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Chapter 6: The Political Environment - Coggle Diagram
Chapter 6: The Political Environment
Stability of Government Policies
The ideal political climate for a multinational firm is a stable, friendly government; but they're not always like that.
If there is a potential for a profit and if permitted to operate in a country, multinational companies can function under any type of government.
Political parties need to be taken into consideration when doing business.
Political Risk of Global Business
Risks can range from confiscation, the harshest, to many lesse but still significant government rules and regulations, such as exchange controls, import restrictions, and price controls directly affect the performance of business activities.
Exchange controls stem from shortages of foreign exchange held by a country.
Political Sanctions
Risk of violence, terrorism and war
Cyberterrorism and cybercrime
Assessing Political Vulnerability
Some companies appear to be more politically vulnerable than others, in that they receive special govenment attention.
Prodcuts that have or are perceived to have an effect on the environment, exchange ratesm national and economic security, and the welfare of people or that are publicly visible, subject to public debate or associated with their country of origin are more likely to be politically sensitive.
Lessening Political Vulnerability
Expand the investment base
Licensing
Planned Domestication
Political Bargain
Political payoffs