As a political risk analyst, you have been asked to prepare a short report detai

Question

As a political risk analyst, you have been asked to prepare a short report detailing the possible consequences to business operations of a multi-national enterprise (MNE) working in the oil extraction sector in a politically-unstable country in the Middle East. Your clients wish to know the possible effects of expropriation, confiscation, or domestication of their business. Explain what each of these actions might comprise. Suggest potential counter-measures that your client could adopt to pre-empt this occurrence, or to improve the situation should action be taken against you.

Explanation / Answer

Whever a country engages in international trade and marketing, it becomes prone to various politicl risks.

Confiscation means that assets of the company might be seized without any payment to the compnay. It is the biggest threat to the company,

Expropriation means that an investment is seized but a major share of the investment is reimbursed to the company.

Domestication means that the middle eastern countries may ask your client to encourage local employment and management,

The client can take an insurance against all these risk. Also, the client should take into account the risks experinced by other companies in this region and try to devise policies to tackle such situations.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.