Managing Political Risk
SLIDE 1
Adaptation
Creating more of a forward-looking approach, integrating political risk into strategic planning
• First, partnerships help companies leverage expansion plans. They can be informal
arrangements or include joint ventures, strategic alliances, and cross-holdings of company
stock.
• Second, localization entails modifying operations, the product mix, or some other business
element—even the company name—to suit local tastes and culture.
• Third, development assistance allows an international business to assist the host country or
region in improving the quality of life for locals.
• Fourth, insurance against political risk can be essential to companies entering risky business
environments.
• Political Influence:
Information Gathering
Staying informed about industry and societal trends
Collect qualitative and quantitative data and developing capabilities to assess the impact
Political Influence
Recruiting individuals with political expertise
Lobbying is the policy of hiring people to represent a company’s views on political matters.
Lobbyists meet with a local public official to influence his or her position on issues relevant to
the company. Bribes often represent attempts to gain political influence. But the Foreign
Corrupt Practices Act forbids U.S. companies from bribing government officials or political
candidates in other nations (except when a person’s life is in danger).
SLIDE 2
• Relations among countries can influence the political economy of nations and the pace
of economic development. Favorable and strong political relationships foster stable
business environments. Favorable political relations among countries expand business
opportunities, lower risk, and promote economic development.
• To generate stable business environments, some countries have turned to multilateral
agreements—treaties concluded among several nations, each of whom agrees to abide
by treaty terms even if tensions develop.
• The United Nations (UN; www.un.org) was formed after the Second World War to
provide leadership in fostering peace and stability around the world. The UN and its
many agencies provide food and medical supplies, educational supplies and training,
and financial resources to poorer member nations. The UN receives its funding from
SLIDE 1
Adaptation
Creating more of a forward-looking approach, integrating political risk into strategic planning
• First, partnerships help companies leverage expansion plans. They can be informal
arrangements or include joint ventures, strategic alliances, and cross-holdings of company
stock.
• Second, localization entails modifying operations, the product mix, or some other business
element—even the company name—to suit local tastes and culture.
• Third, development assistance allows an international business to assist the host country or
region in improving the quality of life for locals.
• Fourth, insurance against political risk can be essential to companies entering risky business
environments.
• Political Influence:
Information Gathering
Staying informed about industry and societal trends
Collect qualitative and quantitative data and developing capabilities to assess the impact
Political Influence
Recruiting individuals with political expertise
Lobbying is the policy of hiring people to represent a company’s views on political matters.
Lobbyists meet with a local public official to influence his or her position on issues relevant to
the company. Bribes often represent attempts to gain political influence. But the Foreign
Corrupt Practices Act forbids U.S. companies from bribing government officials or political
candidates in other nations (except when a person’s life is in danger).
SLIDE 2
• Relations among countries can influence the political economy of nations and the pace
of economic development. Favorable and strong political relationships foster stable
business environments. Favorable political relations among countries expand business
opportunities, lower risk, and promote economic development.
• To generate stable business environments, some countries have turned to multilateral
agreements—treaties concluded among several nations, each of whom agrees to abide
by treaty terms even if tensions develop.
• The United Nations (UN; www.un.org) was formed after the Second World War to
provide leadership in fostering peace and stability around the world. The UN and its
many agencies provide food and medical supplies, educational supplies and training,
and financial resources to poorer member nations. The UN receives its funding from
