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Navigating Political Risks in Global Business: Strategies for Success

Explore the complexities of political risks in global business, from sovereignty issues to trade agreements, and learn effective strategies to reduce vulnerability. Discover how factors such as confiscation, expropriation, and terrorism can impact operations, and delve into practical methods to safeguard your investments against political uncertainty. Find out how corporate philanthropy, joint ventures, and government encouragement can mitigate risks and foster sustainable growth in the ever-changing political landscape.

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Navigating Political Risks in Global Business: Strategies for Success

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Presentation Transcript

  1. The Political Environment Chapter 6

  2. Sovereignty • What is sovereignty? • Trade agreements • Stability • Political parties • Nationalism

  3. Political Risks of Global Business • Confiscation • Expropriation • Domestication • Economic Risks • Exchange controls • Local-Content • Import Restrictions • Tax controls • Price Controls • Labor Problems

  4. Political Risks of Global Business • Political Sanctions • Political and Social Activists • Violence and Terrorism • Cyberterrorism

  5. Assessing Political Vulnerability • Uncertainty • Politically Sensitive Products and Issues • Forecasting Political Risk

  6. Reducing Political Vulnerability • When does it work? • Increases exports over imports (balance of payments) • Locally-produced resources are used • Transfers capital, technology, or skills • Create jobs • Makes tax contributions

  7. Reducing Political Vulnerability • Corporate Philanthropy • Joint Ventures • Expanding the Investment Base • Licensing • Planned Domestication • Political Payoffs

  8. Government Encouragement • Why is foreign investment good? • Promotes industrialization • More jobs • More technology • Generate exports

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