Business Environment Assignment
Tutor: Mr.Firas Adwek Student: Awab Dali Assignment: Political stability In Libya
At the moment, there is a large number of multinational firms that don’t fully understand or comprehend how to deal with the high political risk in Libya, This is significant since political risk can have a substantial affect on firms, as current events are showing in Libya, Before this paper discusses this, firstly you the reader need to understand what exactly is political risk, in essence political risk is defined as the risk of losing money as a result of unstable governments or regulatory environments, acts of terrorism, wars, and military coups are all extreme examples of political risk, expropriation of resources by the government, or merely the threat can also have a disturbing effect on share prices as seen from the events in Libya, Syria, Egypt, Bahrain and Tunisia. Libya has over the past few months witnessed unprecedented civil disturbances, along with mass demonstrations and disruptions to businesses, however, these recent political problems and uncertainty around the old and new incoming governments has had implications for company profits, The next part will unravel political risk and aid to develop some strategic options for companies to deal with future political risk. Main body:
To better understand all that’s happening, this paper must raise the question: what caused this political risk? In the Middle East and North Africa (MENA) region, the main grounds behind the political unrest were caused by the increased toxic mix of high unemployment, high inflation, indecisiveness in fuel prices and long standing corrupt and brutal regimes, But in Libya, it was this extreme corruption that coexisted with the complete lack of human rights, brutality of the gedhafi regime, and educated people not finding jobs that ignited the regime change.
In Libya, the effect of the political risk was that some international firms are losing large sums of money because they temporally close up their business units, these international companies who are currently feeling the pain of political instability in Libya, These American, European and Asian firms have lost huge revenues from their properties being damaged, roads being blocked, employees safety dangered and the noticeable economic slowdown, Supply chains are also getting squeezed and stressed due to this instability and as a result of all these things, there is now top management teams that are assessing the damage As such, all companies have to take into account and considering all political risks in Libya very carefully and cautiously since that the unrest is here to stay for a while. The in progress political turmoil in Libya has made it a major risk for international companies operating here, The country is facing social, political and economic changes now that Colonel Mu'ammar gadhafi is dead, The National Transitional Council (NTC) has appointed it’s new Prime Minister Dr Abdel Rahim al-Keib who has recently announced his government in late November which includes a list of all ministers, In these uncertain times it is important for those hoping to return to operation in the country, or with the objective of doing so in the near future, to keep an eye and an ear on the latest news, since the next step in the Libyan political process is the elections in June, companies should put that in consideration above everything else because of all that could go wrong in that process and could cause an unrest, also There has already been some reservation expressed about the NTC, and the elected government that succeeds through it which Dr Abdel Rahim al-K picked, the unaddressed negative out spoke about the government has popped up...