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.
Hill, C., Wee, C. and Udayasankar, K. 2012.International Business:An Asian Perspective. 8th ed. Singapore: McGraw-Hill.
1John D. Daniels and Lee H. Radebaugh, International Business: Environment and Operations (USA: Addison Wesley Longman, Inc., 1998), 181.
Globalization has affected every aspect of the business community in one way or another. Globalization in a simple sense is a business’s movement from one country to another. This is done for a number of reasons; amount of readily available resources, labor market, increased number of customers, and to ultimately become more profitable. There is a decisive advantage for a business to move overseas, but there are a number of drawbacks globalization creates on the local economy. When businesses become an international entity the home country experiences increased unemployment rates, the human resource department now has to manage across borders, prices of goods fluctuate, and forcing wages to decrease for unskilled workers and increase for skilled ones. To protect businesses and employees from unfair practices, various organizations have been created to enforce the policies set forth. Both international government organizations and non-governmental organizations play a vital role in enforcing the policies. It has been difficult to maintain a coordinated effort between developed and underdeveloped in terms of labor laws and tax incentives. Businesses will often seek out the locations where they can benefit the most.
For each of the four globalization strategies, describe the risks associated with that strategy and the potential returns from that strategy. __________________________________
“…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”
15. Hill, Charles W.L. International Business: Competing in the Global Marketplace. New York : McGraw-Hill, 2007.
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,
Select a country of interest to you and discuss and analyse the political, economic and legal characteristics of that country, and the implications for doing business there. (Chapter 2)
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.
Brinkman, June E., and Richard L. Brinkman. "Corporate Power and the Globalization Process." International journal of social economics 29.9/10 (2002): 730-52. Print.
Among the other developments I have found that International business is the most important developments within a company, it’s the main key to make the company profitable and recognized by the world. It connects the company with the outside world economy. Moreover, international business is the transaction between two rejoins or more, it can be by investment, sales and transportation. This essay will showcase the future of international business, advantages and disadvantages of international business, the legal and ethical side of international business, and the risks of international business.
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.
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).
The increase of globalisation has presented businesses with unexampled opportunities for global investment and trade. Deemed by Rosabeth Moss Kanter as “one of the most powerful and pervasive influences on nations, businesses, workplaces, communities and lives” (1995, as cited in Schermerhorn et al., 2014), globalisation has allowed many multinational corporations (MNCs) to expand coordination and control of their activities to foreign countries by forming subsidiaries and joint ventures. This is necessary to establish a presence in the increasingly competitive international market and is now a pre-requisite for business survival and growth. To maintain and improve their global competitiveness, MNCs must manage both local and foreign enterprises effectively. This concept of international management can be simply described as the “management in organisations with business interests in more than one country” (Schermerhorn et al., 2014, p. 90) and is applicable to MNCs, who are defined as organisations with “extensive international operations in more than one foreign country” (Schermerhorn et al., 2014, p. 101). Undeniably, administrating operations on such a vast basis will present challenges. These challenges have been thoroughly analysed in numerous studies, which have also offered methods to develop effective policies and practices that allow MNCs to best control these factors. Despite the immense range of suggested solutions made available, these difficulties remain a steadfast force that managers must consider in every decision made for the company. Whilst the foundation of each individual challenge seemingly differs so greatly from one another, there is a connection between most that can be referred back to cultural difference...
In this section of my work, I will look at equality in the world, and