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.
