The Influence of Politics in Business
Alexander Djerassi talks about the influence of politics on businesses.
“It is well known that countries following populist agendas tend to focus solely on their local audiences and often engage less with foreign investors or companies. In these cases, it is important to point out that any changes in legislation and policies can be very time-consuming and expensive”, Alexander said.
Djerassi points out how foreign investors are well aware of this situation when deciding where to invest their money. “Many times, it is easier for them to choose countries which are more politically stable or less likely to implement sudden policy changes,” he said.
“However, in many cases, the risk of having to deal with policy changes is worth taking. For foreign investors or companies who are willing to assume this kind of risk, there are usually very high returns”.
He also points out the importance of stable political conditions when protecting shareholder value. “Today, where there are no legal means to protect shareholder value over an extended period, the only way for a company is to monitor and listen to the government constantly and to be aware of its agendas. The more knowledge, the easier it is for us to act accordingly”, Djerassi said.
He also said that nowadays, political haggling around big infrastructure projects is a common practice. “It is extremely important today to closely monitor the development of large-scale infrastructure projects as they can often hold back or accelerate corporate strategies,” he said. “The same goes for certain taxation policies, such as those about labor and transportation costs.”
“In a constantly changing world, businesses need to be aware of recent political changes and how they might affect their day-to-day operations,” he said. “Keeping track of current political agendas is essential in business today.”
Alexander believes that it is easier for foreign companies to do business with countries that do not suffer from political and economic instability. “Many investors today regard political stability as a key factor in their business decisions,” Alexander said. “They are attracted to countries that have vibrant economies, but also to those that are well-regulated.”
“The more political influence a country has on its economy, the less likely it is for foreign investors to spend their money there,” he said. “Countries heavily influenced by politics tend to lose out in most development indexes.”
Djerassi talks about how many large multinational corporations are considering leaving South America because of political instability. “For companies, it is becoming nearly impossible to do business in countries where political agendas are heavily focused on populist measures,” he said.
“To avoid being negatively influenced by policy changes, foreign investors would rather choose more stable markets with a higher rate of return.”
Alexander Djerassi points out how easy it is for foreign companies to do business when the game rules are clear. “The track record of emerging markets faces the risk of deterioration, especially when there are frequent changes in government,” he said. “Companies operating abroad need to know this if they want to turn their business into a success.”
