Using both examples of theory and practical cases (both company and Essay

Using both examples of theory and practical cases (both company and country examples) assess the relative importance of political and cultural factors in influencing global investment decisions - Essay Example Before establishing investments in a foreign country, it is important to assess the status of its politics as well as its cultural orientation. This is because politics and culture of the host country are major determinants of the success of foreign investment in it. Ignoring political threats in global investment decisions puts the company at a high risk of failure. (Cateora, Philip R. and John L. Graham, 1998 pp.23-25). In recent years, politics and the threats they pose to foreign investors determine the success of a company. They are the ones that actually determine the winner or looser. Investment policies of a country are normally formulated nationally through local policy plans. This could lead to uncalled for negative impacts on the global market. Political intervention on the market systems of many countries is rampant. This is happening in the developed and developing countries, necessitating caution while companies consider investing in foreign countries. The regulations of the global market are being changed time and again by politicians and can be disadvantageous to foreign companies especially those that invest heavily on fixed assets such as in the tourism industry where companies make huge capital outlay for assets such as buildings and infrastructure. The major threat caused by political interference is over-regulation thereby bringing in impediments to open capital flow which may ad versely affect the global market (Mooij Marieke. 1998 pp. 38-41). Political risks are the possibilities that may occur in the host country due to political decisions or actions that may have a negative impact on the business. In such cases, companies may end up loosing their money or fail to perform according to the expectations. They include confiscation of property due to local misunderstanding, changes in currency value, restrictions of business activities, politically instigated violence such as the one that was experienced in Rwanda in 1992,