Chapter 1

Chapter 1 Student’s Name Institution Course Professor Date Chapter 1 Part 1 1-3. Discuss examples of recent macropolitical risk events and the effect they have or might have on a foreign subsidiary. What are micropolitical risk events? Give some examples and explain how they affect international business. Foreign subsidiaries must make significant modifications due to recent macro-political risk events like Brexit. UK businesses like Eurocams, an auto components supplier, are adapting to Brexit uncertainty. In anticipation of import tariffs and standards inspections after a no-deal Brexit, Eurocams is moving its distribution operations to the Netherlands. This strategic change requires significant relocation expenditures and disrupts supply systems. Thus, distribution process changes threaten production efficiency and may result in job losses. Meanwhile, micro-political risk occurrences affect international company operations locally but still strongly. Bristol-based skateboard maker Shiner illustrates Brexit anxiety. The corporation is storing goods in the EU to prevent supply chain disruptions. Shiner may also create EU legal entities as a micro-level response to political risks (Chapter 1, 2019). This localized strategy shows how smaller enterprises might respond to political uncertainty. Eurocams and Shiner’s different experiences demonstrate macropolitical and micropolitical risks. Political developments like Brexit cause industry-wide changes that need huge companies like Eurocams to make strategic improvements. Micropolitical events, albeit confined, require personalized responses from smaller enterprises like Shiner, underlining the necessity for nuanced and context-specific tactics to negotiate the complex political risks in international commerce. 1-4. What means can managers use to assess political risk? What do you think is the relative effectiveness of these different methods? At the time you are reading this, what countries or areas do you feel pose political risk sufficient to discourage you from doing business there? Managers use several ways to measure political risk because they must grasp the intricate interaction of political forces in international business contexts. Political risk analysis, which assesses a nation’s political stability, business intervention, and political climate, is a popular method (Chapter 1, 2019). This strategy helps managers assess political uncertainty and operational risks. Country risk ratings from Moody’s and political risk insurance are further management instruments. These materials provide structured political insights and quantitative risk assessments for a region. Political stability, economic performance, and regulation are usually considered when ranking countries. Business owners in politically sensitive areas can protect themselves from political losses with political risk insurance. Managers can estimate political risk by monitoring geopolitical events. Being aware of political changes helps businesses anticipate disruptions and adjust their strategy in a continuously changing global context. In addition, local networks are essential for understanding regional political dynamics. Local contacts may offer unique viewpoints and real-time information not available through formal channels. These strategies can be helpful depending on information accuracy and political event dynamics. Ratings and assessments give a framework, but unexpected and abrupt political shifts may undermine their pr...