Answer to Question #257119 in Management for Ben

Question

Explain the actual strategies that marketers can use to minimise political vulnerability and risk.

Answer 1

• The most straightforward strategy to handle political risks is to avoid investing in a nation that ranks high on such risks. Where investment has already been made, plants may be closed down or relocated to a more secure country.
• Political risk may also be addressed by persuading the host government that it cannot function without the firm's activity. This can be accomplished by exerting control over raw materials, technology, and distribution routes in the host country. If the firm's operations are disrupted, it may threaten the host country with a halt in the supply of resources, goods, or technology.
• Another method of controlling political risks is to influence local politics through lobbying. Lobbying is the practice of paying someone to represent a company's business interests and its positions on local political issues. Lobbyists engage with local public authorities to try to influence their stance on important matters to the company. Their ultimate purpose is to get favorable legislation approved while rejecting unfavorable rulings.
• Obtaining indispensability is a good approach for organizations with exclusive access to high technology or unique products. Such corporations keep research and development out of the reach of their politically susceptible subsidiaries while also increasing their negotiating leverage with host governments by stressing their economic contributions.