SLP2 THE FINANCIAL AND ECONOMIC ENVIRONMENT OF INTERNATIONAL BUSINESS Essay

SLP2 THE FINANCIAL AND ECONOMIC ENVIRONMENT OF INTERNATIONAL BUSINESS - Essay Example Therefore, it is pivotal for the company to ensure operations run smoothly amidst the political instability and economic problems afflicting the region. More often than not, peaceful protests and rallies lobbying for political reforms turn violent and destructive, as protestors adopt more extremist ideologies. For example, Venezuela has experienced 6,369 protests in the first six months of 2014, which were triggered by the escalating anti-government sentiments supported by the growing opposition faction (Shackman, 2014). Both public and private infrastructures get damaged during clashes between protestors and the police. Besides political instability, DirectTV faces other challenges while operating in Latin America, which include the imposition of price controls and the planned strategy by Latin American governments to update foreign exchange rules. Price controls adversely affect business operations, as they undercut fair competitiveness, a prime feature of the free market. For example, in Venezuela, price controls facilitate expropriations with a 30 percent cap on profits acquired (Avadhani, 2010). Foreign investors operating in hostile markets defined by unwarranted price controls shy away from committing to more investment opportunities. Conversely, Latin American governments are prone to updating foreign tax rules to further their personal interests. Therefore, foreign investors in the region are always wary of the foreign policies, as they might translate into adverse consequences for their businesses. In the case of Argentina, which ended the previous year with major challenges, as exemplifie d by long lasting blackouts in various major cities, the government struggled to contain social dissatisfaction on public security and prices of basic goods. This was likely to lead to heightened political and social polarization, with a high probability of industrial unrest. In order to safeguard itself against these