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Government, Law, and Political Risk in International Business - Coggle…
Government, Law, and Political Risk in International Business
Political Risks
Potential of Affecting
Short-term
Firm's viability
Long-term
Minimizing The Risks
Investigation before entering the market
Ongoing political operations of the desire country
Through
Newspaper
Visiting the country
Internet
Books
Contacts
Legal Aspects
Firms must obey
Home country laws
The World Trade Organization
Define acceptable economic practices
Host country laws
Role of Government
Political Environment
Religion
Ethnicity
Tend to affect the political environmetn
Legal Environment
Civil Law
based on
Detailed set of laws
Legal Code
Theocratic Law
based on
Faith and Religion
Common Law
based on same
Precedent
Former and current colonies
Custom
Tradition
Usage
Corruption
the abuse of public and private office for personal gain
Bribery
Types of Political Risks
Systematic
affect a large number of assets
Impossible to be protected from
Revolution
Wars
Epidemics
Unsystematic
affect a small number of assets
Specific risk
Foreign Exchange risk
Interest Rate Risk
Country Risk
Political Risk
Credit or default risk
Market Risk