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International Business Essay

This paper seeks to analyze and discuss how politics impact on risks in the context of international business. The case of Wal-Mart’ way of conducting international business would be used as illustration of existing research about politics. As to how politics impacts on risks in international business with ownership may yet understood by understanding the meaning of politics (Behrman, J. et. al, 1975). It may be asserted that politics is a reality in any organization since it could only apply where there are groups of people.

Since business is an organization of people politics has its role in the way it operates and therefore could be determinative of its success or failures to great extent. It must be stated that in the context of international business (Kashlak, R. et. al, 1998; Toyne, B. ,1989), companies are operating under possibly different governments which also are run by different rules in addition to the different cultural background of these countries. Consumers can lobby against their law making bodies for them to pass laws that would protect their rights.

Thus certain countries have different laws for customer’s protection Politics is also concerned with relations of people involving influence or authorities about one another (Zagaris and

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Lakhani; Ricart, et. al 2004); hence, it could only involve asserting that power by some and refusing or accepting that power on the part of the subjects. Thus there is an attempt to strike a balance among these competing forces by companies trying to adopt their strategies to the local conditions where they want to bring their operations.

As to how politics may affect Wal-Mart when conducting business in international markets is very much evident into the company’s failure to apply strategies that work well in its home base but did not work well in the local conditions of other countries. Thus the company needed to pay close attention to local customs and tastes of the host country. It in fact experienced trouble in Germany where the operation rules and union projects were not how it had successfully conducted business in the US (Penn, 2003).

It is not a new thing for many that cultures are influenced by politics and vice versa. The degree to which politics exerts is influence depends of how their government could easily alter the rules for the protection of interests for certain groups. The effects in risks suffered by Wal-Mart’ international expansion because of local politics into corporate culture were indeed felt in cases where markets were found to work better when the company had acquired existing retailers instead of directly importing Wal-Mart’s own store (Penn,2003).

It can be concluded that multinationals conducting business worldwide could not but have to adjust to realities of differences in the environments under which they operate and they must be ready for these situations since the governments or markets in foreign markets were there before these companies expanded their business internationally. Moreover governments assert independence which no world economic power can just dictate how people should behave or reacts to situations.

People will always be people who have varying needs and interest and could change how business firms make their strategies as political power could used to at least strike a balance to influence of economic powers.


Behrman, J. et. al (1975) International Business-Government Communications: U. S. Structures, Actors, and Issues; Lexington Books Kashlak, R. et. al (1998) Reciprocity in International Business: A Study of Telecommunications Alliances and Contracts; Journal of International Business Studies, Vol. 29, 1998

Penn (April 9, 2003) The Wal-Mart Empire: A Simple Formula and Unstoppable Growth {www document} URL http://www. upenn. edu/researchatpenn/article. php? 631&bus, Accessed January, 27, 2008 Ricart, et. al (2004) New Frontiers in International Strategy; Journal of International Business Studies, Vol. 35, 2004 Toyne, B. (1989) International Exchange: A Foundation for Theory Building in International Business; Journal of International Business Studies, Vol. 20, 1989 Zagaris and Lakhani (1999) The Emergence of an International Enforcement Regime on Transnational Corruption in the Americas; Law and Policy in International Business, 1999

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