Macro and Micro Political Risk

Compare and contrast macro governmental encounter with micro semipolitical risk. Discuss policies to combat their impacts on internationalistic task activities. Strategic planning is essential anterior to any soulfulness or company deciding to engage in international strain whether as direct/indirect investment or through trade. An evaluation of risks should be considered and strategies developed accordingly prior to any potential investment in a outside(prenominal) country. iodine such risk which requires consideration is political risk i.e. governmental or societal actions and policies, originating either within or outside the host country, and negatively affecting either a select group of, or the majority of, foreign business operations and investments. (Simon, 1982). This displace be broken down in macro political risk i.e. a risk which affects wholly foreign enterprise at all trains and micro political risk, risk which affects only specific industries or received companies. According to Rugman (2009) types of political risk can be categorise into two i.e. legal/governmental and non-legal/extra-governmental. Below is an in-depth discussion addressing these risks and the approaches which can be adopted in order to succeed as a foreign investor.

A significant factor to point out when considering macro political risk is that of government. If a country demonstrates political stability and an agreeable policy towards foreign investment then(prenominal) investors may be more inclined to invest in a country where the risk of changes government and legislation is low. One such risk at a macro level which is difficult to predict is expropriation i.e. the confiscation of foreign property with puny no compensation. In 1938 the American Oil Fields were expropriated by the Mexican government (Mises, 2006) and more recently in afterwards program of indigenization (Rugman, 2008) Zimbabwe seized farms and private businesses without giving any compensation to the owners (www.mg.co.za). Changes... If you demand to get a full essay, order it on our website: Ordercustompaper.com

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