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CH.6 Governmen, Law, and Political Risk of IB - Coggle Diagram
CH.6 Governmen, Law, and Political Risk of IB
The Political Environment
Government role
Pursuit of international markets
Phenomenon of ethinicity
Ethnicity + Religion = uprisings
Managers must undertsand ethnic and religion compositions of host countries
Types of Political Risks
Systematic
affects large number of assests
Unsystematic
small number of assests
Credit/Default
Country
Foreign Exchange
Interest Rate
Political and Market
Government Issue and Corruption
Corrupt behavior reduces economic growth
“the abuse of public or private office for
personal gain”
Corruption is widespread, even in democracies
Poltical parties, courts and police are vital for conducting international business.
The Legal Environment
Businesse must obey home and host country laws
Law can be based on society/culture and spiritual guidance (Islam)
Common Law
Civil Law
Theocratic Law
Level of Government involvement
Economic Enviroment
Result of political situation in a country
Unique country risks strategies
varies from business to business
Domestic Economic Conditions
External Economic Relations
Resolving International Disputes
Source of Jurisdiction
Strategies to minimize risks
Plans for future investment