Assess the Impact of a Political Environment on International Business.

| April 3, 2014

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(Stating your thesis)
Purpose of Research: The aim of this essay is to provide a clear understanding of the how a political environment can affect a countries economy as well as businesses that are operating within the country. Looking at the factors and impact of these political unrest by providing case studies like countries within the Middle East etc.
Background of the Study: A political environment within a country affects business organisations and the economy resulting to a risk factor that could cause them to suffer a loss. The political environment could change as a result of the actions and policies of governments at all levels, from the local level to the federal level. Businesses need to be prepared to deal with the fallouts of government politics.
Thesis Statement: The political environment in international business consists of a set of political factors and government activities in a foreign market that can either facilitate or hinder a business’ ability to conduct business activities in the foreign market. There is often a high degree of uncertainty when conducting business in a foreign country and this risk is often referred to as political risk or sovereign risk.
Main Body:
(Developing your ideas & provide specific support for your thesis)
1. First Main Idea: Presenting the factors that contribute to a political revolution that influence the international business landscape including the economy.
Background information on these factors: WHAT’S IT ALL ABOUT?
• Economic System
• Government System
• Trade Agreements
• Formal and Informal Trade Barriers
• Political Instability
2. Second Main Idea: Analysing and evaluating the impact of these factors.
• Who else is there to blame for these politically unstable environment? Could the government be blamed for it?
– Even in countries perceived as politically stable, political change can have a significant impact on business. This may simply be because government changes the legal framework, but it could also be that a change of government changes the political attitudes towards business. This may result in less ‘business-friendly’ policies (trade agreements problems), changes in business taxation (trade barriers) and perhaps political changes that affect the firm’s marketing.
• Changes in Regulations with evidence
– Governments could change their rules and regulations, and this could have an effect on a business. For instance, after the accounting scandals of the early twenty-first century, the United States Securities and Exchange Commission became more focused on corporate compliance and the government introduced the Sarbanes-Oxley compliance regulations of 2002. This was a response to the social environment that called for such change to make public companies more accountable.
• Impact on the economy with evidence
– The political environment in a country affects its economic environment. The economic environment, in turn, affects the performance of a business organisation. In the United States, for instance, there are significant differences in Democratic and Republican policies. This has implications for factors such as taxes and government spending, which in turn affect the country’s economy. A higher level of government spending tends to stimulate the economy, for instance.
3. Third Main Idea: Drawing conclusion and bringing in language from thesis statement
• How can a political environment be managed when it occurs
• The importance of monitoring the political environment
(Re-instate your thesis)
Reintroduce Thesis Statement: Stressing the significance of the thesis rather than repeating it, encourage readers to look at the political environment in international business which can be complex and poses some serious risks to companies seeking operation within it. As well as, the factors that contribute to the international political environment including the type of political system and economic system in which it will be operating in. While trade agreements may aid, organisations may have to contend with both formal and informal trade barriers. Finally, some foreign markets are in politically unstable areas where it may cause a risk not only within the loss of money but also life. The risks may be worth it because much of the economic growth in the coming years will come from emerging and developing international markets.
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Category: International Organizations and Global Governance

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