International Business - Political Stability of the Markets

Contents

Introduction 2

Intensity of Political Instability 3

Impact of Political Risk 4

Managing Political Risk 6

Making Political Challenge into Strength 8

Conclusion 9

References 9

Bibliography 11

Introduction

Political stability of the markets that are proposed to make an investment of foreign expansion is a vital considerations for multinational corporations. Therefore proper vigilance is necessary from the international managers to assist the organization in making pertinent decision regarding the investments in foreign markets. The political risks in different countries affect the business of the organizations in different ways. The political climate in different countries are shifted significantly in recent times. An urge for democracy has started in many countries and the business work is waiting for the consequences. The instability of these countries are main concerns for various organizations who plans to invest in these unstable countries and who have already invested in these countries (Bremmer, 2005).

In todays' global business, the corporations keenly search the potential markets. And before they invest in these potential foreign markets, they analyses the political, economic, social, and technological environment of the proposed markets. The instabilities of the business environment is definitely a concern for the global corporations. At the same time, more than being reluctant to invest in such a politically instable country, they prefer identifying ways to eliminate or minimize the effects of these instability into their business. The managers of these organizations must be highly vigilant enough to adopt pertinent measures for making appropriate decisions in such an instable business environment.

The organizations would prefer politically stable countries with obvious sense. But with the increasing competition and globalization trends, the organizations adopt every opportunities of profitability in the international business environment. Pertinent risk management techniques are employed by the organizations to carry on the business smoothly even in tough situations in different markets. The intensity of the instability is the major concern for the organization. If it is identified that carrying out the business process will be an impossible task in a particular market, even after proper analysis of risk management, the organization will decide not to invest in such a market despite its market potential. But the organizations would adopt such a tough decision only after appropriate analysis of every