Crime is relevant to business since it leads to financial and property losses. For example, theft, shoplifting, and embezzlement of funds lead to financial losses. Another threat is the loss of protected information that may lead to the loss of a competitive advantage. In 1988, a researcher named Peter Taborsky discovered an effective way of treating sewage (Lau & Johnson, 2012). South Florida University pressed a criminal charge against him for stealing trade secrets. In another instance, Harry Potter author, J. Rowling, took a legal action against Vander Ark for trying to use her works illegally (Lau & Johnson, 2012). Rowling decided to sue Ark when the latter announced plans to public the content of the formers works.
What strategies exist for businesses to minimize exposure to criminal liability or to loss associated with criminal activities?
Companies have continued to protect their interests by registering their trademarks. In doing so, it becomes difficult for illegal operators to take advantage of such developed brands to sale their relatively unpopular products. Companies can also protect their creativity through copyright (Lau & Johnson, 2012). Just like trademarks, the federal law protects copyright and ensure that a company that invest in innovative products can reap from their investment by prohibiting competitors from copying such products. Another way of minimizing exposure to criminal liabilities is to ensure that ensure that all the contracts are legally enforceable (Lau & Johnson, 2012). Such measures allow companies to win cases that would otherwise attract huge losses if such companies were forced to compensate the plaintiffs financially.
Why is the global legal environment important to all businesses?
A global legal environment is necessary for creating a level ground, where domestic and multinational companies can compete fairly. With an international legal framework, it is possible to protect the interests of the consumers, employees, and investors irrespective of their nationalities and other differences. A global legal environment also offers an opportunity for multinational companies to reduce losses associated with criminal activities (Lau & Johnson, 2012).
What legal considerations exist with respect to trade regulations, international contract formation, employment and human rights issues, and prohibited activities in the international environment? Give at least three specific examples.
When selecting partners, it is important to ensure that they comply with employment and human right issues. For example, Apple landed in trouble when its Chinese-based partner named Foxconn engaged in workers exploitations that led to alarming cases of suicide (Lau & Johnson, 2012). Another important legal consideration is the economic sanctions that prohibit multinational corporations from trading with specific organizations. For example, it is a criminal offence for US-based multinationals to do business with a terrorist organization involved directly or indirectly through funding of terror activities. Although multinational companies focus on the international market for expansion, they must comply with federal trade regulations when exporting products. For instance, the companies involved in the manufacture of defence equipment should consider the federal export controls aimed at preventing the proliferation of dangerous weapons to the wrong hands (Lau & Johnson, 2012).
Did Wal-Mart act illegally?
Evidently, Wal-Mart acted illegally by failing to follow the US and Mexican laws that govern the process of setting up new stores. For example, the Foreign Corruption Practice Act is the US law that prohibits American multinational companies such as Wal-Mart from indulging in illegal activities outside the US jurisdiction. Specifically, they failed to follow or the requirements for setting up new stores.
Did Wal-Mart act immorally?
Wal-Mart acted immorally by trying to cover up the scandal in Mexico. Once a journalist aired Wal-Marts scandal, the senior managers tried their best to cover rather than take the right measure. The US-based senior managers decided to involve the same suspects implicated in the scandal. In doing so, it was difficult to unearth the problem and punish those involved since they their investigation.
Identify all the parties who have responsibility to identify, prevent, and punish illegal acts taken by corporations doing business internationally.
Dealing with crime in international business is a collective responsibility. The success in identifying, preventing, and punishing illegal business dealings depends on the willingness of all the stakeholders to cooperate. For the internal players, employees have a role to play in reporting to their seniors any illegal acts. For example, auditors can easily identify financial irregularities that might imply fraud. The top managers have the obligation of taking both preventive and punitive action against illegal acts. For their preventive roles, senior managers have the authority to stop any illegal transaction by making well-informed decisions that focus on legal means of competing, and solving problems. For example, the senior managers at Wal-Mart could have avoided its scandalous entry into the Mexican market by insisting on legal procedure just like their competitors.
For the external players, law enforcers from different jurisdictions have the obligation of taking preventive measures as well as investigating suspects. In the globalized business environment, local authorities have the duty to ensure that multinational corporations follow legal procedures in line with the international trade and local legal frameworks. Once law-enforcing authorities find enough evidence of illegal acts, they have the obligation of taking illegal action against the suspected companies and all the individuals involved. From there, the judiciary takes over by interpreting the law and giving a justified punishment in form of fine or business closure.
Lau, T., & Johnson, L. (2012). The legal and ethical environment of business. Flat World Knowledge.
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