Geopolitics and International Business Flashcards
What is geopolitics? Why is geopolitics important to international business?
Geopolitics consists of two elements. Geo which refers to geography and how it impacts the economy of a country. Politics which refers to how political stability impacts trade with internationalization in a country and use of power.
Geopolitics is important to international business because the geographical position of a country plays a role in its politics. As an international business works within different countries it must understand geopolitics in order to thrive.
Briefly describe each of the four dimensions of the geopolitical paradigm of international business.
Time dimension:
- Period until the World War II, Cold War period, period of appraisals and new economic and political alignments, post 9 / 11 period of exclusions
Place dimension:
- Natural resources, strategic location, geographic proximity, regionalism
Demographic dimension:
- Size of the population, supply of labour, role of environmental, ethnic and religious groups
Power dimension:
- Military vs. economic power, defence and sovereignty, power as a deterrent, power as a means to exploit
“The main signpost that helps political realism to find its way through the landscape of international politics is the concept of interest defined in terms of power“ (Morgenthau, 2005). Briefly explain this statement in the context of international business.
It is important for international businesses to gain power in the countries they operate in order to influence on the foreign policy. This way, an international business can minimize its risk and maximize its benefits and avoids reinterpreting reality to fit the foreign policy.
