Question

How important is political risk in deciding whether to locate a business or branch of a business in a country?

Answer 1

It is very important to consider political risk before moving business or its expansion to a particular location. Political risk involves political instability, volatility in laws , governing operations of the business and repatriation of funds. Even unstable government, can take control of the business firms in order to negotiate with the world institutions. In this scenario, people or target audience, will reduce their demand and will not focus on goods other than the necessity goods. So, in this scenario, a business should be very careful before moving to a location and in this regard, political risk should be properly considered and analyzed.