Managing political risks essay

Has the conflict ended? Even worse, a revolution could spawn a new government that does not honor the actions of the previous government. This was the first free national election in six decades.

What can a multinational company do to minimize exposure to political risk?

What economic system do they practice? Who is the current president? What are their current political and legal systems? For example, inthe Dominican Republic expropriated bauxite belonging to U.

Takeover Risk Takeover, or nationalization, by a government can constitute a serious political risk, especially in countries where governments are not democratically elected or where there is an unstable political situation.

Chinese Business Culture Political risk is the hazard that political decisions or events will have a negative effect on your business.

Oil companies operating in these areas, such as Shell Oil, often manage these risks by hiring security firms to protect workers, and by negotiating to create schools, hospitals and jobs for locals.

Much money can be lost, lives can be lost, and equipment can be. For example, following the Cuban revolution, the Cuban government expropriated a large number of American businesses. The simplest solution is to conduct a little research on the riskiness of a country, either by paying for reports from consultants that specialize in making these assessments or doing a little bit of research yourself, using the many free sources available on the internet such as the U.

There are a couple of measures that can be taken even before an investment is made. Managing political risk involves researching potential risks beforehand, taking steps to minimize risk and ensuring you have legal recourse. As an executive at BP, Gaspers, or Since, given this traumatic experience in Libya, would you recommend that in the future your firm enter another oil-rich country with a similar political system with its typical problems such as dictatorship, corruption, and nepotism that provoke mass unrest in the Middle East?

They can be very profitable because they do have resources that other countries utilize, but there is huge risk as well.

Examples of Companies Managing Political Risk

They do not have much property rights. By agreeing to spend more money, Alcoa managed to avoid large delays from protests. The new president is working on fixing things.Managing Risk in Business and the Role of Risk Management Boycott of Arla Foods in Middle East, a Danish Сompany seling to Muslims Foreign Direct Investment And Political Risk Economics Essay.

Managing political risk in middle east: focus on Libya

Aug 27,  · Once risks have been identified and measured, an effective system for active political risk management can be put in place.

The first element in managing political risks is to map potential risk. Political risks can range from war and revolution to corruption and changes in tax laws. Managing political risk involves researching potential risks beforehand, taking steps to minimize risk and. Investigate examples of political risk in international business and show how these risks can be managed.

Another useful strategy of managing political risks is to adopt minority interest in the business. If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please. Understanding and Managing Political Risk An International Investor Guide to Political Risk.

Share Flip Pin Political risks are those associated with changes that occur to a country's policies governing businesses, as well as external factors that could affect businesses. A common example of political risk might be a country that.

Managing Risks: A New Framework Sources of these risks include natural and political disasters and major macroeconomic shifts. constructive discussions about managing the risks related to.

Managing political risks essay
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