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International Business: An Asia Pacific Perspective, Second Edition by Andrew Delios

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3. The Political Environment

The word “politics” almost never fails to inspire debate. Politics is a sensitive issue with many individuals. The political environment is an equally sensitive issue to a company. Like the cultural environment, the political environment will vary considerably across nations. This variance creates uncertainty when a firm is entering a new host country market and when it is operating in a host country.

To maximize the chances of making a successful and profitable entry in a foreign country, a firm’s managers must be able to both measure and manage the political environment.1 The political environment can inject uncertainty into a firm’s operations.2 To identify the extent of uncertainty, a firm’s managers can turn ...

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