Quick Summary
Diagram
Important Table
| Point | Meaning | Example / Use |
|---|---|---|
| Expropriation | Government takes assets | High risk |
| Policy Change | New rules or taxes | Business uncertainty |
| Political Instability | Conflict or unrest | Operational disruption |
| Trade Restrictions | Tariffs or bans | Export-import impact |
Best 10 Marks Answer
Political Risk in International Business is an important topic in International Business Environment. It helps managers understand how global economic, political, legal, cultural and technological forces affect business decisions.
Political risk is the possibility that political decisions, instability or government actions may negatively affect international business operations.
In international business, this concept is useful because firms operate across countries where markets, laws, currencies, cultures and competition are different. A business must analyse these factors before entering a foreign market or expanding globally.
For example, a company planning to sell products in another country must study customer culture, exchange rate, trade barriers, legal rules, political stability and local competition.
Conclusion: Therefore, Political Risk in International Business helps businesses reduce risk, identify opportunities and make better global business decisions.
Tips and Tricks to Remember
- ✅ Mention political stability as key factor.
- ✅ Use examples like tariffs and policy change.
- ✅ Companies use risk analysis before entry.
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