1.
What are the main types of political risk? How might each affect
international business...

Question

1.
What are the main types of political risk? How might each affect
international business activity
b.
Identify the steps managers can take to stay safe while on an
international assignment.
	
Document Preview: ASSIGNMENTWhat are the main types of political risk? How might each affect international business activityIdentify the steps managers can take to stay safe while on an international assignment.Distinguish between confiscation, expropriation and nationalization.What are the methods that businesses can use to manage political risk?

David · Accepted Answer

Political risk 
1 a) What are the main types of political risk? How might each affect international 
business activity 
The main types of political risk include confiscation, expropriation and nationalization. 
Each of these may negatively affect international business and cause to losses to the international 
business. They can result in loss of independence to operate as well as cancellation of 
permissions and rights to operate in a particular nation. 
Political risk and political instability are a threat to an international business and it is 
required to be carefully studies and analyzed before a business decides to enter a nation. The 
rules and regulations regarding FDI, FII and foreign businesses vary from a government to 
another and this at times can prove detrimental to an international business (Hunger, J. D., & 
Wheelen, T. L., 2007). 
Confiscation can lead to the government taking away a business operating in their nation 
and not even paying its value. There may be several reasons for this measure including the 
business not being appropriate for the development of the nation. But it can result in huge losses 
to the business.  
Expropriation results in the government taking away the business by paying the fair 
valuation amount and this may not be unto the expectations of the owner of the business. In this 
way the business will have to be handed over in whatever little amount is offered for the business 
or might also be used for public use. The property of the business is redistributed and this does 
result in heavy losses to the organization (Dessler, Cole Goodman & Sutherland, 2008). 
In case of nationalization, the ownership of the business is nationalized or made 
domestic. This results in restriction on transfer of profits and transfer of ownership. In this way it 
would result in the owner not being able to own the business if he is of foreign nationality and 
having to leave back the profits in the foreign country, thus causing inconvenience and losses to 
the business.  
b) Identify the steps managers can take to stay safe while on an international assignment.

1. What are the main types of political risk? How might each affect international business activity b. Identify the steps managers can take to stay safe while on an international assignment. Document...

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