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Forms of Political Risk

Global marketers can avoid legal conflicts by understanding the reasons conflicts arise in the first place. Describe some of the sources of political risk. Specifically, what forms can political risk take?

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The major concern will be whether the investment in the foreign country will give adequate returns or not. This will be dependent on environmental factors of the country, which will define the risk and return matrix of the country.

The main political risk factors that could jeopardize business operations is a part of external audit. A very important factor is the country's political climate and stability. If the political situation is unstable then the environment is unfavorable for the business. Similarly high government debt or budget deficits/surpluses are also unfavourable.
Other factors are:
- Tax Laws and other economic laws
- Foreign trade regulations
- Import tariffs and quotas
- Restrictions on international financial flows
- Environmental protection laws
- Copyright ...

Solution Summary

This solution explains the many forms that political risk can take.