The political impact on international business activities is relatively complex to assert because the domestic political process is subject to both domestic and international influences. The first issue to consider is the political regime existing in the target country. This is of the utmost importance since it will directly influence a company's operations. In democracies, there is a wide participation in the decision-making process, while in totalitarian regimes, either secular or theocratic, only a few participate. As governments become more democratic, they influence citizens and institutions by, among others, protecting liberty, promoting welfare of citizens, and handling market defects.
Freedom is also a crucial issue.
Factors examined while measuring freedom comprehend the degree to which fair and competitive elections occur, freedom of press as well as the extent to which individual and group freedom are guaranteed. In order to achieve international success, companies must be aware of the political regime of the targeted country, as well as the consequences. This system, found in the United States, Great Britain is based on tradition, custom and usage, which means that courts interpret the law according to precedents. Civil law , also called a codified legal system, is based on a detailed set of laws organized into codes. This system is applied in more than 70 countries, including Germany, France, and Japan.