Balancing political risk in international business development

Ed Marsh | Feb 28, 2012

Betting it all on red

You probably don't view your business like a game of roulette....but innatention to the background factors in your focus export markets could yield some very unpleasant surprises.  These surprises are often in the form of consequences from activity in a region, but can similarly arise from inactivity.  Business requires "keeping an ear to the rail" (to use an american expression) and international business requires an habitual scan or business intelligence sources. 

When a country imposes currency controls restricting your customers' ability to pay, your should be surprised.  If resources are nationalized, you shouldn't be shocked.  If currency conversion is limited, there should be no angst.  If you monitor trends,  and rely on quality tools to do so, you will know in advance when such conditions will arise.  You won't know the precise date of course, but you will intuit that conditions are deteriorating and position your business and relationships accordingly. 

Argentinian currency controls are a recent and illustrative example.  No one should have been surprised by this development...and yet many were. 

Early movervenezuela and argentina are good examples of political risk to manage in an export or international business development program

Sometimes the situation is in reverse.  Sometimes a change ushers in a variety of new opportunities.  And in that case being prepared to move quickly to leverage that dynamic and capture a disproportionate share of the opportunity is the reward for your diligence and business intelligence review. 

So if turmoil can represent opportunity, then what about the situation in Venezuela?  Chavez's illness has been insufficiently treated and it seems nearly certain now that his time in office will be limited by his waning health and likely death within a year.  What will happen?  Elections are scheduled and he is running as in incumbant.  But the field is suddenly open and energized by the recent acknowledgement that his cancer has "returned." 

Stratfor recently reviewed potential outcomes in a Geopolitical Diary piece Venezuela's Stability in Doubt after Chavez's Cancer Relapses.  Depending on your product and regional focus, this may be irrelevant.  On the other hand if you have a vibrant business initiative in Colombia, don't you think that you should be planning how you might quickly gain a foothold if the market conditions suddenly change?  Perhaps you should contact the embassy in Caracas (as the foreign commercial service has discontinued operations in Venezuela.)  Maybe you should do nothing. 

A global attitude and international perspective

Here's the bottom line.  Spend a few less minutes with the sports section each day and put 15 minutes into a quick scan of key, inexpensive, international business intelligence resources.  Follow headlines, think strategically, look for opportunities and posture defensively.  You'll be challenged, you'll learn a ton and you'll position your business for long-term international success. 

Consilium Global Business Advisors helps companies shift from a domestic mindset to an international one.  With international business development and export assistance advisory services we help companies develop sustainable international business.  Interested in learning how we can help shift your company mindset and open new business horizons?

Created on 04/07/12 at 10:39:46