ABSTRACT
The purpose of this chapter is to give an overview of political systems around the world and the regulatory environment that firms are likely to encounter, as well as to discuss the concept of political risk. Specifically the chapter will:
Define a variety of political systems and their view of business;
Discuss the relationships among government, business, and society and the views that governments hold of business and foreign direct investment, as well as restrictions and incentives relating to investment;
Outline the various types of political risk a company may encounter, including forced divestment, unwelcome regulations, and interference in operations;
Discuss the assessment of political risk, including internal and external sources of information, and the country and company characteristics that influence this form of risk;
Consider the management of political risk through financial, management, logistics, and marketing defensive and integrative approaches.
Give examples throughout to illustrate the points being made.
