in management of political risk ,
1. how can distribution control manage political risk ? textbook says "control and development of such items as pipielines and shipping facilities will deter expropriation of assets"
I know that host country will seize the foreign property for their own use. But i'm not sure how a parent company that has a property which it's being seized by host country's government can manage political risk this way....
Is it because pipelines and shipping facilities are spreaded out to the host country (not located in one spot) so it's hard for the host country to seize the whole pipeines ??
But for shipping facilities, isn't easily expropriated by the host country?...
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managing political risk
8y ago#1Imagine a company operating an oil refinery.
The government could take over the oil refinery, but if the company has control over the distribution of the oil (the pipes, the shipping etc.), it will make it much harder for the government to be able to then sell the oil if they take over the refinery. So it will make it less likely that they will take over the refinery.
But cant government take over the control over the distribution of the oil(pipes and shipping etc) ???
8y ago#3Yes - but it makes it harder for them as I wrote before. It doesn't stop it happening, but it reduces the risk of it happening.
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