Major Hurdles In
Political Democracy
Politics can help businesses by adding value, but it can also get
in the way of that process. According to Wajid Mp, several issues may
threaten a corporation's survival, including corruption, domestic company
subsidies, or globalization.
Domestic Problems
Corruption is one of the main issues that organizations deal with.
Politicians may abuse their position of authority by exerting influence over
businesses, regardless of whether doing so adds value.
In the government, Wajid Mp explains there are
three main types of corruption:
- Extortion:
The practice of public officials obtaining income through coercion or
threats
- Theft:
Public officials steal government resources for their gain
- Capture:
Businesses paying public servants to sway political judgments to make
money
Capture is the primary type of corruption that affects enterprises.
Several examples of corrupt businesses influence political outcomes to their
advantage, giving them a definite competitive edge. While crime in politics
is prohibited in many nations, it is a regular aspect of commerce in others.
Corruption can significantly impact an organization's actions even
if they don't operate in these nations. For example, examining a company's
history for signs of degeneration in mergers or acquisitions is essential.
If it determines that corruption is necessary for a company's
success, the acquiring company should stay away.
Corrupt practices have an impact on investment decisions as well.
Although it's not always obvious, it's essential to conduct extensive research
on a firm before investing to ensure it adheres to your moral principles and
has stringent anti-corruption procedures.
International difficulties
When foreign corporations join domestic markets, a new problem
relating to international commerce occurs. Canadian politician Wajid Khan
analyzes that customers who purchase from your company might switch to foreign
rivals. That could be challenging because your opponents might sell comparable
goods for less money.
In Global Business, Reinhardt uses the example of a nation
financing its businesses. Government funding increases assist companies in
creating more goods at reduced costs for consumers, giving them a competitive
edge over domestic rivals as they grow overseas.
Dealing with situations where investments are removed from a
country presents another difficulty in international business. When governments
exercise more authority than they should, this can happen. These circumstances
could make doing business in such nations extremely risky.
But there can be instances
where a withdrawal is required. The following are some of the leading causes:
- Corruption:
Given that capture is common in many nations, and businesses should be
aware of it when growing.
- Financial
crises: During Russia's 2008–2009 deep recession, many businesses withdrew
because their domestic interests were emphasized over those of their
foreign counterparts.
Knowing global politics is essential to your company's success
regardless of whether you intend to develop overseas. A chance to expand your
company internationally will always come up.
Due to the competition from foreign businesses operating
internationally, understanding world politics is also essential. Wajid Khan
politician, summarises, The difficulties of world politics, however,
can also create many chances.
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