Political Risks And Its Effects On Local Activity

1. Political: “issues affecting our international vendors could materially adversely affect our business and financial performance.”(Page 8.)

Political: this inturns the legislation and government rules of the country that may influence and pose as a threat to the business,

We are always trying to figure out where we are in this world, or how we got where we are today. Obviously you have no choice of parents or where your born and these are two major contributing factors of who am I today. Being born white and a male society has immediately granted social advantages or white privileges. But, how privileged was I really? Being born in a highly populated city to first generations Americans without high school diplomas. I did have some advantages and I realized them growing up around my non-white friends. But compared to other white people I didn’t see my self privileged in many ways.

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.

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,

It is clear from the list above that political factors often have an impact on companies and how they do business. Organisations need to be able to respond to the current and anticipated future legislation, and alter their marketing policy appropriately.

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

Political force describes the impact of politics in marketing decisions. It takes into consideration the influence of a government that may affect the business environment. This includes the business cycle of a nation, monetary policy, fiscal policies, and trade policies. For instance in 2013 the Qantas Airlines was severely affected by the political unrest in Thailand which in result, caused a major concern for the organisations to generate adequate revenue in that particular region. In relation to that situation, Qantas also didn’t manage to obtain their desired target of revenue in the Middle East region due to the political instability that most Middle East country was facing from 2003 to 2010. In nut shell, the p;,political factor can relentlessly affect the airline industry at a particular region because people will normally think twice before deciding on their holiday location.

According to research, commerce prospers or is successful when business sector includes independently owned companies that exist to make and increase profits (Axtmann 89). A country such as Britain uses a democratic form of governance or political system, and because of this, the country is one out of the many countries that diverse companies want to venture their business it. This makes the country a stable business environment of international companies. Democratic political system business laws ensures all businesses especially in the private sectors are independent in that they carry out their own business operations with the intent of making profits and revenues; thus grows and improves the economy. In a totalitarianism political system, there is a difference in that this form of government has vague business laws. There is no guarantee that international enterprises would prosper in countries practicing this government. For example in North Korea, the business laws are nebulous in that multinational companies are not protected. The international firms can be taken by the government, and this occurs when there are international issues or wrong movements by the companies. This shows that it is risky to do business with totalitarian nations such as North Korea; thus it is not a conducive environment for international companies or businesses.

Generally, businesses do not thrive under uncertainties. The political uncertainty brought about by the recent UK referendum was cited by business leaders as the top risk facing UK businesses [6]. These political risks negatively affect the general economy, in terms of both reductions in GDP growth and value of the UK pounds sterling.

Without stability security is harder to maintain and both are needed to promote profitable economic activity.

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?

Evans and Richardson (2007), contend that globalized economic environment is complex and changes from time to time and this places a heavy responsibility on multinationals and other business enterprises. They are forced to adapt in order to deal with these factors for the benefit of their organizations. A company cannot ignore political issues when assessing the business environment in which it operates because it affects government policies such as licensing, regulation and taxation, which have a direct consequence on the activities of a business enterprise (Evans, & Richardson, 2007).

The average press freedom in the 32 SSA countries in this study is 57.5, which implies the press in the region is largely partly free.

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