Uncertainty Essay Example

  • Category:
    Business
  • Document type:
    Math Problem
  • Level:
    Undergraduate
  • Page:
    1
  • Words:
    365

Businessmen invest in the hope their investment will bring future returns. However, the future is always uncertain and all the businesses can do is make guesses whether investment will bring any returns. Uncertainty increases the risk of business venture failing and thus businesses engage in market research to try and predict the market future. One area of uncertainty that critically affects businesses is political uncertainty. Most corporation will stay away in countries where government and government policy is unstable. According to Edwards and Kuruvilla (2005) most Multinational businesses prefer nations with established business regulatory frameworks. However, uncertainty arises in these nations as the guiding regulatory frameworks are abandoned and sometimes businesses are forced to bribe to be able to operate.

Uncertain political environments in BRIC economies have seen many Developed world multinationals falter. In India and China corruption is rife and companies have to make kickback payments to get deals or even licenses. Uncertain laws in India, Banglandesh and Argentina have seen Siemens AG of Germany come under allegation of bribery (Layak, 2013). According to Jayakumar (2013), the certainty of the law in India is only followed on very few occasions. Many MNC prefer a country where following the laid down procedure guarantees them profits.

The uncertainty brought about by elections mean MNC’s abstain from making further investments until after elections. This year’s Elections in India, Brazil and South Africa has seen the bond and stock markets perform poorly (Phillip, 2014). Moreover, UBS confesses that India it considers India its least attractive market as the political situation is volatile.

References

Edwards, T., & Kuruvilla, S. (2005). International HRM: national business systems, organizational politics and the international division of labour in MNCs. The International Journal of Human Resource Management, 16(1), 1-21.

Jayakumar, T. (2013). MNC CSR in Emerging Economy Conflict Zones-A Case Study of HUL’s North-East Operations in India. VIKALPA, 38(4), 69.

Layak S. (August 2013). “MNCs find it tough to do business in India due to corruption and uncertain laws” The Economic Times. Retrieved from http://articles.economictimes.indiatimes.com/2013-08-04/news/41034417_1_uk-bribery-act-siemens-ag-india-and-china accesed 17 June 2014.

Phillip, J.T. (January 2014). The elections will be the main hurdle for India in 2014. The Wall Journal. Retrieved from: http://www.livemint.com/Companies/jYUqEbf1XLC7tsWgP4UXvJ/The-elections-will-be-the-main-hurdle-for-India-in-2014-Ke.html?utm_source=copy accesses 17th June 2014