Risks of Investing In Dictatorship-Led Economies

Risks of Investing In Dictatorship-Led Economies

In the modern world, international corporations face several risks as they invest in foreign nations. Although there are several benefits associated with foreign investments, it is important that companies consider the risks that they may face once they invest in a given foreign nation (Coplin and O’Leary 57). Of importance in this case is to consider the political and economic risks in the host nation. For example, in a dictatorship led nation, a company will have to consider a number of political and economic factors that may prove to be potential risks.

In this case, the CEO must understand that although the leadership in the country of interest is a potential business associate with the company, the politics of the country may change any time, and affect the company in a number of ways. For instance, the regime is prone to change or face political and social unrest, as it is common in nations where dictatorship regimes exist (Coplin and O’Leary 59). The civil society or armed militia may demand change in leadership, which may involve political change. The company, being one of the companies in good relationship with the government, may be one of the targets. This further implies that the company will suffer great loses.

In most dictatorship led nations, there are high risks of international alienation, as the international community seeks for change in political system (Tuller 92). Whenever such a situation occurs, there are a number of economic sanctions against the target nation. The economic system in the country can be adversely affected, resulting in poor trade and low profit. In addition, marketing becomes increasingly difficult with time. The company will find itself in very critical situation (Coplin and O’Leary 64).

By not choosing to market in the country, the company will lose certain opportunities that it could have utilised to increase profitability. Given that the company enjoys great political and social support in the country of interest, there are possibilities that if it decides to invest therein, it will enjoy political support, ability to develop strong monopolies and good supply of security and other amenities. All these factors will help the company develop strong competitive advantage over its competitors in the market……………………………………………………………………

Place your order now with Reliablepapers.com
and experience the difference of letting the professionals do the work for you!
Our Process is Simple
Our Simple process

Order Now

Place Order