It is undeniable that globalization has generally played an important role in the world economy as it has been supposed to enhance global economic growth by free trade, as well as solve some deep-seated issues like poverty and unemployment, which was analyzed in the previous reflections. Despite the fact that open markets have been expanded, many firms must still follow local rules and regulations of the countries in which they are operating. In other words, this fact highlights that the importance of understanding the political context should be treated as a key to any companies’ success.
Political risks are defined as the impact of politics on markets by all factors that may politically stabilize or destabilize a country, such as taxes, trade
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The influence of these risks is clearly dependent on the level of the investment decision. However, instead of paying more attention to mitigate the risks, there was a common misconception about the politics’ role, as some argued that the importance of public policy and its intervention in the international marketplace can be underestimated because of the trend of belittling role of government in the economy. This argument, however, ignored other aspects of the interaction between policy and international business. For instance, even though the politicians have decreased their roles in domestic economies, global problems in the financial sector and new transformation in European economy such as Brexit may reverse this trend. It is also necessary to mention that governments at all levels are more interested in several aspects of international trade that are important for economic, competitive or ethical reasons. Such misconception, as a result, led to the lack …show more content…
Therefore, it is crucial to gain more knowledge in terms of that philosophy. Specifically, there is a huge difference between autocratic governments and democratic governments, as all control is centralized in one leader or a small group of leaders with the individual rights is limited in autocratic countries while democratic governments, which is known as the most common form of government today, derive their power from the citizens. As a result, it is clearly to state that businesses likely operate in open, democratic countries as they usually offer a high level of political stability, such as the U.S, Canada and Nordic countries. At the national level, these democratic countries also have free market capitalism and a comprehensive welfare state at enhancing individual autonomy. However, history demonstrates that some global firms have chosen to conduct business with countries where the government control the industry. The complexity in doing business with that countries is obviously extensive, but also offers new opportunities for that firms to meet their high demand of scare resources like oil. Even that countries, in spite of political instability, recently have become an attractive destination for many global firms thanks to their internal strength. For instance, although the Saudi
It promotes silence on significant issues of political-economic organization that might raise questions in people’s minds about the influence of money on American Democracy. Such as issues as how much corporation should have, the roles of labor unions, healthcare, and education funding are deemed too radical to serious discussion in newspapers, television, and schools. Corporations ensure journalists who inquire too deeply into politics and raise questions about business position in society will not see their stories to the masses and that journalist’s job is to keep corporation happy but reporting issues that are irrelevant. Third, business power undermines the development of aspect of democracy. Fourth, “business power is a threat to democracy because of a new divergence between the economic interests of business
In Absence of the Federal Trade Commission In Michael Huemer’s book, The Problem of Political Authority he argues that the government does not hold legitimate authority and then proposes a form of anarcho capitalism, which he believes could eventually replace an existing democracy, specifically in the United States. I found the section concerning whether or not the government holds legitimate authority to be convincing. However, the second section of the essay directed at proposing how a system of anarcho capitalism could be put into action does not seem like a feasible alternative to government. Huemer does well to address how private security agencies and private arbitration firms could replace the current police and court systems, but does
Throughout the 20th century and into the present time, the government has played an active role in stabilizing the economy through a range of policies and actions. From the Great Depression and the New Deal policies to the financial crisis of 2008, the government has intervened in the economy in various ways to prevent economic instability and promote growth. While these interventions have often been necessary, they have also been controversial, with some arguing that they interfere with free markets and hinder economic progress. Based on the analysis of government intervention in the economy throughout the 20th century to the present time, it is clear that while government actions have been necessary to prevent economic instability and promote
As a result, the impact of large enterprises on the government is becoming more and more big, and big enterprises seem to learn more and more how to achieve their own interests in the
In larger and more developed countries like America and China, the government is more apart of their people’s personal and daily lives.
Expanding internationally seems like an obvious opportunity to expand a company, increase sales, and decrease risk. What most overlook is how to properly avoid the risk associated with international expansion by understanding a foreign country’s political background. Each of the four categories of political risk is crucial when considering international expansion. Systemic political risk, like currency convertibility, devaluation, and hyperinflation, impacts all business. Procedural political risk impacts the processes and costs of accomplishing tasks.
While some Americans blame the government for it being undemocratic, the elected officials have provided us with evidence that America is undemocratic. An ideal democracy is how the government puts the people’s interest before the businesses interest. In Lindblom’s story “The Market as Prison”, it introduces a mechanism called the automatic punishing recoil mechanism (APRM). This provides businesses to have a privileged position in society.
Part A. The primary externals influences to Starbucks PESTEL describes a framework of macro-environmental factors used in the environmental factors component of strategic management. PESTEL analysis includes some several factors: political, economic, social, technological, legal and environmental factors. This report analyzes the factors which have main impact on Starbucks. 1.
Globalization and Nation States Globalization has integrated and intertwined the economies of the world. In the world today, every nation has become independent on every other nation, be it through trade or through finance. Developing countries today are attracting large rounds of foreign investment, and this foreign investment is coming from the developed countries. Thus, the money of the developed countries is today invested in the developing countries.
In order to compare and contrast varying types of government within two or more countries, one must have a clear definition of Government and know the purposes it serves. Therefore, I did some research and I have established that Government is a group that exercises dominant power over a nation, state, society or other body of people. Governments are commonly responsible for constructing and implementing laws, handling money, and defending the general population from external threats, and may have other obligations or privileges. All over the world, there are many different types of government within countries. Each kind has its advantages as well as disadvantages regarding the general well-being of its peoples and economy.
However, globalization is controversial. The proponents of globalization claim that it gives an opportunity to the poor countries to grow and develop economically. On the other hand, opponents claim that free market has benefitted multinational corporations at expense of the local people, culture and enterprises. The management concepts create a significant
The aim of this assessment is to reflect on what I have learned this semester regarding the module of Business in Global Context; from the lectures with the professor, the case studies done in class and the three previous patchworks that we worked on. We have learned that there are different internal and external components that affect the business environment, from corporate social responsibility to cultural and institutional framework; organizations must take into consideration all the factors related to the different parts of its environment. For the topic discussion, I will be discussing globalization and how it has affected the global business environment along with the key aspects and the different point of views regarding it.
4.0 Implementation 4.1 Broader perspective Globalization is affected by various factors that drive towards its existence and formation in the society and a set of these macroeconomic factors. As per this analysis we can get an overview of the current economy of the country that helps the researcher to make relevant suggestions and recommendations that can benefit the economy as well as society to make them believe and trust that the globalization enhances their behaviour and life style. PEST Analysis: Source: Visual.ly website PEST Analysis of Saudi Arabia Political environment Giddens and Griffiths (2006, p. 59) states that mainly there are three reasons why politics has become one of the main drivers of globalization.