International Business and Political Risk



International Business and Political Risk

Introduction

Even when political changes seem to follow a direction favorable to the forces of the market, it does have risks politicians. In our work the will study the risk policies, such as companies and multinational predict the way in which tactics they use negotiation to reduce to a minimum.

The business risk, contingency or future win or lose, is a variable inherent in every business decision. Without doubt one of the main considerations faced by the employer to evaluate your project's investment. The possibility of adverse situations arise that may affect the viability and profitability of the business, which are impossible to identify at the time of new activities, is a factor every investor should take into account when making a study goal of feasibility of the company proposed. This is especially true in projects of international business, as the investor is not always familiar with aspects of the household or with all components of the climate of business in another country, and, therefore, must make a much more complex and would require extensive investment in their country of origin. The idiosyncrasy of a country, its problems economic, the system money, taxation and foreign exchange, attitude and treatment towards foreign investors, legal system, governance and political stability are just some of the factors that the employer should consider taking right decision when investing. Among the most common risks are considered and evaluated the financial and the commercial market and be of those businessmen are normally prepared for. However, there is a particular type of risk that every day becomes more important and whose impact on international business is becoming more common that is the political risk.

In this paper, it is presented that the political risk as one of the variables to consider seriously any company you plan to do business internationally. For the development of the subject, from the definition of political risk analysis of the different situations that can lead, and discuss some illustrative cases of situations in which the occurrence of political risk has created difficulties for foreign investors. Present some problems involved in the work of prediction and assessment of political risks in a country. Finally, it will study different mechanisms of protection against the adverse effects of the occurrence of those risks.

Research Question

The Research questions are as follows:

What are the nature of political risk, (causes and classes)? What are some of the most common ways in which political risk is managed? What are the strategies and common tactics used for the assessment of political risk? What are some of the strategies by which multinationals protect their investments worldwide? How the impact of government decisions and the internal situation in Colombia affect the business's international, as the theoretical elements developed in the workplace?

Political risk

Political risk is defined as the probability that a given political event results in losses for a particular signature. There are many kinds of political risk, which can be broadly divided into extra-legal risks and ...