POLITICAL

ENVIRONMENT

POLITICAL ENVIRONMENT

•MOST MNC`S HAVE TO FACE COMPLEX POLITICAL ENVIRONMENTAL PROBLEMS.

•DEVELOPED COUNTRIES ARE ALSO QUITE CONCERNED ABOUT FOREIGN DIRECT INVESTMENTS.

•IN INDIA THE COUNTRY WAS A HIGHLY REGULATED CLOSED ECONOMY WHICH DISCOURAGED FDI.

• THE COMPANIES SHOULD KEEP IN MIND THAT POLITICAL CLIMATE DOES NOT REMAIN STATIONARY.

•POLITICAL RISK ANALYSIS.

•INDICATORS OF POLITICAL INSTABILITY.

•ATTITUDES OF NATIONS.

•POLICIES OF THE HOST GOVERNMENT.

POLITICAL RISK ANALYSIS

•NUMBER OF POLITICAL RISKS WHICH ARE TO BE FACED BY INTERNATIONAL MARKETERS.

•THE MARKETERS FACE THE HOST GOVERNMENT ARE,

•CONFISCATION.

•EXPROPRIATION.

•NATIONALIZATION.

•DOMESTICATION.

•CREEPING EXPROPRIATION.

CONFISCATION

•IT IS THE PROCESS OF A GOVERNMENT TAKEN OWNERSHIP OF A PROPERTY WITHOUT COMPENSATION.

•EX.,

•THE CHINESE GOVERNMENT SEIZED AMERICAN PROPERTY AFTER THE CHINESE COMMUNISTS TOOK POWER IN 1949.

EXPROPRIATION

•IT DIFFERS FROM CONFISCATION IN THAT THERE IS SOME COMPENSATION THOUGH NOT NECESSARILY JUST COMPENSATION.

NATIONALISATION

•IT INVOLVES GOVERNMENT OWNERSHIP AND IT IS THE GOVERNMENT THAT OPERATES THE BUSINESS BEING TAKEN OVER.

DOMESTICATION•FOREIGN COMPANIES RELINQUISH CONTROL AND

OWNERSHIP EITHER COMPLETELY OR PARTIALLY TO THE NATIONALS.

•IT MAY SOMETIMES BE A VOLUNTARY ACT THAT TAKES PLACE IN THE ABSENCE OF CONFISCATION OR NATIONALIZATION.

•USUALLY IT CAUSES OF THIS ACTION ARE EITHER POOR ECONOMIC PERFORMANCE OR SOCIAL PRESSURES.

INDICATORS OF POLITICAL INSTABILITY• IN ORDER TO ASSESS A POTENTIAL MARKETING ENVIRONMENT , A

COMPANY SHOULD IDENTIFY AND EVALUATE THE RELEVANT INDICATORS OF POLITICAL DIFFICULTY.

• ECONOMICS HARDSHIP, INTERNAL DISSENSION AND INSURGENCY AND IDEOLOGICAL, RELIGIOUS, RACIAL AND CULTURAL DIFFERENCES.

•HUMAN NATURE INVOLVES MONASTERY (THE URGE TO STAND ALONE) AS WELL AS SYSTEMS (THE URGE TO STAND TOGETHER) AND THE TWO CONCEPTS PROVIDE ALTERNATIVE WAYS OF UTILIZING RESOURCES TO MEET A SOCIETY`S NEEDS.

•MONASTERY ENCOURAGES COMPETITION BUT SYSTEMS EMPHASIZE COOPERATION.

ATTITUDES OF NATIONS•THE POLITICAL CLIMATE IS NOT COMPETE WITHOUT AN

INVESTIGATION OF THE ATTITUDES OF THE CITIZENS AND GOVERNMENT OF THE HOST COUNTRY.

•THE NATIONALS ATTITUDE TOWARDS FOREIGN ENTERPRISES AND CITIZENS CAN BE INHOSPITABLE.

•NATIONALS ARE OFTEN THESE CONCERNED WITH FOREIGNERS INTENSIONS WITH REGARD TO EXPLOITATION AND COLONIALISM.

POLICIES OF THE HOST GOVERNMENT•UNLIKE CITIZENS INHERENT HOSTILITY, THE GOVERNMENT'S

ATTITUDE TOWARDS FOREIGNERS IS OFTEN RELATIVELY SHORT-LIVED.

•GOVERNMENT POLICY FORMULATION CAN AFFECT BUSINESS OPERATIONS EITHER INTERNALLY OR EXTERNALLY.

• THE EFFECT IN INTERNAL IS FIRM'S OPERATIONS WITHIN HOME COUNTRY.

• THE EFFECT IN EXTERNAL IS FIRM`S ACTIVITIES IN ANOTHER COUNTRY.

•ALTHOUGH AN EXTERNAL GOVERNMENT POLICY IS IRRELEVANT TO FIRM`S DOING BUSINESS ONLY IN ONE COUNTRY, SUCH A POLICY CAN CREATE COMPLEX PROBLEMS FOR FIRMS DOING BUSINESS IN COUNTRIES THAT ARE IN CONFLICT WITH EACH OTHER.