2.

Non-legal factors might affect the decision by a business to engage in transnational commercial
activities:
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
XI.
XII.
XIII.
XIV.

Cost
Profit
Culture
Reputation
Language
Custom
Economics stability
Politics
Social
Technologies
Customer demand
Consumer preferences
Training cost and time
Exchange rate

3. Cost typically cost of doing business is how much a business spends in the transnational
commercial activities. For example, operating cost, taxes impose on the business, minimum salary of
employees and so on. If the cost of doing business is cost higher than the profit, the business will be
in the position of deficit. In long-term, it will cause the business facing the problem of bankruptcy due
the lack of finance. In this circumstance, the business will not take the decision to operate. In my
opinion, a business can choose to start a commercial activity in those countries which have a lower
tariff in order to reduce the cost of business. Reputation affects decisions of transnational commercial
activities. For example, it has been a big number of foreign investment withdrawals happening in
Malaysia due to corruption scandals of the current Prime Minister. In contrast, theres many foreign
investment in Singapore because the reputation of government in Singapore is high. In order to
lubricate employees corporation in foreign country, firms would have to provide proper training like
foreign language classes and so on. This increases budget and is a time consuming process.
However, it is unavoidable. Hence, this affects decisions of transnational commercial activities. One of
the way to minimize the impact of this is, a business can employ native as their employee so that they
do not need to provide a foreign language class for them. Besides, economics stability, also affects
the decision in transnational commercial activities. When a countrys economic is stable, it will attract
more foreign investor. In contrast when a country is facing an economic downturn and unstable,
foreign investor will not invest in that country as there is a higher risk of business failure. To minimize
the effect of this factor foreign investor must do more research about the countrys economics before
they invest. While in a country which have an unstable economic, government can increase the
allowance like tariffs allowance in order to increase the confidence of investor. Finally, profit earned by
a business, is a great factor which can affect the decision in transnational commercial activities.
Shortly, profit is the income of a business. If the profit in a transnational commercial activities is high,
the business will continue the activities. But if the profit is low or lower than the operating cost, the
business will not continue the transnational commercial activities.