Question

Reason why a corporate stakeholder may decide not to relocate to other country

(political risk/economic condition/currency risk , worker welfare, stokeholder welfare)

Answer 1

Followings are the reasons for which a corporate stakeholder may decide not to relocate to another country-

• Economic factors

If there is no economic stability in the foreign country, then there is chance of market volatility. So that the investment securities might lose their value. Hence the net profit margin will get reduce for the stakeholders.

• Currency exchange rate

When the value of domestic currency is depreciated in comparison to the value of foreign country, then export business will get hamper. The exchange rate will be high for the stakeholders. During the inflationary period the shares trading will get more affected if the exchange rate is high.

• Political factors

Government policies and tax implications like FATCA, ERISA and Dodd Frank will increases the tax burden for stakeholders. So that their net returns will get reduced.

• Worker welfare

Getting work permit in foreign countries also expensive for the stakeholders. Apart from this workers welfare fund and health concerns are also important to carry business in foreign countries. Corporate social responsibility also important from workers welfare point of view.

Hence these are the main reasons for which a stakeholders is not interested to relocate to other countries.