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social, political problems of developing countries
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Political, Economic and Social Risks of Developing Countries
International trade barriers, for most, have long fallen. In developed
nations, markets are becoming saturated; specific natural resources
are often exhausted or non-existent and labour rates and material
resources are too costly. Meanwhile, emerging economies such as China,
India, or even Brazil are finally opening themselves up to the rest of
the world. For businesses, this means a chance to take advantage of
opportunities that are too often scarce at home. However, opportunity
does not come without risks; foreign countries have different
political, economic and social frameworks which all affect MNCs in
different ways, especially in developing countries where
socio-political and economic grounds may at times remain unstable.
International managers can do very little to prevent the difficulties
they face, and have
no control over events that may influence those risks. It is therefore
in the interest of any international manager not only to understand
the different risks they face but also to be aware of the methods used
to assess such risks.
Although the question divides risks into three different categories
(political, economic and social), it has nevertheless been noted that
all risks have political, economical and social implications.
Therefore, to avoid confusion, this discursive essay will employ
Griffin & Putsay's risk categorisation[1]:
1. Governmental risks: risks that arise out of governmental action
and/or influence (including legal and regulatory frameworks…)
2. Non-governmental risks: risks that arise out of non-governmental
actions (terrori...
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[1] Griffin, R. & Pustay, M (1999) International Business, A
Managerial Perception, New York, Addison-Wesley.
[2] Holt, D. (1998) International Management, New York, The Dryden
Press
[3] Economist "The world in 2003"
[4] Holt, D. (1998) International Management , New York, The Dryden
Press
[5] Holt, D. (1998) International Management , New York, The Dryden
Press.
[6] Griffin, R. & Pustay, M (1999) International Business, A
Managerial Perception, New York, Addison-Wesley.
[7] ibid
[8] Woods, M. (1995), International Business, London, Chapman &Hall.
[9] The Economist "The world in 2003"
[10] The Chambers Encyclopaedia (2001), Edinburgh, Chambers Harrap
Publishers.
[11] Hill, C. (2003), International Business, New York, The
McGraw-Hill Irwin.
For each of the four globalization strategies, describe the risks associated with that strategy and the potential returns from that strategy. __________________________________
India Challenges India presents lucrative business opportunities, but both foreign and domestic enterprises face formidable challenges in conducting their businesses here. India is a complex market due to regional diversity, large rural-urban divide, dominant unorganized markets and multiple legal and administrative systems. Furthermore, a complex bureaucracy and lack of proper infrastructure facilities magnify these challenges. The biggest challenge that most multinational companies face is the Indian governance framework, which is intertwined between the Central and State structures. The companies face several complex bureaucratic procedures and are forced to comply with both state and central rules and regulations. Moreover,
Our economic development will forever be defined as our ability to succeed internationally. PwC forecasts India’s real annual GDP growth until 2050 at 8.9 percent, Vietnam’s at 8.8 percent, and China’s at 5.9 percent. The list of fast-growing emerging markets goes on and on. The U.S. forecast is a meager 2.4 percent, comparable with most Western economies. The domestic companies that are likely to see incremental growth in the coming decades are those that are not only doing business internationally, but that are developing the strategic skill set to master doing business across cultures. Cross-cultural core competence is at the crux of today’s sustainable competitive advantage. For example, political environment will tell us, as to how and why political leaders control, whether and how of international business. Legal environment, both national and international will tell us about many kinds of laws by which business firms must work. The cultural environment will tell us about attitudes, beliefs and opinions important to business people. Economic environment will tell us about the economic system being followed by the host country, which may or may not be different from home country. It will also explain the variables such as level of development, human resources, Gross Domestic Per Capita and consumption patterns that determine a firm’s ability to do business. Geography will tell us about location, quantity, and quality of the world’s resources.
In recent decades, the process of globalization has accelerated and the world economy has become increasingly interdependent. The rise in the number of businesses that extensively operate in more than one foreign country, which is known as multinational corporations, plays an important role in the ongoing procedure of globalization. The United Nations has reported that multinational corporations hold one-third of world’s productive assets and control 70 percent of world trade (Schermerhorn et al., 2014). As there is a considerable growth in international businesses, worldwide economy is becoming more highly competitive. The global economy not only offers great opportunities for multinational enterprises but also on the other hand, creates many difficulties for them. Therefore, success in the large-scale economy requires a number of elements. One of the major determinants is dependent on global managers. In the operation of organizations, managers may encounter different international management challenges that restrict their business development. These challenges often include issues associated with the host countries, the global workforce diversity management, management across cultures, difficulties in competitive global business environment as well as in the process of global planning and controlling. This essay is going to discuss the above international management challenges in a broad sense and giving illustration in aspects of each challenge.
four adults in ten who can read and write and less than one in four
Shangquan, Gao. “Economic Globalization: Trends, Risks, and Risk Prevention.” Development. United Nations, 2001. Web. 10 Dec. 2013. .
Developing countries have fewer resources to obtain than the developed countries like America as a result of different social and environmental factors. Currently, developing countries are catching up by doing researches on the biosensor or self-diagnose devices within the range they can afford. The developing world is striving to improve their quality of life.
“…increasing international trade and financial flows since the Second World War have fostered sustained economic growth over the long term in the world’s high-income states. Some with idle incomes have prospered as well, but low-income economies generally have not made significant gains. The growing world economy has not produced balanced, healthy economic growth in the poorer states. Instead, the cycle of underdevelopment more aptly describes their plight. In the context of weak economies, the negative effects of international trade and foreign investments have been devastating. Issues of trade and currency values preoccupy the economic policies of states with low-income economies even more than those with high incomes because the downturns are far more debilitating.1”
Wells, L.T. (1998). Good and fair competition: Does the foreign direct invest face still other risks in emerging markets? Malden, MA: Blackwell.
Ibid; See also Marina Azzimonti and Pierre-Daniel G. Sarte, Barriers to Foreign Direct Investment Under Political Instability, Vol. 93, 3 Economic Quarterly 287-315 (2007).
Multinational enterprise (MNE) is “a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collinson 2012, p.38) that has at least one office in different countries but centralised home office. These offices coordinate global management in the context of international business. MNEs have increasingly essential influence on the development of the global economy and coordinate with other companies in different business environments. However, there are many issues involved with how MNEs operate well overseas, especially in emerging markets (EMs) (Cavusgil et al., 2013, p.5).
Expansion across seas can be very advantageous and lucrative for many companies; however, there are many risks associated with doing business overseas, and companies that intend to expand internationally should be careful and strategic when doing so. Not only do companies run the risk of experiencing a product fail due to differences in cultures, they also face severe political and economic risks as well.
Globalization, love it or hate it, but you can’t escape it. Globalization may be regarded as beneficial from an economic and business point of view, but however cannot be perceived the ditto when examined from the social sciences and humanities side of it. Globalization can be argued as a tool for economic growth, advancement and prosperity through co-operation between the developed and developing countries. The pro-globalization critics argue that the benefits that globalization brings to developing nations surpasses or outcasts the negative impacts caused by globalization and may even go a step further to state that it is the only source of hope for developing nations to prosper and stand out. However, the real question to be asked is as to what extent are the positives argued upon without taking into account the negative aspects of globalization towards developing countries. Moreover, how many developing countries out of many are exactly benefiting or even prospering from globalization is another question to consider. Therefore, my paper will dispute that indeed growth and advancement provided by globalization to developing countries is beneficial in short-term, but in the long-run, it will only bring upon negative impacts and challenges due to the obstacles involved such as exploitation of labour and resources, higher increase in poverty, and effects of multi-national corporations on local businesses and the economy, and to an extent the effects on the developing country itself.
THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's activities by encouraging and offering support or by discouraging and banning or restricting its activities depending on the government. Here steps in international law. International law recognizes the right of nations to grant or withhold permission to do business within its political boundaries and control its citizens when it comes to conducting business. Thus, political environment of countries is a critical concern for the international marketer and he should examine the salient features of political features of global markets they plan to enter. THE SOVEREIGNITY OF NATIONS From the international laws point of view a sovereign state is independent and free from external control; enjoys full legal equality; governs its own territory; selects its own political, social, economic systems; and has the power to enter into agreements with other nations. It is extension of national laws beyond a country's borders that much of the conflict in international business arises. Nations can and do abridge s...
In this section of my work, I will look at equality in the world, and