International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
firms that continue to invest and manufacture abroad while ignoring
their home country are often accused of creating domestic
unemployment problems and may be subject to political pressure,
from the government. Indian government encourages business houses
to go and perform outside in steel, healthcare, mining, textile and
automobile.
2. Host Country Political Environment
If the actual benefits of foreign firms are shared in terms of
employment, taxes and social security with the locals, political
atmosphere tends to be hospitable. If it is felt that the foreign firms
contribute nothing to the well being of the nation, it may produce a
hostile reaction from the business community and labor organization,
which in turn puts pressure on the government. In extreme cases, this
may lead to either political turmoil or the appropriation of the assets
of the foreign firm.
Mc Donald had to face a change in the ruling party, in Israel.
When the National Religious Party (NRP) came into the power it
demanded that McDonald should change its practices or be shut
down.
3. Global Political Environment
This may be describes as the combined politics of the home country,
the host country and the other countries in the world.
Multilateral agreements between international organizations,
such as GAAT, the UNO and the Commonwealth, may constitute an
impediment to free trade as well as to the nature and scope of the
operation of international firms. Embargos, Cartels, free trade pacts
and customs’ unions allow a few nations to enjoy competitive
advantages, whilst others lose their business prospects. However,
there may also be advantages, e.g., the commonwealth generalizes
Systems of Preferences (CWGSP) offers good opportunities to all
commonwealth countries to supply and receive goods and services at
concessional rates, which ultimately give them a competitive edge
over non-commonwealth nations.
Global politics can influence business in vastly varying ways.
For example the economic embargo on Iraq by the Security Council
of the United Nations in 1991 meant that conducting trade with that
country was illegal for all international firma. Another example is
China Ordering Microsoft to stop selling. “Windows 95” as it
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