International Business – Political Stability of the MarketsContentsIntroductionIntensity of Political InstabilityImpact of Political RiskManaging Political RiskMaking Political Challenge into StrengthConclusionReferencesBibliographyIntroductionPolitical stability of the markets that are proposed to make an investment of foreign expansion is a vital considerations for multinational corporations. Therefore proper vigilance is necessary from the international managers to assist the organization in making pertinent decision regarding the investments in foreign markets. The political risks in different countries affect the business of the organizations in different ways. The political climate in different countries are shifted significantly in recent times. An urge for democracy has started in many countries and the business work is waiting for the consequences. The instability of these countries are main concerns for various organizations who plans to invest in these unstable countries and who have already invested in these countries (Bremmer, 2005).
In todays global business, the corporations keenly search the potential markets. And before they invest in these potential foreign markets, they analyses the political, economic, social, and technological environment of the proposed markets. The instabilities of the business environment is definitely a concern for the global corporations. At the same time, more than being reluctant to invest in such a politically instable country, they prefer identifying ways to eliminate or minimize the effects of these instability into their business. The managers of these organizations must be highly vigilant enough to adopt pertinent measures for making appropriate decisions in such an instable business environment.
The organizations would prefer politically stable countries with obvious sense. But with the increasing competition and globalization trends, the organizations adopt every opportunities of profitability in the international business environment. Pertinent risk management techniques are employed by the organizations to carry on the business smoothly even in tough situations in different markets. The intensity of the instability is the major concern for the organization. If it is identified that carrying out the business process will be an impossible task in a particular market, even after proper analysis of risk management, the organization will decide not to invest in such a market despite its market potential. But the organizations would adopt such a tough decision only after appropriate analysis of every
towards optimal business development practices.
2.1 Globalization
In addition to dealing with globalization, the organizations are also involved in a number of national security issues. For example, with regard to the U.S.-Russia and China trade balance, the organizations in the Asian Infrastructure Investment Bank have been involved in many of the global security issues. The organizations in this regard have also been involved in discussions with both Russia and China on other global security issues.
2.2 Regional/Economic Cooperation
The organizations in the Asian Infrastructure Bank have worked closely with China, Iran, India, Portugal, the U.S., and Germany on key issues such as the Asia Infrastructure Investment Bank.
2.3 Cooperation with Member States
The American Friends of China (AFChD) is a key player at the Asian Infrastructure Bank and the European-China Trade Bank which have been involved together in some level of the U.S.-China trade cooperation activities, according to its website. The AFChD has been in charge of the Asia Infrastructure Bank and the European-China Trade Bank since 2005 and has been under U.S. supervision since December 2006.
Other organizations the AFChD has been involved with include the International Association of International Financial Journalists (IAJ), the International Investment Commission (IIC), the Financial Institutions and Credit Suisse (FERS) and the International Bank for Reconstruction and Development (IBID). The IBID focuses on the global stabilization of monetary and social security institutions and the international development sector as well as on the political, economic, and financial security of developing countries. The IBID was established in 2004 in Geneva to promote cooperation among various countries.
The AFChD worked closely with the European Central Bank (ECB) in developing countries in both the crisis of 2008 and the Eurozone crisis of 2009. The European Central Bank also worked closely with the AFChD.
AfPak is a member of the AFChD when it was a member of the ECB in 2007.
The organization also provided financial assistance to various organizations in Afghanistan and Nepal during the 2001 earthquake. The organization has been involved in the development of the Afghan economy from the start. Since its inception, many organizations the AFChD has been involved in the development of global capital markets (GMPs). The organization has also facilitated the development of financial institutions and their transfer activities in the market. The members of this organization also support the development of international banking and real estate development and various other activities.
AfPak is focused on the African market with the organization assisting a number of countries from the Congo to the Niger River basin in Africa. The organization has coordinated with more than 500 African financial institutions including the African Investment Bank, the Ghanaian Bank, U.S. Agricultural Development Bank and BMO International.
2.4 Globalization in the Development Sector
AfPak has also been involved in building the international infrastructure to address issues such as water quality, access to capital and the infrastructure sector in key regional nations. The American Friends of China (AFChD) is a key member and the African Infrastructure Investments Fund (AGF) was established to fund the development of the country in the development sector during the period 2002-2007.
2.5 Economic Development to Develop Countries
This is mainly the economic development