Political events affecting the local operation

Question

Discuss about the different ways in which the political events in the host country affects the local operations of MNC.

Answer 1

Answer to this question can be organized on the basis of three types of political risk: Transfer risk, control risk, and operational risk. Transfer risk occurs from the uncertainty about cross-border flows of the capital, payments, know-how, and so on. Operational risk occurs from uncertainty about the policies of the host country which affects the local operations of MNCs. Control risk occurs from the uncertainty about the policy of the host country relating to the ownership and control of the local operations of the MNCs.