PARIS GRADUATE SCHOOL OF MANAGEMENT
INTERNATIONAL EXECUTIVE PROFESSIONAL MBA
COURSE: INTERCULTURAL MANAGEMENT
STUDENT NAME: ENOCH TETTEH QUAYNOR VANDERPUYE
STUDENT NUMBER: GH06251
DATE ENROLLED: SEPTEMBER 2006 (18 Months)
Discuss examples of recent macropolitical risk events and the effect they have or might have on a foreign subsidiary. What are micropolitical risk event? Give some examples and explain how they affect international business.
Alan M. Rugman and Simon Collinson in International Business 4th Edition define Political risk as the probability that political forces will negatively affect a firm's profit or impede the attainment of other critical business objectives. The nature of political risk can best be examined at both the legal and governmental as well as the non-legal and extra governmental levels. Types of political risk are macro political risk and micro political risk.
Whereas the legal/governmental sources of macro political risk stems from newly elected government, new overarching trade agreements, general changes to policies or laws relating to foreign investors or investments, the non-legal/extra governmental sources are coup or civil war, military attacks from other nations, internal terrorist attacks, general corruption, mafia-type activities like the enormous bureaucratic web of Russia and general property expropriation.
Macropolitical risk event is one that affects all foreign enterprises/firms doing business in a country or region in the same general way. Expropriation, the governmental seizure of private businesses coupled with little, if any, compensation to owners, is an example of a macro political risk. Communist governments in Eastern Europe and China expropriated private firms following World War II. Fidel Castro did the same in Cuba from 1958 to 1959. However, in more recent years, governments in Angola, Chile, Ethiopia, Peru and Zimbabwe have expropriated private enterprises. In some cases like that of Zimbabwe, this stems from indigenization laws, which require that nationals hold...