Discussions: The Sources of Internal Political Risk for Businesses in the Background of BREXIT in U.K. Corruption.

2021-07-15 07:13:12
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Vanderbilt University
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The discussion question -1 is:

Please discuss the sources of internal political risk for businesses in the background of BREXIT in U.K. What is your view on its impact on foreign investors. Please elaborate from different angles?

Political risks are the possible losses on investments that a business may face due to changes in the political structure of a nation (Sadgrove 2016). BREXIT which refers to the withdrawal of the United Kingdom from the European Union is an example of political change which possessed various internal political risks to firms in the United Kingdom. Some of the sources of the internal political risks faced by the businesses in relation to BREXIT are such as, an increase in production cost for companies that purchased their raw material from the other European countries. The increase in cost has been caused by the increased importation charges that firms have to pay while transporting the raw materials to their enterprises in the United Kingdom.

The nation's changes of regulations due to BREXIT may lead firms to face various political risks. The change may, for instant force companies to suddenly change their operational structures to conform to the new trade and environmental laws set by the government. The scarcity of skilled labor is also a source of various political risks that most business would face. BREXIT would discourage most of the citizens of the European Union countries from working and living in the United Kingdom since the increase in taxation of their salaries would reduce their income (Cumming & Zahara 2016). This would force companies to spend a lot of resources in training their unskilled employees or raise their wages to retain their workers.

BREXIT has negatively impacted foreign investors in the United Kingdom. Higher trade costs and the implementation of new restrictive trading policies on the quantity and quality of products acceptable to the United Kingdom marker are some of the main factors that would discourage foreign investors from investing in the United Kingdom. This would thus depress the nation's foreign direct investment. However, BREXIT would ensure that consumers receive goods that are of high quality since the laws implemented prevent practices such as the dumping of goods.

References

Cumming, D. J., & Zahra, S. A. (2016). International Business and Entrepreneurship Implications of Brexit. British Journal of Management, 27(4), 687-692.

Sadgrove, K. (2016). The complete guide to business risk management. Routledge.

 

The discussion question -2 is:

Corruption is a problem in political and business relations in most countries. What can be done to curtail corrupt practices? Can you discuss with recent happenings in the world?

Corruption is the unethical utilization of authority in benefiting oneself (Rose-Ackerman & Palifka 2016). Acts of corruption such as bribery, fraud, theft, extortion, blackmail, and embezzlement are often perpetrated by governments official and individuals holding different positions in businesses. In fighting corruption countries and firms may employ strategies such as one, ensuring there are transparency and openness in the organization and government spending. Transparency usually ensures that the public is aware of how the government spends the revenue collected through taxes and money borrowed as public debt. The incidences of corruption in New Zealand are currently low since the nations enactment of the Fiscal Responsibility Act in 1994 which promotes transparency has aided in the proper management of public resources.

Two, by paying organizations employees and civil servants. According to Holcombe & Boudreaux (2015), poor payment usually demotivates employees. It also encourages them to find ways paying themselves since it makes them believe they have a right to earn money that is worth the services they offer to their organization or their government. The corruption level among public servants in African countries such as Nigeria and Kenya is very high because individuals working for the state such as police men are under paid. Three, the utilization of smart technology. This would reduce levels of corruption because it would discourage the direct interaction between public and organizational officials. Smart technology would thus make processes such as the awarding of government tenders to local companies free and fair. Chile is an example of a country that has managed to fight corruption through the employment of smart technology in its public procurement system. The nation's launching of the ChileCompra public electronic system in 2003 has aided in ensuring that most of the government purchases and expenses can be accounted for thus preventing the embezzlement of public funds.

 

References

Holcombe, R. G., & Boudreaux, C. J. (2015). Regulation and corruption. Public Choice, 164(1-2), 75-85.

Rose-Ackerman, S., & Palifka, B. J. (2016). Corruption and government: Causes, consequences, and reform. Cambridge university press.

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