How Does Multi National Corporations Minimize Investment And Political Risk
Answer ONE of the following questions: Discuss how multi-national corporations can minimize investment and political risks through their choice of market entry strategy
Intro :
Gt về globalization and reasons companies go approach. Obviously, with the impact of globalization trading and traveling around the world are become easier, comfortable and easily accessible. As the result, in all countries around the world, the economic conditions have been developed and these significant improvements make several companies become wealthier in both advanced and developing countries. As we know, the multi-nation corporation’s purpose is to maximize their profit by making use of all these resources to invest not only in their country's …show more content…
Political risk insurance protects against the hazard that a government will take some action that causes the insured to experience a large financial loss. Even though at a macro level, political risk and catastrophes are very difficult to manage, however, at the company level, political risk can be could be handled. This comes at quite a cost, but best used as an absolute fail-safe solution, especially in combination with other, more practical political risk management strategies. An example about political risk insurant could be an automobile manufacturer. This company set up a plant in a developing country and it suffers a risk of losing its plant following a coup in the country. If after the coup, the national government declares its ownership of all formerly private factories, political risk insurance could compensate the auto manufacturer for the loss of its …show more content…
However, all the institutions mentioned above provide insurance for different types of political risks not all types of political risks. These agencies provide insurance cover to a limited extent of investment [such limit of insurance liability varies with each agency]. Therefore, PRI does not completely insulate investors from losses owing to political risks. They have different principle and their insurance coverage may be applicable only w.r.t. specific industry and specific geographical location.one notifiable issue is that buying political risk insurance does not guarantee that a company will receive compensation immediately after an adverse
Intro :
Gt về globalization and reasons companies go approach. Obviously, with the impact of globalization trading and traveling around the world are become easier, comfortable and easily accessible. As the result, in all countries around the world, the economic conditions have been developed and these significant improvements make several companies become wealthier in both advanced and developing countries. As we know, the multi-nation corporation’s purpose is to maximize their profit by making use of all these resources to invest not only in their country's …show more content…
Political risk insurance protects against the hazard that a government will take some action that causes the insured to experience a large financial loss. Even though at a macro level, political risk and catastrophes are very difficult to manage, however, at the company level, political risk can be could be handled. This comes at quite a cost, but best used as an absolute fail-safe solution, especially in combination with other, more practical political risk management strategies. An example about political risk insurant could be an automobile manufacturer. This company set up a plant in a developing country and it suffers a risk of losing its plant following a coup in the country. If after the coup, the national government declares its ownership of all formerly private factories, political risk insurance could compensate the auto manufacturer for the loss of its …show more content…
However, all the institutions mentioned above provide insurance for different types of political risks not all types of political risks. These agencies provide insurance cover to a limited extent of investment [such limit of insurance liability varies with each agency]. Therefore, PRI does not completely insulate investors from losses owing to political risks. They have different principle and their insurance coverage may be applicable only w.r.t. specific industry and specific geographical location.one notifiable issue is that buying political risk insurance does not guarantee that a company will receive compensation immediately after an adverse