Political Risk Essay

Political guess is what happens when a comp any or companies flavor a series of semi policy-making changes that could threaten its situation in a country. Political Threat is a situation when a community would at last suffer a series of hard conditions on a certain(a) foodstuff. Political Changes are a series of changes in spite of appearance the government of a country. Micro Risk a type of governmental take chances that threatens the activities of a certain industry. Macro Risk a type of political risk that threatens all the industries. Violent Situations Situations that risk the integrity of the volume, the infrastructure, the economy among others in the country. exercise Requirements when a country forces a company to modify its circumstances to persist in the market. Introduction We studied the influence of political risk in moving in all around the world analyzing its definition through it.It is of import to take into account that in business it is crucial to know near the political situation of a country because political risk is non al shipway presented in the same way, it depends on the characteristics of the countries involved in the problem. We had a previous knowledge given by the teacher and we also had tuition obtained from the news we are constantly reading, but we did not have some examples of that because all the cases that could be examples of political risk took place in Latin America all of them were extremely valid and onsonant with the definition we had of political risk, up to now we concluded that it could be less inspiring for our classmates because those cases are very well-known. That is the important reason we had to search cases that were not piece of the public domain in the Colombian context and we decided to focus on cases from different part of the world and in that order of ideas we could understand how companies display case political risk. This field of force will help us to improve our knowledge i n business and politics. ArgumentsFirst of all is very important to understand the definition of political risk. It is what happens when a company or companies face a series of political changes that could threaten its situation in a country. Any company could be affected by political changes, as well as any country could be affected by political risk situations differential coefficient of political changes. The factors that lead to political risk are revolutions, wars, general elections, political reforms, among others. There are two types of risks that could affect a company, a market or an industry.Macro risk and micro risk the first is the champion that affects every company in every industry, and the back is the cardinal that affects a specific industry and its companies. Another factor that threatens the development of an industry within a country is violence it could be classified in one-third different kinds terrorism, open-war and kidnapping. The national requirements are also a reason for political risk this is when a country has a very high and arduous protectionism or when the government forces companies to have a determined number of local anaesthetic products.When companies are victims of political risk there are some ways to fight it. If the company has security problems, the solution would be to contract a security agency and also an insurance agency if the problem is because of the local or national requirements, the company should get a partner from that character or country and the last one would be to create political pressure to fight the political problems. The first study case we erect is about a Ukrainian company that was affected by political risk in Russia. Ukrainian iron and steel company Azovstal do its debut in the international bond markets this week, successfully selling $175m of bonds in loan participation note format yesterday (Thursday) through give voice leads ING and Russias Moscow Narodny But while the company w anted to deepen up to $200m in five year funds, Ukraines political excitableness and the threat of further disputes with Russia over shove off put paid to those ambitions as investors shied away from buying that typo and length of risk without a concession. (Ukraines Azovstal overcomes politics to sell $175m. (2006). Euroweek, 1-1. Retrieved from http//search. proquest. com/docview/231056813? accountid=45662) This Company was the third largest steel producer in Ukraine by the year 2006, it had plans for expansion into the international market beginning with Russia. When Azovstal ultimately ventureed into the Russian market it had to face many problems from Moscow and Kiev. Both nations reached one of its worst moments in their dealings during that time.Viktor Pynzenyk, then the finance minister resigned as a protest over the decision of Kiev to pay $95 per 1000 cubic meters of gas to Russia when they used to pay $50. That decision was do very close to the parliamentary electi on of that month and it was very bad for the then president of Ukraine Viktor Yushchenco. This crisis, at its worst moment, generated the worst threat from the Russian government to not sell more gas to Ukraine. Here we goat see the Macro risk situation that Azovstal went through because the want of gas supply could totally affect every Ukrainian company.Azovstal, which had already aforethought(ip) to convert its machinery to use coal, decided to anticipate it to foil itself of shortage later many weeks both governments reached an agreement, even so, Azovstal had to make many reforms, it had to modify its internationalization plans that were based on the entrance into the Slavic countries because of the frequent diplomatic conflicts that it had with Belarus eventually they decided to enter into the Middle East market.The second study case we found was about a Chinese company when it tried to enter into the Vietnamese market it had to face a prices war, very high tariffs and th e lack of help from the government and people. The Lifan Group would particularly welcome new opportunities. controversy in motorcycles has become intense, and profit margins are falling. The group has a self-aggrandising share of the export market to Vietnam, but there too it faces apace growing competition and vicious price wars. (Business The communist entrepreneur face value. (2003, Mar 29). The Economist, 366(8317), 74-62. Retrieved from http//search. proquest. com/docview/224030774? accountid=45662). Lifan Group entered into the Vietnamese market in the late 90s but it had to face very bad conditions because it was a unusual company, besides this, Hanoi implemented very strong protectionist politics to prevent the national industry to be affected by foreign companies this is a Macro risk situation a rack upst Vietnamese politics.Another fact that did not help too much was that Lifan was a Chinese company and the relations between Beijing and Hanoi were not the best. To fac e this situation Lifan company countered by two fronts in first instance it allied with a Vietnamese company for assembling cars in Vietnam, they do that in a direct way in order to improve their situation and they obtained beneficial results because it reduced the high tariffs and the negative influence from the ones who dont trustingness in China.If the cars were assembled in Vietnam it would help more to Hanoi than if they imported them. The second fact that helped Lifan Group to face this situation of political risk was the gain of political influence in the original China when the directives of Lifan reached positions in the Chinese communist party, they ensure the Chinese help in case of any misfortune. Conclusion As future business people we know the immensity to keep in touch with the daily information of the world.Political Risk rates in a country are an essential part of a business, by them we could know if it is feasible to invest in a country or in a company in a dete rmined country, also if the debut of a company in other country will be successful or not and if the people in that foreign country will accept the company and its products or services based on their politics or government.