Political Environment.....

2. POLITICAL ENVIRONMENT
•MOST MNC`S HAVE TO FACE COMPLEX POLITICAL ENVIRONMENTAL
PROBLEMS.
•DEVELOPED COUNTRIES ARE ALSO QUITE CONCERNED ABOUT FOREIGN
DIRECT INVESTMENTS.
•IN INDIA THE COUNTRY WAS A HIGHLY REGULATED CLOSED ECONOMY
WHICH DISCOURAGED FDI.
• THE COMPANIES SHOULD KEEP IN MIND THAT POLITICAL CLIMATE DOES
NOT REMAIN STATIONARY.

3. •POLITICAL RISK ANALYSIS.
•INDICATORS OF POLITICAL INSTABILITY.
•ATTITUDES OF NATIONS.
•POLICIES OF THE HOST GOVERNMENT.

4. POLITICAL RISK ANALYSIS
•NUMBER OF POLITICAL RISKS WHICH ARE TO BE FACED BY INTERNATIONAL
MARKETERS.
•THE MARKETERS FACE THE HOST GOVERNMENT ARE,
•CONFISCATION.
•EXPROPRIATION.
•NATIONALIZATION.
•DOMESTICATION.
•CREEPING EXPROPRIATION.

5. CONFISCATION
•IT IS THE PROCESS OF A GOVERNMENT TAKEN OWNERSHIP OF A PROPERTY
WITHOUT COMPENSATION.
•EX.,
•THE CHINESE GOVERNMENT SEIZED AMERICAN PROPERTY AFTER THE
CHINESE COMMUNISTS TOOK POWER IN 1949.

6. EXPROPRIATION
•IT DIFFERS FROM CONFISCATION IN THAT THERE IS SOME COMPENSATION
THOUGH NOT NECESSARILY JUST COMPENSATION.

7. NATIONALISATION
•IT INVOLVES GOVERNMENT OWNERSHIP AND IT IS THE GOVERNMENT THAT
OPERATES THE BUSINESS BEING TAKEN OVER.

8. DOMESTICATION
•FOREIGN COMPANIES RELINQUISH CONTROL AND OWNERSHIP EITHER
COMPLETELY OR PARTIALLY TO THE NATIONALS.
•IT MAY SOMETIMES BE A VOLUNTARY ACT THAT TAKES PLACE IN THE
ABSENCE OF CONFISCATION OR NATIONALIZATION.
•USUALLY IT CAUSES OF THIS ACTION ARE EITHER POOR ECONOMIC
PERFORMANCE OR SOCIAL PRESSURES.

9. INDICATORS OF POLITICAL INSTABILITY
•IN ORDER TO ASSESS A POTENTIAL MARKETING ENVIRONMENT , A COMPANY SHOULD
IDENTIFY AND EVALUATE THE RELEVANT INDICATORS OF POLITICAL DIFFICULTY.
•ECONOMICS HARDSHIP, INTERNAL DISSENSION AND INSURGENCY AND IDEOLOGICAL,
RELIGIOUS, RACIAL AND CULTURAL DIFFERENCES.
•HUMAN NATURE INVOLVES MONASTERY (THE URGE TO STAND ALONE) AS WELL AS
SYSTEMS (THE URGE TO STAND TOGETHER) AND THE TWO CONCEPTS PROVIDE
ALTERNATIVE WAYS OF UTILIZING RESOURCES TO MEET A SOCIETY`S NEEDS.
•MONASTERY ENCOURAGES COMPETITION BUT SYSTEMS EMPHASIZE COOPERATION.

10. ATTITUDES OF NATIONS
•THE POLITICAL CLIMATE IS NOT COMPETE WITHOUT AN INVESTIGATION OF
THE ATTITUDES OF THE CITIZENS AND GOVERNMENT OF THE HOST
COUNTRY.
•THE NATIONALS ATTITUDE TOWARDS FOREIGN ENTERPRISES AND CITIZENS
CAN BE INHOSPITABLE.
•NATIONALS ARE OFTEN THESE CONCERNED WITH FOREIGNERS INTENSIONS
WITH REGARD TO EXPLOITATION AND COLONIALISM.

11. POLICIES OF THE HOST GOVERNMENT
•UNLIKE CITIZENS INHERENT HOSTILITY, THE GOVERNMENT'S ATTITUDE TOWARDS
FOREIGNERS IS OFTEN RELATIVELY SHORT-LIVED.
•GOVERNMENT POLICY FORMULATION CAN AFFECT BUSINESS OPERATIONS EITHER
INTERNALLY OR EXTERNALLY.
•THE EFFECT IN INTERNAL IS FIRM'S OPERATIONS WITHIN HOME COUNTRY.
•THE EFFECT IN EXTERNAL IS FIRM`S ACTIVITIES IN ANOTHER COUNTRY.
•ALTHOUGH AN EXTERNAL GOVERNMENT POLICY IS IRRELEVANT TO FIRM`S DOING
BUSINESS ONLY IN ONE COUNTRY, SUCH A POLICY CAN CREATE COMPLEX PROBLEMS
FOR FIRMS DOING BUSINESS IN COUNTRIES THAT ARE IN CONFLICT WITH EACH OTHER.