This chapter discusses political risk, government relations, and alliances for multinational corporations. It covers analyzing different types of political risks at both the macro and micro level. Key political risks include expropriation, government corruption, and terrorism. The chapter also examines techniques for managing political risk, such as developing bargaining power, using integrative or defensive strategies, and engaging in proactive lobbying. Finally, it discusses managing alliances with other companies and host governments. Successful alliances depend on factors like partner selection, cooperation agreements, and knowledge management.
Political forces affecting international businessMis bah
Political Forces : Affecting international business
1. Ideological forces
2. Government ownership of business
3. Privatization
4. Government stability
5. Country-Asset risk analysis
Political forces affecting international businessMis bah
Political Forces : Affecting international business
1. Ideological forces
2. Government ownership of business
3. Privatization
4. Government stability
5. Country-Asset risk analysis
This presentation by David Lewis was made at the first session of the 2014 Global Forum on Competition (27-28 February) which focused on fighting corruption and promoting competition. Find out more at http://www.oecd.org/competition/globalforum
This presentation, by Estefania Santacreu-Vasut, Professor in Economics, ESSEC Business School and Chris Pike, OECD Competition Division, was made during the discussion “Gender and competition”, held during the 17th OECD Global Forum on Competition on 29 November 2018. More documents and presentations on this topic can be found at oe.cd/gnc.
This presentation by Frédéric Jenny, Chair, OECD Competition Committee, was made during the discussion “How can competition contribute to fairer societies?” held during the 17th OECD Global Forum on Competition on 29 November 2018. More documents and presentations on this topic can be found at oe.cd/cfs.
Political Risk Assesment-Lecture-02(Helen Deresky)Shifur Rahman
David A. Schmidt has offered a three-dimensional framework that combines
Political Risks,
General Investments, and
Special Investments.
Political Risks can be broken down into three basic categories:
Transfer Risks,
Operational Risks, And
Ownership-control Risks.
Prepared by
Md. Sohel Chowdhury
Assistant Lecturer
Dept.of Management Studies
University of Barisal
Governance and Corruption in International BusinessIlan Alon
Reviews and presents an overview of corruption research in international business, highlighting particular moderators such as trust, regime type, and learning.
We present results from a laboratory experiment identifying the main channels through which different law enforcement strategies deter organized economic crime. The absolute level of a fine has a strong deterrence effect, even when the exogenous probability of apprehension is zero. This effect appears to be driven by distrust or fear of betrayal, as it increases significantly when the incentives to betray partners are strengthened by policies offering amnesty to “turncoat whistleblowers”. We also document a strong deterrence effect of the sum of fines paid in the past, which suggests a significant role for salience or availability heuristic in law enforcement.
This presentation by Jonathan Baker, Research Professor of Law at American University Washington College of Law, was made during the discussion “How can competition contribute to fairer societies?” held during the 17th OECD Global Forum on Competition on 29 November 2018. More documents and presentations on this topic can be found at oe.cd/cfs.
Advantage series regulatory convergence studyGrayling
The gradual demise of divergent national regulations is inevitable as our economies, markets and societies globalize with exponential speed, and every day we see examples of regulatory convergence, whereby standards, policies and laws align across different geographies.
This convergence is occurring both bilaterally between countries, and at a regional/international and global level.
What does this mean for international organizations? How can they maximize the benefits and mitigate the risks associated with regulatory convergence?
This study examines this phenomenon in detail and provides some signposts to creating advantage.
This presentation by David Lewis was made at the first session of the 2014 Global Forum on Competition (27-28 February) which focused on fighting corruption and promoting competition. Find out more at http://www.oecd.org/competition/globalforum
This presentation, by Estefania Santacreu-Vasut, Professor in Economics, ESSEC Business School and Chris Pike, OECD Competition Division, was made during the discussion “Gender and competition”, held during the 17th OECD Global Forum on Competition on 29 November 2018. More documents and presentations on this topic can be found at oe.cd/gnc.
This presentation by Frédéric Jenny, Chair, OECD Competition Committee, was made during the discussion “How can competition contribute to fairer societies?” held during the 17th OECD Global Forum on Competition on 29 November 2018. More documents and presentations on this topic can be found at oe.cd/cfs.
Political Risk Assesment-Lecture-02(Helen Deresky)Shifur Rahman
David A. Schmidt has offered a three-dimensional framework that combines
Political Risks,
General Investments, and
Special Investments.
Political Risks can be broken down into three basic categories:
Transfer Risks,
Operational Risks, And
Ownership-control Risks.
Prepared by
Md. Sohel Chowdhury
Assistant Lecturer
Dept.of Management Studies
University of Barisal
Governance and Corruption in International BusinessIlan Alon
Reviews and presents an overview of corruption research in international business, highlighting particular moderators such as trust, regime type, and learning.
We present results from a laboratory experiment identifying the main channels through which different law enforcement strategies deter organized economic crime. The absolute level of a fine has a strong deterrence effect, even when the exogenous probability of apprehension is zero. This effect appears to be driven by distrust or fear of betrayal, as it increases significantly when the incentives to betray partners are strengthened by policies offering amnesty to “turncoat whistleblowers”. We also document a strong deterrence effect of the sum of fines paid in the past, which suggests a significant role for salience or availability heuristic in law enforcement.
This presentation by Jonathan Baker, Research Professor of Law at American University Washington College of Law, was made during the discussion “How can competition contribute to fairer societies?” held during the 17th OECD Global Forum on Competition on 29 November 2018. More documents and presentations on this topic can be found at oe.cd/cfs.
Advantage series regulatory convergence studyGrayling
The gradual demise of divergent national regulations is inevitable as our economies, markets and societies globalize with exponential speed, and every day we see examples of regulatory convergence, whereby standards, policies and laws align across different geographies.
This convergence is occurring both bilaterally between countries, and at a regional/international and global level.
What does this mean for international organizations? How can they maximize the benefits and mitigate the risks associated with regulatory convergence?
This study examines this phenomenon in detail and provides some signposts to creating advantage.
PMI Sydney Chapter Presentation 11 10 05Bryan Fenech
Presentation describing how Project Portfolio Management is a means of applying modern market and investment disciplines to the internal management and governance of large organisations.
Arrangements by which politically connected firms receive economic favors are a common feature around the world, but little is known of the form or effects of influence in business-
government relationships. We present a simple model in which influence requires firms to provide goods of political value in exchange for economic privileges. We argue that political influence improves the business environment for selected firms, but restricts their ability to fire workers. Under these conditions, if political influence primarily lowers fixed costs over variable costs, then favored firms will be less likely to invest and their productivity will suffer, even if they earn higher profits than non-influential firms. We rely on the World Bank's Enterprise Surveys of approximately 8,000 firms in 40 developing countries, and control for a number of biases present in the data. We find that influential firms benefit from lower administrative and regulatory barriers (including bribe taxes), greater pricing power, and easier access to credit. But these firms also provide politically valuable benefits to incumbents through bloated payrolls and greater tax payments. Finally, these firms are worse-performing than their non-influential counterparts. Our results highlight a potential channel by which cronyism leads to persistent underdevelopment.
2. THE NATURE AND ANALYSIS OF
POLITICAL RISK
The state poses a direct threat to MNCs due to their policy
changes
Political risk – the unanticipated likelihood that a business’s
foreign investment will be constrained by a host
government’s policy
Examples of risk
3. THE NATURE AND ANALYSIS OF
POLITICAL RISK
Risk of doing business in China
Short-term interest
Piracy and Counterfeit
Government censorship
Tension between US and China
Selling American goods in China
Yuan
Safety of goods
4. Macro and Micro Analysis of Political
Risk
Macro Political Risk Analysis – analysis that reviews
major political decisions likely to affect all enterprises
in the country
Micro Political Risk Analysis – analysis directed toward
government policies and actions that influence
selected sectors of the economy or specific foreign
businesses in the country
5. MACRO RISK ISSUES AND
EXAMPLES
Large concern for MNCs if country doesn’t have a
market driven economy
Russia’s control on currency
India’s legal system
Ways around it
Vietnam’s joint venture
Fear of foreign government taking control of
companies
Government Corruption
7. MICRO RISK ISSUES AND
EXAMPLES
Usually invovlve industry regulations, taxes on specific
types of business activity, and restrictive local laws
Some MNCs are treated different than others
US steel companies
Impact of WTO and EU regulations
Anti-Dumping Act
General Electric and Honeywell
Ryanair
South American export policies
8. TERRORISM AND ITS OVERSEAS
EXPANSION
Terrorism – the use of force or violence against others to
promote political or social views
What is their ultimate goal?
Three types of terrorism
Classic terrorism
Amateur terrorism
Religiously motivated terrorism
Examples
Effect of terrorism on MNCs
How should they prepare?
9. ANALYZING THE EXPROPRIATION RISK
Expropriation – the seizure of businesses by a
host country with little, if any, compensation to the
owners
Indigenization laws – laws that require nationals to
hold a majority interest in an operation
Who is most at risk?
Ways to avoid expropriation
10. THE ROLE OF OPERATIONAL
PROFITABILITY IN RISK ANALYSIS
Companies most concerned if they will make a profit
Government regulations that may restrict profit
Having to buy materials from a local company
Restriction on the amount of profit that can be taken
out of the country
Laws regarding the wages and salaries that are
paid to employees
11. MANAGING POLITICAL RISK AND GOVERNMENT
RELATIONS: DEVELOPING A COMPREHENSION
FRAMEWORK OR QUANTITATIVE ANALYSIS
Political Risks
Transfer Risks: government policies that limit the
transfer of capital, payments, production, people, and
technology in and out of the country
Operational Risks: government policies and
procedures that directly constrain management and
performance of local operations
Ownership-control Risks: government policies or
actions that inhibit ownership or control of local
operations
Russia’s actions against Exxon Corporation
12. DEVELOPING A COMPREHENSION
FRAMEWORK OR QUANTITATIVE
ANALYSIS
General Nature of Investment
Conglomerate Investment:
Vertical investments:
Horizontal investments:
13. DEVELOPING A COMPREHENSION
FRAMEWORK OR QUANTITATIVE
ANALYSIS
Special Nature of Investment
Relates to the sector of economic activity, technological
sophistication, and pattern of ownership
Three sectors of economic activity
Primary sector:
Industrial sector:
Service sector:
Technological sophistication
Difference?
Patterns of ownership
16. TECHNIQUES FOR RESPONDING TO
POLITICAL RISK
Governments and MNCs must develop political strategies in order
to prevent risks
Relative bargaining power analysis
Integrative, Protective, and Defensive Techniques
Proactive Political Strategies
17. RELATIVE BARGAINING POWER
ANALYSIS
MNC bargaining position power > host country where it is
operating
Technology
Bargaining power dependent on
Worldwide perception of MNC
Experience
Legitimacy
Government intervention possible
19. INTEGRATIVE, PROTECTIVE, AND
DEFENSIVE TECHNIQUES
Protective and defensive techniques
Microsoft prefers protective technique
Mixed Strategy
Food industry
Defensive Strategy
Steel Industry
20. PROACTIVE POLITICAL
STRATEGIES
Proactive political strategies: lobbying, campaign financing,
advocacy, and other political interventions designed to shape and
influence the political decisions prior to the impact on the firm
Political system & distribution of power determines strategy
Transportation, Power & Water
Government influence via Nongovernment Organizations
24. ALLIANCE LIFE CYCLE
1. Alliance Start Up
2. Alliance Hockey stick Growth
3. Alliance Professional
4. Alliance Mature
5. Alliance Sustaining
25. DIVORCES
Legal Issues
Conditions of Termination
Disposition of Assets and Liabilities
Dispute Resolution
Distributorship Arrangements
Protection of Proprietary Information and Property
Rights over Sales Territories and Obligations to Customers