Political Risk Analysis: Dekra, Kellogg's, and Coca-Cola
This paper analyzes political risk as a component of country risk for three multinational companies operating in distinct political environments. It examines Dekra, a German vehicle inspection company, and the domestic political risks it faces from regulatory changes and trade agreements. It then considers Kellogg's operations in India, where risks include GMO labeling legislation, historical nationalization precedents, and political instability. Finally, it assesses Coca-Cola's position in Japan, where risks stem from regional security tensions and potential government intervention in currency and trade policy. The paper concludes that companies must manage their public profiles and financial exposure relative to the political environment of each host country.
- Introduction to Political Risk: Defines political risk and its scope
- Dekra in Germany: Regulatory and trade risks for Dekra
- Kellogg's in India: GMO laws and instability risks for Kellogg's
- Coca-Cola in Japan: Security and currency risks for Coca-Cola
- Conclusion: Synthesizes political risk management across cases
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- Uses three concrete, well-chosen case studies spanning low-, medium-, and higher-risk political environments, giving the analysis comparative depth.
- Grounds abstract concepts like political risk and nationalization in specific, real-world examples (Argentina v. YPF, Coca-Cola's expulsion from India) that make the argument tangible.
- Each case study follows a consistent structure — identifying risks, then discussing mitigation strategies — which makes the paper easy to follow and compare across cases.
Key academic technique demonstrated
The paper demonstrates applied comparative analysis: it introduces a theoretical framework (political risk as a subset of country risk) and then tests it systematically across three cases of varying risk intensity. This moves the discussion beyond description into practical risk assessment, showing how the same concept manifests differently depending on political context.
Structure breakdown
The paper opens with a definitional introduction that establishes key terms and scope. Three body sections each analyze a single company in a single country, covering risk identification and mitigation. A brief conclusion synthesizes findings across all three cases. References follow APA format throughout.
Introduction to Political Risk
Political risk is one of several elements of country risk that a company must take into consideration when operating internationally. Political risk reflects the risk posed by the government of a country, including the risk that the government will take action against a company — as in the case of China versus Google — up to and including the risk of nationalization, as seen in the case of Argentina versus YPF. Governments have the capacity to change the rules governing a company's operations in an unpredictable and ad hoc manner. In the West, where political processes tend to be transparent, it is considerably easier to understand and measure political risk.
It should be noted that political risk reflects actions taken against existing ventures, rather than something like project approval. The Keystone XL pipeline, for example, represented a pending decision rather than a political risk. A true political risk would arise if Keystone XL were approved and construction begun, and then a subsequent government moved to block the project retroactively.
References
Erb, C., Harvey, C., & Viskanta, T. (2003). Political risk, economic risk and financial risk. Fuqua School of Business. Retrieved December 9, 2014, from https://ciber.fuqua.duke.edu/~charvey/Teaching/CDROM_BA456_2003/Other_Harvey_Papers/P38_Political_risk_economic.pdf
Huff, E. (2013). India passes GMO labeling law, but some worry its provisions were poorly planned. Natural News. Retrieved December 9, 2014, from http://www.naturalnews.com/039137_india_gmo_labeling_laws.html
Jijakli, N. (2013). Country risk assessment: India. Credendo Group. Retrieved December 9, 2014, from
Sieg, L. (2009). Five political risks to watch in Japan. Reuters. Retrieved December 9, 2014, from http://www.reuters.com/article/2009/11/02/us-japan-risks-factbox-idUSTRE5A111A20091102
The Economist. (2013). Flogging a dead cow. The Economist. Retrieved December 9, 2014, from http://www.economist.com/news/americas/21582304-recently-nationalised-oil-company-agrees-big-foreign-investment-flogging-dead-cow
Yergin, D., & Stanislaw, J. (1998). Commanding Heights. Retrieved December 9, 2014, from http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_thirdworld.html
Create your account
Always verify citation format against your institution’s current style guide requirements.