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Political Risks of MNC Local Operations in a Host Country

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Discuss the different ways political events in a host country may affect local operations of an MNC

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The expert discusses the different ways political events in a host country may affect local operations of an MNC.

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Some political risks of a host country that may influence local operations of an MNC are: (1) Business regulations of the host country's government, (2) Procedural hazard, and (3) Unexpected catastrophes. A foreign firm that is involved in FDA of a host country may be vulnerable to significant changes of its host country's government business regulation. The business regulation may be aimed at prevailing market structure, concentrated on a specific business area, or directed at a small functional business area. Potential logic for business regulations consists of recent government organization, fluctuation in the important outlook on economic areas, or modifications of leading government leaders who are accountable for the host country's budgetary regulations. For example, in 1998, the Malaysian government's ...

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