Macro and Micro Political Risk

A1. Global risks are usually predictable and have a high probability of occurrence but are often referred to as uncontrollable risks (Merna, 2008). Of the risks listed above, one that has more of a global aspect on marketplace activities is the political and regulatory risks. This would include potential losses from expropriation, nationalization, civil unrest, terrorism and significant changes to trade policy. Specifically,

One form of protectionism is to place limit on the amount of an incoming product. This is called

However, the investment was not without risks. There are four types of risks in international business called cross-culture risk, country risk, currency risk and commercial risk. Cross-cultural risk refers to a situation or event where a cultural miscommunication puts some human value at stake. Country risk describes the potentially adverse effects on company operations and profitability holes by developments in the political, legal, and economic environment in a foreign country. Currency risk is the risk of adverse unexpected fluctuations in exchange rates. Commercial risk refers to potential loss or failure from poorly developed or executed business strategies, tactics, or procedures (Boter & Wincent, 2010). Investment in Rulmenti Grei, Timken might face the salient risks of political and economic instability. Romania’s economic growth was slower, inflation was higher, and the labor force was more volatile. Furthermore, there might be a risk of re-nationalization. It is said that economic risk analysis tells corporate leaders the ability of a particular country to pay its debt while political risk analysis tells them whether that country will pay its debt. Political risk measures the stability of individual countries through the

Although tariffs usually cause domestic prices to increase they can have a positive effect on our economy and specifically our domestic producers of steel and their employees. The US trade policy has historically been protectionist in nature, and congress, the principle body of power for import policy, heavily favored domestic firms over their foreign competitors (Irwin 146). As a result, domestic steel producers have had tariffs and quotas in place for many years. An effective tariff raises revenue for our US government and can help to subsidize domestic production at the expense of foreign producers. This is good because the American government receives money from foreign exporters that it would not have otherwise had access to. This money can then be used in domestic government policies and could

Rapid changes in governments, people’s non-trust towards the government and number of Martial Laws and declaration of Emergencies in Pakistan has made this country to be a high risk country for foreign investment. Examples of political factors are changes in government, changes in govt. policies, corruption, type of government, regulations, trade restrictions, tax policies, tariffs etc.

POLITICAL AND BUSINESS RISKS Last Name 3between various countries may negatively impact on the global business operations. As such, afirm cannot effectively operate to achieve its full capacity and maximize its profits. Political risksalso include the legal legislations that a country imposes on the international businesses that openup their operations in these countries. The government may devise a policy that limits theoperations of the multinationals in the country. Such legislation by the government is a hindranceto the efficient operation of the international businesses.Business risk refers to the likelihood that a company will have lower profits thanexpected (Wild & Han, 2014). There are a number of factors which influence the risk; theyinclude the price of commodities, sales volume, competition, the economic conditions and thegovernment interventions. These factors negatively influence the global business operations.Therefore, as large

Yes, it can be managed because they could suspend their firm’s dealings, or in the other hand, they may choose to start operations there and to accommodate that risk through adaptation to political regulatory environment. There are some methods that can be used to manage such risk; equity sharing, participative management, localization of the operation and development assistance. Although, Multinational corporations also could manage political risk through their global strategic choices another way to minimize the risk of negative outcomes due to political events is by involving local people. Finally, the returns I would expect to gain the successful and development of my business.

The economic dependency of the United States of America on its trade sector would be beneficial in illustrating the relation of protectionism to the economic growth. In the USA, the trade Union believes that protectionism is the only policy, with which the country can maintain domestic industrial growth (Trwin, 1998, 1015-1026). Being a centre for global trade, the industries of the USA have been through a significant setback in the past few years, with a prominent increase in the unemployment rate. Moreover, the growing numbers of import of Chinese goods, which are available at cheaper rates comparatively, have decreased the purchase of domestic goods in the USA This has ignited the debate to, either increase tariffs on such items to protect domestic firms and industries, or to protect the needs of civilians. From the last few years, many governments, including that of USA, U.K and several other facing the challenges of economic downturn, are looking for alternate measures, as protectionism does not seems to provide long term solution for economic crises.

may be less risky than domestic firms if the added risks of operating overseas are more than offset by the ability to operate in nations whose economic cycles are not perfectly in phase

Factors may be changed by the government’s policy influence on a country’s infrastructure and country’s business policy infrastructure. Factors contain current political pressure and potential influences and hence, the industry’s environment stability and the operating cost will be affected. Political factors often impose costs upon organization such as taxes. The governments are often trying to protect firms in their countries from foreign competition through tariffs and import restrictions, and to encourage their development through cheap loans and large government

1. Political risk and country risk are challenges that must be strategically considered by multinational firms. What is one real-world firm that deals with political and country risk?

Political environment is significant to do business in other countries. There are different factors of political environment. These factors can influence the government decision making and other activities. For foreign investors every country set some rules and regulations. Investor need to maintain these rules and regulation to do business on certain country. Political factors can influence the government to change these regulations. So investors need to know the regulations and get the proper knowledge about political environment.

3. Political risk - This indicates the possibility of risk that the ruling government or political unrest could affect or interfere with export and import regulations. The results could come in many different forms such as collapse in share market and also loss or cancellation of export license, seizure of property etc. This is a possibility where a country may experience political instability. We must monitor the effects of political changes and developments that it has on businesses in the country.

THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's

Persistent unemployment pushes many groups to call for protectionism; one of the most effective is organized labor. By limiting imports, local jobs are retained as firms and consumers are forced to purchase domestically produced goods and services. However, unless the protectionist country is relatively small, such measures usually do little to limit unemployment. On the other hand, they may result in a decline in export-related jobs because of (i) price increases for components or (ii) lower incomes abroad. Further, such measures are likely to lead to retaliation unless either the protectionist or the affected country is relatively small. Thus, governments must carefully balance the costs of higher prices with the costs of unemployment and the displaced production that would result from freer trade when enacting such measures.