Legal and Ethical of Business - IP 5 Research Paper

Legal and Ethical of Business - IP 5 - Research Paper Example This paper will research and comparatively analyze the challenges faced by McDonalds and Starbuck in India and China respectively. McDonald’s got engaged into the Indian market in 1996. This entry was in a form of a joint venture between local restaurants in both western India and northern India. This entry was expected to increase the customer base for the company. Having used the local partners, McDonald was sure to have little if any resistance in the industry. This is because it was expected that the taxes and duty issues related to foreign companies would be relatively affordable. Whereas this was not far-fetched, several other challenges became of greater concern. First, the political system in India is not so friendly. Even with the local support, the government still find loopholes to overtax the foreign entities even when partnered. The brand duty is exorbitant, and all profits are taxed for foreign firms (Chari, 2013). Further, violent destruction of hotels was also witnessed as fueled by the politicians and community leaders. For Starbuck, the political system in China is more strict but relatively transparent. From the beginning, industries and activities are either encouraged, restricted or prohibited. Establishing a business, therefore, requires initial certification (Gaff, Choy, & Chan, 2012). Following 2008 poisoned milk scandal, China has enacted more stringent laws on food and beverages companies and Starbuck almost got kicked out of the country only a few years since its entry. This contributed greatly to the loss of competitiveness in the global luxury markets especially in the large cities in China. However, the management sought to reverse this situation by partnering with real estate agencies in the country to establish shops in cheaper locations and closer to people’s residential areas. Socially and ethically, McDonald had a variety of challenges. The