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What is a non quantitative approach in a business? and why is it so popular for...

What is a non quantitative approach in a business? and why is it so popular for firms to quantify their political risks?

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Answer #1

What is a non-quantitative approach in a business?

“Non Quantitative or qualitative approach to business is defined as making decisions by talking to customers, taking their opinion, understanding their beliefs and values. It’s about people and their opinion about your business.”

The non-quantitative approach to business can be used to discuss a problem with a small sample group of people one on one in an unstructured manner and use it as a basis for making a quantitative analysis for a larger audient or target segment.

The nonquantitative or qualitative approach measures other parameters besides figures, data, and statistics, some of them are as follows:

  • Individuals mind
  • Perception
  • Beliefs
  • Emotions
  • Intentions

We can use nonquantitative approach for business discussion, to discuss a few as follows:

  1. Conduction a personal interview telephonic or face to face where an informal discussion can be initiated on an unstructured topic, the interviewer can get a good insight into the ideas, belief, and thought the process of the individual.
  1. Group discussion and Conference calls can also be initiated to discuss initial business strategies like pricing strategy of a competitor and where we want to position ourselves. This can be a free exchange of ideas and an open discussion without any laid out parameters which will be defined after the conclusion of this meeting. The thought process of senior management and stakeholders will be understood regarding the pricing options and entry-level strategy.

Why is it so popular for firms to quantify their political risks?

“Political risk is defined as the risk faced by businessman and investors by the political decisions/ conditions which directly impact the organizations financial and strategic business planning.”

Measuring political risks of the country and the region is critical for the following reasons:

  • To measure the success of the business in the region.
  • To determine the ease of entry of the organization into the market.
  • To study the economic viability of the business in the country.
  • To arrive at a cost-benefit analysis with respect to the prevalent business practices
  • The business ethics and level of corruption
  • Political risk also helps determine the credit risk

All above can be impacted by many macro environment parameters as follows:

  1. Political Stability to understand the vulnerability to terror attacks, the possibility of war and conflict with neighbors, local violence, riots etc. which will make your business environment safe or unsafe.
  2. Economic factors which impact the currency fluctuations, annual growth of GDP and availability of foreign exchange, trade deficits etc, which directly impact your investments and revenues.
  3. The patent and IP laws and the protection offered for a patent, trademarks, and copyrights which might impact your product.
  4. The monetary policies and rules related to foreign investments, transfer of profits from the country, use of capital, tax structure and many other financial regulations which directly impact the business.

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