About this Typology About this Typology This typology breaks down the traditional boundaries between the nonprofit and private sectors and draws definition to this new institutional animal--part business-part social--the social enterprise.
What can a multinational company do to minimize exposure to political risk? By Albert Phung Updated February 8, — Adverse political actions can range from very detrimental, such as widespread destruction due to revolution, to those of a more financial nature, such as the creation of laws that prevent the movement of capital.
The Two Types of Political Risk In general, there are two types of political risk, macro risk and micro risk. Macro risk refers to adverse actions that will affect all foreign firms, such as expropriation or insurrection, whereas micro risk refers to adverse actions that will only affect a certain industrial sector or business, such as corruption and prejudicial actions against companies from foreign countries.
All in all, regardless of the type of political risk that a multinational corporation faces, companies usually will end up losing a lot of money if they are unprepared for these adverse situations.
For example, after Fidel Castro's government took control of Cuba inhundreds of millions of dollars worth of American-owned assets and companies were expropriated.
Unfortunately, most, if not all, of these American companies had no recourse for getting any of that money back. How to Minimize Exposure to Political Risk So how can multinational companies minimize political risk?
There are a couple of measures that can be taken even before an investment is made. The simplest solution is to conduct a little research on the riskiness of a country, either by paying for reports from consultants that specialize in making these assessments or doing a little bit of research yourself, using the many free sources available on the internet such as the U.
Department of State's background notes. Then you will have the informed option to not set up operations in countries that are considered to be political risk hot spots.
While that strategy can be effective for some companies, sometimes the prospect of entering a riskier country is so lucrative that it is worth taking a calculated risk. In those cases, companies can sometimes negotiate terms of compensation with the host country, so that there would be a legal basis for recourse in the event that something happens to disrupt the company's operations.
However, the problem with this solution is that the legal system in the host country may not be as developed and foreigners rarely win cases against a host country. Even worse, a revolution could spawn a new government that does not honor the actions of the previous government.
Buying Political Risk Insurance If you do go ahead and enter a country that is considered at risk, one of the better solutions is to purchase political risk insurance.
Multinational companies can go to one of the many organizations that specialize in selling political risk insurance and purchase a policy that would compensate them if an adverse event occurred.
Because premium rates depend on the country, the industry, the number of risks insured and other factors, the cost of doing business in one country may vary considerably compared to another. Certain conditions, such as trying other channels for recourse and the degree to which the business was affected, must be met.
Ultimately, a company may have to wait months before any compensation is received.Kim Alter has endeavored to bring business practices to nonprofit organizations and international development agencies, encouraging their sustainability through earned income, in more than 30 countries worldwide for over a dozen years..
She is founder and Principal of Virtue Ventures, a management consulting firm specializing in social . Identifying global market segments, to the extent that they exist, makes it more feasible to implement a GMS, since cross-market segments are identifiable and targetable with similar marketing mix variables.
Aug 27, · Effective management of political risk can enable companies to enter and navigate new markets and business environments, providing a potential for competitive advantage.
I do think it is important to go into why Reactionaries think Cthulhu always swims left, because without that they’re vulnerable to the charge that they have no a priori reason to expect our society to have the biases it does, and then the whole meta-suspicion of the modern Inquisition doesn’t work or at least doesn’t work in that particular direction.
Jun 26, · Increasingly in the 21st century, Washington politics, precedent-setting court decisions and various widespread social movements make an awareness of . lausannecongress2018.com: News analysis, commentary, and research for business technology professionals.