Political factors form part of the external environment of a business and may have important implications on the ability of the enterprise to succeed. An organizations needs to remain aware of the significant political factors in the market and how each affects its chances of success. It then would need to come up with the necessary responses to accommodate the political changes that could take place. It becomes even more critical for an organization operating in many markets as it has to deal with multiple sets of political factors which have a critical bearing on the business. It is against that backdrop that the paper reviews the political factors that Nimble faces with the aim of recommending the best ways in which the organization can deal with the political changes in its environment.
Political Factors
Undoubtedly, the political aspect is perhaps the most unpredictable of all the environmental factors for which a business has to worry. For starters, economies where regular elections are held and there are frequent regime changes carry a significant amount of risk as each administration could come up with its particular set of policies (Wagner, 2012). Political decisions have a potential impact on the economic environment and can even influence the rate at which new technologies emerge. For example, politicians could decide to make changes to the tax rates or the economy’s openness to foreign trade which could impact viability and even survival of a business (Ajami, 2016). In a place like the United States, the leading political outfits may differ on key issues such as taxation and government spending and which may have massive implications on businesses. Apart from that, organizations also have to remain aware of the regulatory environment put in place by the authorities and how it could impact on their business.
Delegate your assignment to our experts and they will do the rest.
Accommodating Political Changes
Ultimately, the biggest challenge for any organization is how to manage the political risk in such a way that the changes taking place do not have a disruptive effect on the business. One of the ways to deal with the risk is to diversify into different markets (Wagner, 2012). In the case of Nimble, the company is an advantage since it already operates in different markets. Therefore, by diversifying, the overall impact on the business following the occurrence of an unwanted political event that has negative implications is limited.
Political risk, as with any other external environment risk may be impossible to eliminate. Therefore, firms may just have to adapt and find a way to live with it. One of the ways of doing so is incorporating local ownership (Wagner, 2012). In doing so, a multinational such as Nimble gets a foothold into the market without taking on all of the risk. Secondly, an organization may take out an insurance policy that would cover it in case the insured event occurred (Dlabay & Scott, 2011). It also helps if the organization invests in the local communities by aiding in projects such as education and health.
Another way in which a company such as Nimble can mitigate political changes is by the use of lobbying. In today’s business world, firms often lobby their way especially in situations that involve the making of decisions that could affect their operations (Dlabay & Scott, 2011). By using this method, firms hope to get the most favorable decisions to them passed and the ones that do not favor them shelved. However, there may be times when political changes make it virtually impossible to operate in the country. Instances such as war and anarchy which threaten security mean that organizations may have to completely pull out of a country (Ajami, 2016). Whatever the case, the business will need to proactively manage political risk on an ongoing basis.
References
Dlabay, L., & Scott, J. (2011). International business Mason, OH: South-Western Cengage Learning.
Wagner, D. (2012). Managing Country Risk Boca Raton, Florida: CRC Press.
Ajami, R. (2016). International business London: Routledge.
