The rapidly changing nature of the international political scene is evident to anyone who regularly reads, listens to, or watches the various news media. Political upheavals and changes in government policy occur daily and can have an enormous impact on international business. For the executive, this means constant adjustments to exploit new opportunities and minimize losses.
Besides the international company, the principal players in the political arena are the host country governments and the home country governments. Sometimes transnational bodies or agencies such as the European Union (EU) or the World Trade Organization (WTO) can be involved. Within a national market, the interactions of all these groups result in a political climate that may positively or negatively affect the operations of an international business. The difficulty for the global company stems from the firm being subject to all these forces at the same time. The situation is further complicated by the fact that companies maintain operations in many countries and hence must simultaneously manage many sets of political relationships.
Host country a country that contains an operational unit (marketing, sales, manufacturing, finance, or R&D) of an international company. Any country that contains an operational unit (marketing, sales, manufacturing, finance, or research and development) of an international company can be defined as a host country. International companies deal with many different host countries, each with its own political climate. These political climates are largely determined by the motivations and actions of host country governments and local interest groups.
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