Political risk is one of the different 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 risks that the government will take action against your company (China v. Google), up to and including the risk of nationalization (Argentina v. YPF). Governments have the capacity to, in an unpredictable and ad hoc manner, change the rules governing a company's operations in a country. In the West, where political processes tend to be transparent, it is a lot easier to understand and measure political risk. Political risk, it should be noted, reflects actions taken on existing ventures, and not something like project approval. So Keystone XL is a pending decision, not a political risk. isk would be if Keystone is approved and then after it is started the next government moves to block the…...
N.D. PP. 1). Yet with the recent wave of anti-American protests can these statements be integrated into a compelling narrative for long-term investment? Specifically, the answer is derived from qualifying the political risk variables associated with respective nation-states.
Risk Variables
While a plethora of political risk models exist, there are definitive items which comprise their ability to predict relative political turbulence. These factors include:
The threat of war, social unrest, disorderly transfers of power, political violence, international disputes, regime changes, institutional ineffectiveness, quality of the bureaucracy, the transparency and fairness of the political system, and levels of corruption and crime. (Economist Intelligence Unit. N.D. PP. 1)
Returning to the Middle East and the unrest of the last 24 months, nation-states in the region have experienced these factors to some degree and have developed scenarios to provide some measure of political certainty. Yet the issue remains whether the dynamism of the Arab Nations uprising will…...
Fiji
Political risk is the risk that is associated with the political stability of a nation and the risk associated with political actions on the part of a nation's government. A decline in the economy of a nation because of a violent change in government falls under the category of political risk, as does the risk of nationalization or other adverse government action directed at the company. There is considerable political risk associated with doing business in a nation like Fiji, for example. There are a number of ways that firms seek to manage the political risk that they face when doing business overseas.
Because of the nature of political risk, the implications can be significant for business. The worst case scenarios could see the loss of the entire business, combined with risk to life and limb of the employees that work for the business. Even minor political risks could have significant…...
Direct investment / Political risk
A distinction between the project and parent perspectives when capital budgeting in a global situation
There are two different viewpoints in capital budgeting known as project and parent. The project is a locally addressed perspective that is child to the parent. The parent is the main organization in which the projects financial and operating cash flows will be directed. The project perspective is very useful in local purposes. However, it is subordinated to the evaluation from the parent's viewpoints (Moffett, Stonehill & Eitemen, 2012). A project evaluation will guarantee cash returns based on the host-governments bonds. In case a project were to fail in receiving cash equal to the bond yield, a parent firm should buy host government bonds instead of investing in a risky project or investing somewhere else. Multinational firms should invest only if they can earn a risk-adjusted return greater than locally-based competitors can…...
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3. A contrast of the various factors that impact foreign direct investment
Foreign direct investment is an investment made by a company and/or entity that is based in one region into another company and/or entity based in another one. There are many things that differ from direct and indirect investments such as the portfolio flow (Moffett, Stonehill & Eitemen, 2012). Therefore, overseas institutions invest in equities listed on a nation's stock exchange. Entities that make direct investments will typically have significant degrees of influence and control over the company into which the investment is made. Nevertheless, the open economies that consist of well-trained workers and project good growth prospects will tend to attract a larger amount of foreign direct investment than the closed economies which are highly regulated economies. Determining the best method that a company will adopt may make its overseas investment encounter different depending on the circumstances of the economic environment.
Some examples would be to set up a subsidiary or associate company in the foreign country, by acquiring shares of an overseas company, through a merger, or joint venture. The regulated threshold for a FDI relationship (defined by the OECD) is at least 10% (Moffett, Stonehill & Eitemen, 2012). In other words, the foreign
Strategy to Mitigate Political iskHistorically, political risk has been linked to dictators who could suddenly seize foreign assets (like the way the US seized ussian assets following the start of the ussia-Ukraine conflict). However, today political can come from just about anywhere, including peoples use of cell phones, local officials, or lone wolf terrorists (ice & Zegart, 2018). The definition of political risk has thus evolved to mean the likelihood that a political action will have a significant impact on a business, either positively or negatively.This all began after the end of the Cold War, which ironically fostered a more unpredictable geopolitical environment. The open hostility of the Cold War went underground in a way, and seeped into various aspects of society so that political risk became less obvious but nonetheless present. On top of this, the evolution of supply chains increased companies\\\' vulnerability to disruptions.In response to this new…...
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ReferencesRana, N. P., Chatterjee, S., Dwivedi, Y. K., & Akter, S. (2022). Understanding dark side of artificial intelligence (AI) integrated business analytics: assessing firm’s operational inefficiency and competitiveness. European Journal of Information Systems, 31(3), 364-387.Rice, C., & Zegart, A. (2018). MANAGING 21ST-CENTURY POLITICAL RISK TODAY\\\\\\\\\\\\\\\'S THREATS ARE MORE COMPLICATED, BUT THE REMEDIES DON\\\\\\\\\\\\\\\'T HAVE TO BE. Harvard Business Review, 96(3), 130-138.
1. Question format: In order to allow the research study to become embedded in the field of economics, the research question will use an applied question format. The purpose of the study is to develop a predictive method regarding player choices in the Prisoner's dilemma. It will explore the association of risk and cooperation or defection in the Prisoner's
Dilemma.
2. Research design: The research will use a deductive approach where the theory will be presented and tested through the methodology. The research will use quantitative research methods, which are suited for research where the information can be reduced to a numerical format. This is the case in the proposed study as both risk tolerance and the decisions made in the Prisoner's Dilemma can be reduced to numerical data and standard statistical methods applied.
III. Data/Information from Previous research
A. Literature Review
The literature review for the study will be divided into…...
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Bibliography (Preliminary)
Agarwal, J. & Feils, D. (2007). Political Risk and the Internationalization of Firms: an Empirical
Study of Canadian-based Export and Fdi Firms. Canadian Journal of Administrative
Sciences. 24 (3): 165+. Questia Database.
Ansell, C. & Gash, a. (2008). Collaborative Governance in Theory and Practice. Journal of Public Administration Research and Theory. 18 (4): 543+. Questia Database.
risk that one needs to be concerned with when selling a franchise (and this is a general case, not only the case of Germany) is that the franchiser (that is, the person who buys the franchise) may not fulfill all his contractual obligations. These include a certain quality standard and a brand image of the mother company (the franchisor). This obviously may lead to the fact that the customers will associate with the mother company a certain level of quality that is less than that agreed upon and less that the one the company actually has in the country of origin. This can cause serious prejudice to the brand image. If we think of a classical case of franchising, McDonald's, a level of quality may include a certain degree of organization, in order to avoid long lines, a certain quality of the products (for example, the franchise contract foresees…...
isk Management Plan for Exxon Mobil
A risk management process is a systematic application of management policies for the purpose of identifying, analyzing, evaluating and mitigating any possible risks within an organization. The following paper focuses on formulation of risk management plan for Exxon Mobil, one of the world's most renowned oil and gas companies. The risks would be identified and selected applicable to this firm and after their evaluation, a risk treatment plan would be advised.
Establish the isk Context
Identifying the Context for isk Assessment
eviewing current organizational processes
Being in the gas and power marketing department of the company, there are certain risks applicable within my area of operation. In order to clearly determine those risks, first, a comprehensive look at Exxon Mobil's organizational processes along with a SWOT analysis is presented. The firm is dedicated to create and maintain an environmental policy that would protect the environment on long-term basis. It…...
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References
Bastian, B.L. & Tucci, C. (2010). An empirical investigation on the effects of political risk on technology strategies of firms, presented at Summer Conference 2010, London, 2010. London: Imperial College London Business School. Retrieved from http://www2.druid.dk/conferences/viewpaper.php?id=501908&cf=43
Hirsch, A. (2011, June 17). Exxon Mobil accused of 'fraud' in Jacksonville gas spill trail. The Baltimore Sun. Retrieved from county/bs-md-co-exxon-trial-closing-20110617-story.htmlhttp://www.baltimoresun.com/news/maryland/baltimore -
isk and Insurance Management
isk is believed to be a newly coined word of assurance (for example, Ewald, 1991: 198). One of the broadly shared suppositions regarding insurance is that it spins around an instrumental concept of risk. Possibility and the amount of influence make up a technical concept of hazard/risk and hazard administration is chiefly worried about reviewing these possibilities and influences (for an overview see Gratt, 1987). For instance, external profits of financial or political occurrences lay down thresholds for the availability of associated risk guesstimates or reckonings (Huber, 2002).
So, the range of the risk groups cannot be clarified by risk judgment single-handedly; peripheral circumstances that could be political, financial or inclusive of image, arts and manners, are also required to be taken into account. Therefore, if risks are not be present, per se, but are deliberately selected, we can go a step ahead and presume them to be…...
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References
Douglas, M. And Wildavsky, A. (1982) Risk and Culture. An Essay on the Selection of Technical and Environmental Dangers. Berkeley: University of California Press.
Evers, A. And Nowotny, H. (1987) Uber den Umgang mit Unsicherheit. Die Entdeckung der Gestaltbarkeit von Gesellschaft. Frankfurt / Main: Suhrkamp.
Ewald, F. (1991) 'Insurance and Risk' in Burchell, G., Gordon, C. And Miller, P. (eds.) The Foucault Effect: studies in governmentality . London: Harvester Wheatsheaf.
Gratt, L.B. (1987) 'Risk Analysis or Risk Assessment: a proposal for consistent definitions' in Covello, V. And Lave, L. (eds.) Uncertainty in Risk Assessment, Risk Management and Decision Making, Advances in Risk Analysis (4). New York: Plenum Press.
Risk-Free
Government bonds are called risk-free because they will be paid back. he underlying assumption is that the U.S. reasury can always print more money in order to finance the payback of these bonds. hat does not by any means make the bonds truly risk-free, but they are guaranteed to return face value. here are actually a few different ways in which government bonds are risky.
A recent change to the more orthodox view of government bond risk is that U.S. government bonds were downgraded in 2011, something that had never happened previously. his has not changed the market view of U.S. government paper, but it does imply that, according to one rating agency at least, the bonds of some other governments are less risky than the bonds of the U.S. government. hat said, the risk conditions of U.S. bonds have not changed. hey are still considered risk free because the reasury…...
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The risk of default in U.S. government bonds, aside from political shenanigans like the debt ceiling debacle in the summer of 2011, lies largely with the federal budget. This is known as sovereign risk. The sovereign risk of the United States, and several other developed nations, is very low. With other countries, however, there are genuine budget issues that make default a possibility. In the Eurozone, for example, nations like Greece are struggling to meet their debt payments. With Greece, there is no ability for the government to print more money in order to cover its obligations, and that increases the sovereign risk. Nations that have their own currencies do not have this type of risk, but still have sovereign risk to the extent that they could find themselves one day without enough cash to pay their obligations.
It should be noted that part of the reason that government bonds give a return is not related as much to risk as it is to providing the incentive to invest. Governments issue debt because they need to raise funds. If there was no return given on that debt, nobody would invest. Therefore, there must be some sort of return offered, in order to entice investors. The rate is typically set in regard to the opportunity cost of capital, and the market yield will reflect the market's views about the sovereign risk associated with debt.
Thus, risk free securities are not truly risk free. There is the risk of default, although this risk is very minor. There is the risk as well that the value of the investment will not be much. In the event of hyperinflation, for example, the value of the money might be very low. However, the value will always be paid out because the Treasury can print that money. The interest rate reflects, in addition to an enticement to invest, the combined risk of default and the risk associated with expected future interest rate moves.
The newly independent states were generally rated according to high level of political, economic or social risk (not entirely untrue), which meant that the levels of interest were generally extremely high. Even more, the sums paid for interest would generally surpass the actual funds that had been received. This meant that, instead of focusing the country's resources on development and internal projects, most of it had to be spent paying off debts which were not even viable and extremely costly.
On the other hand, from an international perspective, international debt is something fundamentally essential to the financial markets. Money is made to circulate and move around, which means that entities need to be connected to the financial markets, borrow on the open markets and use that money to create added value and generate more cash flow. The fact that, in many cases in the developing world, this mechanism was in…...
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Bibliography
1. Perkins, John (2004). Confessions of an Economic Hitman. Berrett-Koehler Publishers.
2. Herz, Noreena. The Debt Threat: How Debt is Destroying the Developing World. Democracy Now! January 2005.
3. Strange, S. (1986) Casino Capitalism, Oxford, OUP
4. Block, F. (1997). The Origins of International Economic Disorder.
Effects of the financial crisis on the developing world vs. The developed world
The 2008 financial crisis began in the American banking sector but its impact was soon felt around the world. Both the developed and the developing world were affected. However, not all nations were crippled by the drying-up of credit and consumer demand to an equal degree. Some nations were derailed in their attempts to progress economically and politically; other nations, particularly in the Far East, emerged relatively unscathed.
The populations affected in different areas of the world economy also varied from nation to nation. For example, in many regions of the developing world, women often have the status of 'second class citizens' for cultural and political reasons. But the crisis in the U.S. was often called a 'male' recession, because the hardest-hit sectors were traditionally male-dominated fields, in the form of the construction industry and the…...
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References
Bernanke, Ben. (2009). Asia and the global financial crisis. Federal Reserve.
Political Backgrounder: Nova Scotia
Nova Scotia, Canada -- Political Background in the context of environmentalism
Darrell Dexter is Nova Scotia's incumbent premier and the 27th Premier of the province since the Confederation. Dexter was elected leader of the Nova Scotia New Democratic Party in 2001 and was sworn in as Prime Minster on June 18, 2009. Both he and the Nova Scotia New Democratic Party have strict views with regard to environmentalism, as the province is actively involved in becoming a global leader in green energy before 2020. As Dexter puts it, "This is about making the right decisions for our economy and our environment. e are putting our energy future where it belongs, back in Nova Scotians' hands." (New Plan To Create Jobs, Stable Electricity Prices, Cleaner Environment)
Darrel thinks about green energy as being more than a means to guarantee a safer future for people when concerning matters from an environmental…...
Certainly, one could tell from your presentation that your political past and present has not yet left you, but the valid ideas remain. My discourse is structured less on what we should do, but rather on how water is both a commodity and a public good.
Moderator: Excellent, but please make sure you don't get into a fight with Paul's rigorous political approach!
Karen akker: Right, will do. We can all understand why water is a public good: because the public drinks it, washes with it and uses it for water balloons. On the other hand, there are companies who see that water can also be a commodity and, as such, they stock the water in water balloons and them sell them, either to the state, in public-private partnerships, or directly to the population. France is a good example in this sense, but then, it was also them who had the…...
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Bibliography
1. Muldoon, Paul, and Theresa McClenaghan. 2007. "A tangled web: Reworking Canada's water laws." In Eau Canada: The future of Canada's water, ed. Karen Bakker, 245-261. Vancouver: UBC Press
2. Barlow, Maude. 2007. Blue Covenant: The Global Water Crisis and the Coming Battle for the Right Water.
3. Boyd, David. 2003. Unnatural Law: Rethinking Canadian Environmental Law and Policy. Vancouver UBC Press.
isk Management in Family Owned Businesses
A family business can be simply described as "any business in which a majority of the ownership or control lies within a family, and in which two or more family members are directly involved" (Bowman-Upton, 1991). In other words, it is a multifaceted, twofold structure consisting of the family and the business meaning that the involved members are both the part of a job system and of a family system (Bowman-Upton, 1991).
Most families seek stability, intimacy, a sense of community, and belonging through the family business (Hess, 2006). On the other hand, whenever family and business are mentioned together, a majority of people think of continuous conflict, competition and contention (Crenshaw, 2005). However, "successful family businesses do not let the family destroy the business or the business destroy the family" (Hess, 2006).
The family-owned businesses are the backbone of the world financial system. According to a…...
Caspar, C., Dias, A.K., & Elstrodt, H. (2010, January).The Five Attributes of Enduring Family Businesses. Retrieved August 15, 2012 from Downloads/McKinsey Quarterly - Jan 2010.pdfhttp://www.businessfamily.ca/cert_register_files/Web
Nestlé, a global food and beverage company, has employed various corporate-level strategies to achieve growth and sustain its market dominance. While these strategies have been largely successful, there are opposing viewpoints on their long-term implications and effectiveness.
Viewpoint 1: Acquisition-Led Growth
Nestlé's aggressive acquisition strategy has been a key driver of its growth. It has acquired numerous companies, including Gerber, Dreyer's, and Kraft Heinz, to expand its portfolio and gain market share.
Supporting Arguments:
Acquisitions provide immediate access to new markets and distribution channels. They allow Nestlé to diversify its revenue streams and reduce dependence on specific products or....
Understanding Financial Risk: A Key to Informed Investment Decisions
Financial risk is an inherent aspect of investing. It refers to the possibility of losing some or all of the invested capital due to adverse market conditions, economic downturns, or other unforeseen events. Comprehending the nature and extent of financial risk is crucial for individuals to make informed and responsible investment decisions that align with their financial goals and risk tolerance.
Assessing Risk Tolerance
The first step in making sound investment decisions is to assess one's risk tolerance. This involves evaluating how comfortable an individual is with the potential for losses. Risk tolerance is....
Investment management Risk Analysis Of Infosys Infosys is a multinational corporation that provides business consulting, information technology, and outsourcing services. As an investment option, Infosys has been a popular choice for investors looking to diversify their portfolios and potentially benefit from the growing demand for technology solutions in the marketplace. However, like any investment, Infosys carries its own set of risks that must be carefully analyzed and managed. One of the key risks associated with investing in Infosys is the volatility of the stock price. As a publicly traded company, Infosys' stock price is subject to fluctuations based on market conditions, interest....
Key Findings from Literature Review on Risk Analysis of Infosys Investments 1. Geopolitical and Economic Risks Infosys faces geopolitical risks associated with its global operations, particularly in politically unstable regions. Economic downturns and currency fluctuations can impact its revenue and profitability. 2. Competition and Market Risks Intense competition from both domestic and international IT service providers poses a threat to Infosys's market share. Emergence of new technologies and disruptive business models can disrupt its traditional offerings. 3. Operational Risks System failures, data breaches, and project delays can lead to reputational damage and financial losses. Dependence on a narrow range of clients and industries....
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