Assume that a company is considering moving production to a location in a developing country, but is concerned about political instability. What particular aspects of the country’s political structure and processes should it take into account when asse

Political Structure and Processes

What particular aspects of the country 's political structure and processes should it take into account when assessing political risk

There are quite a number of political structure and processes that should be considered when assessing political risk which include the political condition it self of the particular country . However , I believe that the most important one should be the reliability of the legal infrastructure and regulatory environment of that particular country . In the context of corporate governance , infrastructure has been defined as the legal right of

corporations and the fiduciary duties of their directors and officers to the share holders (Rezaee 2007 : 458 Given this definition , the reliability of the legal infrastructure and regulatory environment provides a stable atmosphere for any company putting up operation in that country . Regulatory environment is very important issue towards a stable business climate because as Hill and Bender (1995 ) pointed out , government regulations that distort prices and resource allocations , or restrict the ability of price to respond to changes in supply and demand , weaken commodity markets and diminish the incentives for private enterprise (1995 : 1

In most countries , particularly in the United States , legal infrastructure is consists of federal laws and statutes for corporate governance (Rezaee : 459 . In this case , it is important to determine the vitality of law and to the effectiveness of corporate governance Hardt and Kaufman (1995 ) assert that in to determine the vitality of law and , the applicable laws and regulations must...