Political, Legal, and Economic Factors in Sri Lanka's Global Business

This report provides an overview of the global business environment in Sri Lanka, focusing on the political, legal, social, cultural, and economic factors affecting large manufacturing firms. It identifies key risks such as business disruption, market expansions, cyber happenings, regulatory changes, lack of brand image, innovative skill gaps, and human faults. The report also discusses the advantages and disadvantages of investing in Sri Lanka, including political advantages like community contribution, and legal advantages like innovative collection management, while also pointing out disadvantages like tax inadequacy. Cultural and economic factors, such as increased creativity, communication problems, standard of living, and inflation, are also examined. The report concludes by referencing key sources used in the analysis.

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Running Head: INTRODUCTION TO GLOBAL BUSINESS 0
Introduction to global business
Sri Lanka
9/9/2018
Student Name

Running Head: INTRODUCTION TO GLOBAL BUSINESS 1
Table of Contents
Political, legal, social and cultural risks for a large Sri Lanka manufacturing firm..................1
Advantages and disadvantages of investing in Political, cultural, legal and economic factors. 2
Political Advantages...............................................................................................................2
Political Disadvantage............................................................................................................2
Legal Advantages...................................................................................................................2
Legal Disadvantages...............................................................................................................2
Cultural Advantages...............................................................................................................3
Culture Disadvantages............................................................................................................3
Economic Advantages............................................................................................................3
Economic Disadvantages........................................................................................................3
References..................................................................................................................................4

Running Head: INTRODUCTION TO GLOBAL BUSINESS 2
Political, legal, social and cultural risks for a large Sri Lanka manufacturing firm
The political environment in Sri Lanka is found to be stable in nature. But the country was
found to be following the strict rules and regulations. Sri Lanka has got the significant growth
in its cultural environment and human growth indicators. Socioeconomic indicators rank
amongst the utmost in South Asia and associate positively with those in middle – revenue
countries. In terms of legal environment risk, Sri Lanka is facing the European influence in
their country which is considered to be the biggest risk to trade and establish the
manufacturing concern.
 Business Disruption: - Business Disruption is the damage of knowledge to business
as an outcome of property loss. A good risk managing policy will recognize all
potential industry disruption risks and will underline steps to be taken when these will
becomes an actuality (Deresky, 2017).
 Market Expansions: - Market expansion in Sri Lanka affects the business in large
organizations. There is a market risk for the fact that there is worldwide hesitation for
economic development.
 Cyber Happenings: - Cyber risks at a rapid speed becoming common in Sri Lanka
and the rates that are being offered to assailants are increasing. It can be the individual
hacking into structures, robbery of client information and privacy ruptures or
continuous bombardments of facility attacks. Cyber-crime is growing in a very speedy
manner. The criminals are becoming smarter in what they do and they are
continuously changing their techniques all the time (Ruwanpura and Wrigley, 2011).
 Modification in regulation: - There is a lot of media consideration on insurance
especially the topic of life insurance. This is registered in a list of Sri Lanka Company
and Customer Supervisor (ASIC) inquires and surveys. This is common in many large
manufacturing industries but it looks likes ramping up and possibly reaching a
topmost with an amount of law and regulation (Perry, Wood and Fernie, 2015).
 Macroeconomic Growths: - This is an additional bigger topic with risks to trade
coming from all the directors. Around economic development, there is uncertainty in
China. There is an insurance cycle in the money-making sector where rates have been
falling for several years. The growth is out of control but the trade can mold its
policies to evade against many potential risks (Jayathilake, 2012).

Running Head: INTRODUCTION TO GLOBAL BUSINESS 3
 Lack of character or brand image: - In the importance of this threat social media
has played a vital role. Social media increases the capability to use websites like as
the firm which permits an individual to run applications against trade, deal of grip can
develop across a complaint being felt by a person or a group.
 Innovative Skill: - Threat from new technology includes the problems and the issue
of digital disturbance as well as big data. For example, particularly risk containing is
varied from person to person which is based on lending and personal insurance.
 Human Fault: - The ways of human fault for an alternate explanation. Human faults
can create momentous damage. Many large manufacturing firms are dependent on the
IT systems and therefore IT areas can create systems to go down an entire business
can come to standstill (De Jong, 2010).
Advantages and disadvantages of investing in Political, cultural, legal and economic
factors
Political Advantages
Political parties motivate community contribution: - Political parties motivate the
individual when combined with the representative form of government. They listen to the
individual to be well informed about particular situations that are taking place within society
so they can take a stand for the problems. To express opinions or share innovative ideas to
evaluate an informed opinion debates takes place. To run the political office at all the level of
government many political parties motivate the members (Rose-Ackerman and Palifka,
2016).
Political Disadvantage
Political parties can be offensive: - Not every government is a descriptive form of
government. The goal of the parties in this situation is generally more about individual
viewpoint. Therefore if a political party has too much strength or influence within society
then it can become offensive (Cavusgil, et al., 2014).
Legal Advantages
Innovative Collection Management: - To pay a managerial expense as the main feature of
the expenditure amount, that is used to hire a skilled collection controller who monitors in
obtaining and offering shares and bonds. They usually pay less cost for support in the
management of a speculation group (Quer, Claver and Rienda, 2012).

Running Head: INTRODUCTION TO GLOBAL BUSINESS 4
Legal Disadvantages
Tax Inadequacy: - When it comes to investment expansion depositors do not have any
choice for pay-outs in mutual funds. The income, improvements, expansions, and damages in
security holdings during the year and depositors especially accept deliveries from the deposit
that are an overpowering tax event.
Cultural Advantages
Increased Creativity: - When people in diverse cultures, background, and welfares come
together to work for a common objective, increased inspiration can be attained. The artistic
product can become better. This means the firm has to grow a new procedure for an
individual with different ideas to collaborate and work accordingly (Balkyte and
Tvaronavičiene, 2010).
Culture Disadvantages
Communications problems: - Operative communication is a powerful factor for progress.
Diversity can be in the mode that can directly influence manufacturing because of lack of
cohesiveness. It is easy for Spanish speaking individuals to communicate with someone who
knows their culture and understand their native language.
Economic Advantages
The standard of Living: - The benefits of monetary development are that the individual
standard of living will upsurge. Economic growth can decrease deficiency because it can
upsurge individual income and permit them to get importance goods for a living. This
motivates large manufacturing firms to produce more and also grow the possible output level
in the economy.
Economic Disadvantages
Inflation: - The main drawback of economic growth is the inflation outcome. Economic
growth will create a combined request to grow. If the combined request grows quicker than
the growth in the collective source then there will be an additional demand but a lack in
supply in the economy. Therefore an increase in the level of inflation will decrease individual
assurance and this will decrease the level of native and foreign savings (Kang and Jiang,
2012).

Running Head: INTRODUCTION TO GLOBAL BUSINESS 5
References
Balkyte, A. and Tvaronavičiene, M. (2010) Perception of competitiveness in the context of
sustainable development: facets of “sustainable competitiveness”. Journal of business
economics and management, 11(2), pp.341-365.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.
(2014) International business. Australia: Pearson.
De Jong, J.T. (2010) A public health framework to translate risk factors related to political
violence and war into multi-level preventive interventions. Social Science & Medicine, 70(1),
pp.71-79.
Deresky, H. (2017) International management: Managing across borders and cultures. New
Jersey: Pearson Education India.
Jayathilake, P.M.B. (2012) Risk management practices in small and medium enterprises:
evidence from Sri Lanka. Risk Management, 2(7), pp.226-234.
Kang, Y. and Jiang, F. (2012) FDI location choice of Chinese multinationals in East and
Southeast Asia: Traditional economic factors and institutional perspective. Journal of world
business, 47(1), pp.45-53.
Perry, P., Wood, S. and Fernie, J. (2015) Corporate social responsibility in garment sourcing
networks: Factory management perspectives on ethical trade in Sri Lanka. Journal of
Business Ethics, 130(3), pp.737-752.
Quer, D., Claver, E. and Rienda, L. (2012) Political risk, cultural distance, and outward
foreign direct investment: Empirical evidence from large Chinese firms. Asia Pacific journal
of management, 29(4), pp.1089-1104.
Rose-Ackerman, S. and Palifka, B.J. (2016) Corruption and government: Causes,
consequences, and reform. UK: Cambridge university press.
Ruwanpura, K.N. and Wrigley, N. (2011) The costs of compliance? Views of Sri Lankan
apparel manufacturers in times of global economic crisis. Journal of Economic
Geography, 11(6), pp.1031-1049.