Political Instability And The Decision Making Process Of Foreign Direct Investment Essay

Bangladesh is a country where religion based parties play quite a dominant role. There are nearly 40 parties registered with the Election Commission and among them 12 are Islamic parties. Those parties are legally accepted to participate into the political domain of

As previously identified, there are also “non-legal/extra-governmental” political risks which could bring unexpected upheaval to foreign firms. Macro political risks such as the threat of violence, corruption, war or military coup, political instability and terrorism are all direct threats to foreign investors.

What impact will the prospect of deprivatization have on investment by managers of privatized firms?

Political Risk- the unanticipated likelihood that a business’s foreign investment will be constrained by host government’s policy.

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

7. Political risk. Companies considering expanding into other countries must take political risk into consideration when developing a location strategy. Since some countries have unstable political environments, companies must be prepared for upheaval and turmoil if they plan long-term operations in such countries.

4) Stable political conditions: The political conditions prevailing in the country has been particularly favorable for foreign companies and inspite of changes in government and political power, attitude towards attracting foreign invesment has been favorable and fairly

This dissertations presents concept of political risk in the context of Efficient Market Theory (Hypothesis) and State capitalism. The paper explores the link between the three ways of insuring political risk to economic theories. Using case study of a multinational firm the political regime and its effect has been explored on business situations and how it can be managed. Political risks are the threats arising for a business due to the actions of a host government. Multinational firms in particular face political risks due to expansion of their businesses to developing countries. Author has explained and examined how political risk management has been developed in the contemporary history. A comparative analysis of concepts that deal with political risk under the contexts of prevailing ideologies; political and economic constructs has been conducted.

The Political risk can be contributed to government interference in the business affairs of the foreign persons doing business in a particular country. Political risk can also surface as firm-specific risk. This form of risk targets a specific business or class. There can also be country-specific risk where the entire country or region is affected. Given that political risk will exist, if I were a political consultant for Mercedes-Benz, I would suggest relocating any business venture that was located in areas that are susceptible of being stagnated by political strife.

* Political conditions, especially in international markets, including civil unrest, government changes and restrictions on the ability to transfer capital across borders.

3- The develop countries will solely Depends on the outsiders for majority of its economy, this put pressure on both company and the hoist country.

At the most general level, the stability of the political system affects the attractiveness of a particular national market. While radical change rarely results from political upheaval in most Western countries, the instability of many Eastern European governments leads to uncertainty about the economic and legislative framework in which goods and services will be provided.

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.

In Bangla political dynamics all indications are there, popularity of the ruling party, Awami League hit the rock bottom; exemplified when the BNP "thrashed the League in mayoral elections in June and July, notably in Gazipur in the industrial belt, hitherto one of the League’s safest constituencies" and polling data showing a plunge in the government’s popularity. Consequent to opposition called general strike, many stores and schools were closed in Dhaka and very few vehicles were

Bangladesh could face a protracted political crisis in the Lead-up to the 2013 elections unless Prime Minister SheikhHasina’s government changes course and take a more conciliatory approach towards the political opposition and the military. In December 2008, following two years of a military-backed caretaker government, the Awami League