Question

Given the added political and economic risks that appear to exist overseas, are multinational enterprises more or less risky? 

Answer 1

The political and economic risks that are encountered overseas affect multinational enterprises in diverse ways. The political dangers impact international business, resulting in a decline in its income and extreme instances of complicated business strategy. In cases where governments differ in ideologies, the company will be unable to convert foreign currency, import and export goods, and supplies, and protect other assets in differing nations (Narula et al., 2005). The political risk may result from the change in the nation's leadership, advancement in the country's business environment, and a rapid deterioration that results in questionable business relations.

The economic challenges that affect multinational businesses result from sudden economic changes resulting from the local economic environment and global business targets. The suitability of infrastructure involves energy sources, technology, transportation means, and financial sources encountered in the home country and transacting nations (Zhu et al., 2020). Additionally, challenges faced in institutions, violence, crimes, and frequent alleviated currency exchange rates affect the businesses between nations. Therefore the political and economic challenges have impacted some business relations in some countries with adverse effects.

 

 

 

 

 

 

The political and economic risks that are encountered overseas affect multinational enterprises in diverse ways.