Course Code: LBBL369L

Course Name: International Business Environment

Type: Internal Assessment
Date of Allocation:26.09.2023
Date of Submission:15.10.2023
Submission Type: Handwritten
Minimum Word Limit: 2000 words
Note: All the submissions are strictly through LMS only, no submission shall be accepted
through email.
Maximum Marks: 25.

Attempt all questions:

1. Identify a firm which is multinational in operations, and currently operating in a

country with high incidence of terrorism, crime and violence. Explore strategies
adopted by the firm to operate in such countries and compare it with strategic
management of political risks. Discuss your opinion and strategies.
(8)
2. Visit website of western bank operating in Saudi Arabia and identify the adaptations
made to operate under Sharia Law. Discuss the case in detail. (7)
3. Write about the importance of relationship between Home country and Host country
for conduct of International Business? Illustrate your answer with help of examples.
(5)
4. Can a change in the elected government affect the business environment? Comment
or Give your views. Illustrate your answer with help of examples.
(5)

One multinational firm that has operated in a country with a high incidence of terrorism,
crime, and violence is Royal Dutch Shell, an international energy company. The country in
question is Nigeria.

**Strategies Adopted by Royal Dutch Shell in Nigeria:**

1. **Security Measures**: Shell has implemented stringent security measures to protect its
employees, assets, and operations in Nigeria. This includes hiring private security firms and
collaborating with local law enforcement agencies.

2. **Community Engagement**: Shell has recognized the importance of engaging with local
communities in Nigeria. They have initiated several social investment programs to improve
education, healthcare, and infrastructure in the region. This approach aims to reduce social
unrest and build goodwill.

3. **Government Relations**: Maintaining positive relationships with the Nigerian

government is crucial. Shell has actively engaged in dialogue with government officials to
address concerns and negotiate favorable terms for their operations.
4. **Diversification**: Shell has diversified its operations in Nigeria, participating in both
onshore and offshore oil and gas activities. This diversification helps mitigate risks associated
with attacks on specific facilities.

5. **Crisis Management**: Shell has established crisis management teams and protocols to
respond swiftly to security incidents, including kidnappings and attacks on their facilities.

**Strategic Management of Political Risks:**

To manage political risks in high-risk countries like Nigeria, multinational firms typically
employ the following strategies:

1. **Political Risk Assessment**: Regularly assess the political landscape, including changes
in government, policies, and social factors that could impact operations.

2. **Diversification**: Diversify operations across different regions within the country to

minimize exposure to localized political instability.

3. **Legal Frameworks**: Ensure compliance with local laws and regulations, and establish
legal frameworks that protect the company's interests.

4. **Stakeholder Engagement**: Engage with local communities, government officials, and

other stakeholders to build trust and goodwill.

5. **Crisis Preparedness**: Develop crisis management plans and train employees to respond
effectively to security threats and political crises.

**Opinion and Strategies:**

Operating in high-risk countries like Nigeria presents significant challenges, but it can also
offer lucrative opportunities. To succeed, firms must adopt a holistic approach that balances
security with community engagement and political risk management.

One strategy I would recommend is a proactive stance on security and community

development. Investing in local infrastructure, education, and healthcare not only improves
the lives of people in the region but also reduces the likelihood of attacks and social unrest.
Additionally, collaborating closely with local authorities and law enforcement can enhance
security measures.

Furthermore, diversification remains a key strategy. Avoiding overreliance on a single

location or type of operation can spread risk. This could involve exploring alternative energy
sources or expanding into less volatile regions within the country.

Lastly, continuous monitoring and adaptation to the evolving political and security landscape
are essential. Firms operating in high-risk environments should regularly update their risk
assessments and crisis management plans to stay ahead of potential challenges.

In summary, operating in a high-risk country like Nigeria requires a multi-faceted approach

that combines security measures, community engagement, political risk management, and a
commitment to adapt to changing circumstances. Success in such environments depends on a
firm's ability to balance risk mitigation with the pursuit of business opportunities.

Hello, this is Bing. I can help you with your question. 😊

One possible firm that is multinational in operations and currently operating in a

country with high incidence of terrorism, crime and violence is Coca-Cola.
According to the Global Terrorism Index 20221, Afghanistan ranked first on the
global terrorism index with a score of 8.82 points, making it the country most
affected by terrorism on Earth1. Coca-Cola has been operating in Afghanistan since
2006, when it opened its first bottling plant in Kabul. Coca-Cola is one of the few
international brands that have a presence in Afghanistan, despite the challenges of
security, infrastructure, and governance.

Some of the strategies that Coca-Cola has adopted to operate in Afghanistan are:

 Partnering with local businesses and communities: Coca-Cola works

with a local bottler, Coca-Cola Bottling Company of Afghanistan (CCBCA),
which is owned by an Afghan entrepreneur and employs more than 300
local staff. Coca-Cola also supports various social and environmental
initiatives in Afghanistan, such as providing clean water, education, health
care, and women empowerment. By partnering with local stakeholders,
Coca-Cola builds trust and goodwill among the Afghan people and reduces
the risk of being seen as a foreign intruder.
 Adapting to the local market and culture: Coca-Cola understands the
needs and preferences of the Afghan consumers and tailors its products and
marketing accordingly. For example, Coca-Cola offers a range of beverages
that suit the Afghan palate, such as juices, teas, and dairy drinks. Coca-Cola
also respects the Islamic values and traditions of the Afghan society and
avoids any cultural or religious sensitivities in its advertising and packaging.
By adapting to the local market and culture, Coca-Cola increases its
customer loyalty and brand recognition in Afghanistan.
 Investing in security and contingency planning: Coca-Cola recognizes the
high level of uncertainty and volatility in Afghanistan and takes measures to
protect its assets and employees. For example, Coca-Cola has invested in
security equipment, personnel, and training for its bottling plant and
distribution network. Coca-Cola also has contingency plans in place for
various scenarios, such as natural disasters, political unrest, or terrorist
 attacks. By investing in security and contingency planning, Coca-Cola
minimizes the potential losses and disruptions caused by political violence.

These strategies are consistent with some of the best practices for managing
political risk suggested by experts. For instance, FiscalNote2 recommends five
strategies for mitigating political risk: risk analysis, consultation with local
partners, local banking, political risk insurance, and monitoring global issues.
Similarly, Harvard Business Review3 advises companies to adopt four principles
for managing 21st-century political risk: integration (of political risk into strategic
decision making), anticipation (of potential threats and opportunities), influence (of
key stakeholders and policy makers), and learning (from past experiences and best
practices).

In my opinion, Coca-Cola is an example of a successful multinational firm that has

managed to operate in a high-risk country like Afghanistan by adopting effective
strategies for managing political risk. However, I also think that Coca-Cola faces
some challenges and limitations in its operations in Afghanistan. For example:

 Compliance with local laws and regulations: Coca-Cola has to comply

with the local laws and regulations of Afghanistan, which may change
frequently or unpredictably due to the political instability and corruption in
the country. For example, Coca-Cola may face issues such as taxation,
licensing, labor rights, environmental standards, or trade barriers. These
issues may increase the operational costs or legal risks for Coca-Cola.
 Competition from local or regional rivals: Coca-Cola may face
competition from local or regional rivals that offer similar or cheaper
products or services to the Afghan consumers. For example, some of the
competitors of Coca-Cola in Afghanistan are Zam Zam Cola (an Iranian
brand), RC Cola (a Pakistani brand), or Shams (a local brand). These
competitors may have advantages such as lower production costs, better
distribution channels, or stronger customer relationships.
 Reputation and social responsibility: Coca-Cola may face criticism or
backlash from some segments of the Afghan society or the international
community for its operations in Afghanistan. For example, some people
may accuse Coca-Cola of exploiting the natural resources or labor force of
Afghanistan, or supporting the Taliban regime or the US military presence.
These accusations may damage the reputation or social responsibility of
Coca-Cola.

Therefore, I think that Coca-Cola should continue to monitor and evaluate its
political risk management strategies in Afghanistan and make adjustments as
needed. I also think that Coca-Cola should engage more with its stakeholders and
communicate more transparently about its goals and impacts in Afghanistan.
I hope this answer was helpful to you. If you have any feedback or follow-up

questions, please let me know. 😊

I can help you with your question. 😊

Sharia law is the Islamic law that governs the religious, moral, and legal aspects of
life for Muslims. Sharia law prohibits certain activities that are considered
unethical or harmful, such as interest (riba), gambling (maysir), uncertainty
(gharar), and speculation (qimar). Therefore, banks that operate under Sharia law
have to adapt their products and services to comply with these principles and rules.

One example of a western bank that operates in Saudi Arabia and has made
adaptations to Sharia law is HSBC. HSBC is a global banking and financial
services company that has a presence in more than 60 countries, including Saudi
Arabia. HSBC offers both conventional and Islamic banking services in Saudi
Arabia through its subsidiary, HSBC Saudi Arabia1.

Some of the adaptations that HSBC has made to operate under Sharia law in Saudi
Arabia are:

 Establishing a Shariah Supervisory Committee: HSBC Saudi Arabia has

a Shariah Supervisory Committee that consists of three prominent Islamic
scholars who are experts in Islamic finance and jurisprudence. The
committee is responsible for reviewing, approving, and certifying the bank’s
Islamic products and services, as well as providing guidance and advice on
Shariah matters2.
 Offering Shariah-compliant products and services: HSBC Saudi Arabia
offers a range of Islamic products and services that cater to the needs and
preferences of its customers. These include current accounts, savings
accounts, investment accounts, financing solutions, credit cards, insurance,
wealth management, and corporate banking. All these products and services
are based on Shariah contracts and structures, such as murabaha (cost-plus
sale), ijara (leasing), musharaka (partnership), mudaraba (profit-sharing),
wakala (agency), takaful (cooperative insurance), and sukuk (Islamic
bonds)3.
 Adapting to the local market and regulations: HSBC Saudi Arabia
follows the local laws and regulations that govern the banking sector in
 Saudi Arabia, as well as the standards and guidelines issued by the relevant
authorities and bodies. For example, HSBC Saudi Arabia complies with the
Banking Control Law, the Capital Market Law, the Anti-Money Laundering
Law, the Corporate Governance Regulations, and the Shariah Governance
Framework for Local Banks Operating in Saudi Arabia. HSBC Saudi Arabia
also adheres to the Accounting and Auditing Organization for Islamic
Financial Institutions (AAOIFI) standards and the Islamic Financial
Services Board (IFSB) principles.

By making these adaptations, HSBC has been able to operate successfully in Saudi
Arabia as a western bank that offers both conventional and Islamic banking
services. However, HSBC also faces some challenges and limitations in its
operations in Saudi Arabia. For example:

 Competition from local or regional rivals: HSBC Saudi Arabia competes

with other banks that offer Islamic banking services in Saudi Arabia, some
of which are fully fledged Islamic banks or have more experience or market
share in the segment. For example, some of the competitors of HSBC Saudi
Arabia are Al Rajhi Bank, Alinma Bank, Bank Aljazira, National
Commercial Bank, Riyad Bank, Samba Financial Group, and Saudi British
Bank. These competitors may have advantages such as lower costs, better
networks, or stronger customer relationships.
 Reputation and social responsibility: HSBC Saudi Arabia may face
criticism or backlash from some segments of the Saudi society or the
international community for its operations in Saudi Arabia. For example,
some people may accuse HSBC of violating human rights or environmental
standards in its business activities or supporting controversial policies or
regimes in the region or globally. These accusations may damage the
reputation or social responsibility of HSBC.
 Compliance with global standards and regulations: HSBC Saudi Arabia
has to comply with the global standards and regulations that apply to its
parent company, HSBC Group, which operates in multiple jurisdictions and
markets. For example, HSBC Saudi Arabia has to follow the Basel III
framework for capital adequacy, liquidity, and leverage; the Foreign
Account Tax Compliance Act (FATCA) for reporting on US persons; and
the Common Reporting Standard (CRS) for automatic exchange of
information on financial accounts. These standards and regulations may
increase the operational costs or legal risks for HSBC Saudi Arabia.

Therefore, I think that HSBC is an example of a western bank that has made
adaptations to operate under Sharia law in Saudi Arabia by offering Shariah-
compliant products and services, establishing a Shariah Supervisory Committee,
and adapting to the local market and regulations. However, I also think that HSBC
faces some challenges and limitations in its operations in Saudi Arabia such as
competition from local or regional rivals, reputation and social responsibility
issues, and compliance with global standards and regulations.

I hope this answer was helpful to you. If you have any feedback or follow-up

questions, please let me know. 😊

I apologize for any inconvenience, but I'm unable to access the internet to visit specific
websites, including those of specific banks. However, I can provide you with a general
overview of how Western banks typically adapt to operate in Saudi Arabia and comply with
Sharia law.

When Western banks operate in Saudi Arabia, they need to adhere to Islamic finance
principles, which are based on Sharia law. Sharia-compliant banking is a significant aspect of
financial services in Saudi Arabia, and Western banks operating in the country typically make
several adaptations:

1. **Establishment of Islamic Windows**: Many Western banks in Saudi Arabia establish

Islamic banking "windows" or subsidiaries to offer Sharia-compliant financial products and
services alongside their conventional banking offerings. These windows are separate entities
that adhere to Islamic finance principles.

2. **Sharia-Compliant Products**: Western banks adapt their product offerings to include

Sharia-compliant options, such as Islamic savings accounts, investment products, and
financing solutions. These products are structured in a way that avoids interest (riba) and
complies with Islamic prohibitions on certain economic activities, such as alcohol, gambling,
and pork.

3. **Sharia Supervisory Boards**: Western banks operating in Saudi Arabia typically

appoint Sharia supervisory boards composed of Islamic scholars. These boards are
responsible for reviewing and ensuring the compliance of the bank's financial products and
transactions with Islamic principles.

4. **Avoidance of Interest (Riba)**: Western banks ensure that their financial products and
transactions do not involve interest, as interest is considered haram (forbidden) in Islamic
finance. Instead, they use profit-sharing arrangements, asset-backed financing, and other
Sharia-compliant structures.

5. **Ethical Investment**: Western banks may also incorporate ethical and socially
responsible investment criteria into their operations to align with Islamic finance principles.
They avoid investments in sectors such as alcohol, tobacco, and gambling.

6. **Charitable Giving (Zakat)**: Western banks operating in Saudi Arabia may engage in
zakat, which is a form of charitable giving required by Islam. They contribute a portion of
their profits to charitable causes as part of their social responsibility and adherence to Islamic
principles.

7. **Compliance with Regulatory Bodies**: Western banks must comply with the
regulations and guidelines set by Saudi Arabia's financial regulatory authorities, such as the
Saudi Arabian Monetary Authority (SAMA), to ensure they meet the country's Sharia-
compliance standards.

It's important to note that while Western banks adapt to operate in Saudi Arabia under Sharia
law, they often continue to offer conventional banking services as well, catering to both
Islamic and non-Islamic customers.

To gain specific insights into the adaptations made by a particular Western bank operating in
Saudi Arabia, I recommend visiting the official website of the bank in question and exploring
their Islamic banking and Sharia-compliant financial product offerings. Additionally, you can
review their annual reports and disclosures for detailed information on their operations in
Saudi Arabia.

I can help you with your question. 😊

The relationship between home country and host country is an important factor that
affects the conduct of international business. The home country is the country
where a multinational enterprise (MNE) originates from, while the host country is
the country where the MNE operates or invests in. The relationship between the
two countries can influence the opportunities, challenges, and risks that the MNE
faces in its international operations.

Some of the aspects of the home-host country relationship that are relevant for
international business are:

 Economic development: The level of economic development of both the

home and host countries can affect the motives, modes, and outcomes of
international business. For example, MNEs from developed countries may
seek to enter developing countries to exploit their natural resources, low-
cost labor, or large markets, while MNEs from developing countries may
seek to enter developed countries to access advanced technology,
knowledge, or capital. The economic development of the host country can
 also affect the demand, competition, and regulation that the MNE
encounters in its foreign market1.
 Political stability: The degree of political stability of both the home and
host countries can affect the security, predictability, and legitimacy of
international business. For example, MNEs may face political risks such as
expropriation, nationalization, civil war, terrorism, or sanctions in host
countries that have unstable or hostile political regimes. The political
stability of the home country can also affect the support, protection, or
intervention that the MNE receives from its home government2.
 Cultural distance: The extent of cultural distance between the home and
host countries can affect the communication, adaptation, and integration of
international business. For example, MNEs may face cultural challenges
such as language barriers, value differences, or ethical dilemmas in host
countries that have different cultural norms, beliefs, or practices from their
home country. The cultural distance between the two countries can also
affect the trust, cooperation, or conflict that the MNE experiences with its
foreign stakeholders3.
 Institutional environment: The quality of institutional environment of both
the home and host countries can affect the efficiency, effectiveness, and
innovation of international business. For example, MNEs may face
institutional challenges such as corruption, bureaucracy, or weak legal
systems in host countries that have low institutional quality or different
institutional arrangements from their home country. The institutional
environment of the home country can also affect the incentives, constraints,
or pressures that the MNE faces from its home institutions4.

Some examples of how the home-host country relationship affects international

business are:

 Shell: Shell is a global energy company that operates in more than 70

countries, some of which are considered high-risk due to political instability,
violence, corruption, or sanctions. For example, Shell has operations in Iraq,
Nigeria, Russia, and Venezuela. Shell manages its political risk by engaging
with local stakeholders, complying with international standards and
regulations, investing in social and environmental projects, and diversifying
its portfolio and markets3.
 Nestlé: Nestlé is a multinational food and beverage company that operates
in more than 190 countries, some of which are considered high-risk due to
civil unrest, human rights violations, or environmental issues. For example,
Nestlé has operations in Myanmar, Sudan, Zimbabwe, and Brazil. Nestlé
manages its cultural risk by adhering to its corporate values and principles,
conducting regular risk assessments and audits, implementing responsible
sourcing and production practices, and supporting local communities and
farmers2.
  Huawei: Huawei is a Chinese technology company that operates in more
than 170 countries, some of which are considered high-risk due to trade
disputes, security concerns, or regulatory barriers. For example, Huawei has
operations in Iran, India, Australia, and the United States. Huawei manages
its institutional risk by innovating its products and services, collaborating
with local partners and customers, respecting local laws and cultures, and
enhancing its transparency and reputation1.

I hope this answer was helpful to you. If you have any feedback or follow-up

questions, please let me know. 😊

The relationship between the home country (the country where a multinational corporation is
headquartered) and the host country (the foreign country in which the multinational
corporation conducts its international business operations) is of paramount importance in the
world of international business. This relationship influences the success, sustainability, and
profitability of international business ventures. Here's why it is crucial, along with examples
to illustrate its significance:

**1. Regulatory and Legal Framework:**

- **Importance:** The legal and regulatory environment of both the home and host
countries significantly impacts international business operations. Harmonious relations can
facilitate smoother compliance with local laws and regulations.
- **Example:** The European Union (EU) serves as a prominent example. Member states
have established a close relationship that enables businesses to operate seamlessly across
borders, thanks to a unified regulatory framework.

**2. Political Stability and Diplomacy:**

- **Importance:** A stable and amicable political relationship between home and host
countries can reduce the risk of political disruptions, such as expropriation or trade disputes.
- **Example:** The U.S. and Canada share a strong diplomatic relationship, which
contributes to the extensive cross-border trade and investment between the two countries.

**3. Economic Cooperation:**

- **Importance:** Economic cooperation agreements and trade treaties can provide
businesses with preferential treatment, lower tariffs, and reduced trade barriers.
- **Example:** The North American Free Trade Agreement (NAFTA) and its successor,
the United States-Mexico-Canada Agreement (USMCA), promote trade and investment
between the U.S., Canada, and Mexico by reducing trade barriers.

**4. Infrastructure and Market Access:**

- **Importance:** Host countries' infrastructure, such as transportation and communication
networks, can significantly affect a company's ability to access markets and distribute
products.
 - **Example:** China's Belt and Road Initiative is an infrastructure development project
that facilitates international business by improving transportation links between China and
other countries along the route, creating new opportunities for trade.

**5. Cultural Sensitivity and Consumer Preferences:**

- **Importance:** Understanding cultural nuances and consumer preferences in the host
country is vital for marketing and product adaptation.
- **Example:** McDonald's successfully adapts its menu in various countries to cater to
local tastes. In India, for instance, it offers vegetarian options due to cultural preferences.

**6. Risk Management and Crisis Response:**

- **Importance:** In times of crisis or unforeseen events, the support and cooperation of
both home and host countries can be invaluable for the safety and continuity of business
operations.
- **Example:** During natural disasters, multinational corporations often collaborate with
both their home and host countries to provide disaster relief and ensure employee safety.

**7. Access to Resources:**

- **Importance:** Host countries often provide access to valuable resources, such as raw
materials or skilled labor, which are essential for international business operations.
- **Example:** Apple's manufacturing operations in China benefit from access to a skilled
workforce and a vast supply chain network.

In summary, the relationship between the home country and the host country plays a pivotal
role in the successful conduct of international business. A positive and cooperative
relationship can lead to reduced risks, enhanced market access, and increased profitability.
Conversely, strained relations or conflicts between the two can create obstacles and
challenges for multinational corporations. Hence, fostering and maintaining strong
diplomatic, economic, and cultural ties between home and host countries is essential for
sustainable international business success.
I can help you with your question. 😊

A change in the elected government can affect the business environment in various
ways, depending on the policies, priorities, and ideologies of the new government.
The business environment refers to the external factors that influence the decisions
and performance of a business, such as economic, political, legal, social,
technological, and ecological factors1.

Some of the possible effects of a change in the elected government on the business
environment are:

 Economic effects: A change in the elected government can affect the

economic policies and indicators that shape the business environment. For
example, a new government may change the fiscal policy (taxation and
spending), monetary policy (interest rates and money supply), trade policy
(tariffs and quotas), or industrial policy (subsidies and regulations) that
affect the income, consumption, investment, inflation, exchange rate, or
competitiveness of a country. These changes can have positive or negative
impacts on the profitability, growth, or stability of businesses operating in
that country2.
 Political effects: A change in the elected government can affect the political
stability and security that influence the business environment. For example,
a new government may face challenges such as opposition, protests,
conflicts, or violence from its rivals, critics, or enemies. These challenges
can create uncertainty, risk, or disruption for businesses operating in that
country. Alternatively, a new government may also bring peace, harmony,
or cooperation with its allies, partners, or neighbors. These outcomes can
 create confidence, opportunity, or innovation for businesses operating in that
country3.
 Legal effects: A change in the elected government can affect the legal
system and regulations that govern the business environment. For example,
a new government may introduce or amend laws and rules that affect the
property rights, contract enforcement, dispute resolution, consumer
protection, labor rights, environmental standards, or corporate governance of
businesses operating in that country. These changes can have positive or
negative impacts on the efficiency, effectiveness, or compliance of
businesses operating in that country4.
 Social effects: A change in the elected government can affect the social
values and norms that shape the business environment. For example, a new
government may reflect or influence the preferences, attitudes, beliefs, or
behaviors of the society in which it operates. These changes can have
positive or negative impacts on the demand, satisfaction, loyalty, or
reputation of businesses operating in that country.
 Technological effects: A change in the elected government can affect the
technological development and innovation that drive the business
environment. For example, a new government may support or hinder the
research, education, infrastructure, or entrepreneurship that enable the
creation, adoption, or diffusion of new technologies in various sectors of the
economy. These changes can have positive or negative impacts on the
productivity, quality, or competitiveness of businesses operating in that
country.
 Ecological effects: A change in the elected government can affect the
ecological conditions and challenges that affect the business environment.
For example, a new government may adopt or reject the policies,
agreements, or actions that address the issues, risks, or opportunities related
to climate change, biodiversity loss, resource depletion, or pollution. These
changes can have positive or negative impacts on the sustainability,
responsibility, or resilience of businesses operating in that country.

Some examples of how a change in the elected government has affected the
business environment are:

 Brexit: Brexit refers to the decision of the United Kingdom (UK) to leave
the European Union (EU) following a referendum held in 2016. The
decision was supported by a majority of voters who favored a conservative
government led by Prime Minister Boris Johnson. The decision has had
significant effects on the business environment of both the UK and the EU.
For example:
o Economic effects: Brexit has affected the trade relations between the
UK and the EU as well as other countries. The UK and the EU have
negotiated a trade deal that covers some aspects of their economic
partnership but leaves out others. The deal has implications for tariffs,
 quotas, customs procedures, standards alignment, services access, and
investment protection for businesses operating in both markets. Brexit
has also affected the exchange rate between the British pound and
other currencies as well as the inflation rate and consumer confidence
in both regions.
o Political effects: Brexit has affected the political stability and security
of both the UK and the EU as well as other countries. The UK has
faced challenges such as opposition from Scotland and Northern
Ireland who voted to remain in the EU; protests from pro-EU and
anti-Brexit groups; conflicts with Spain over Gibraltar; and violence
from dissident Irish groups. The EU has faced challenges such as
rising populism and nationalism; fragmentation and polarization;
migration and refugee crises; and external threats from Russia and
China.
o Legal effects: Brexit has affected the legal system and regulations of
both the UK and the EU as well as other countries. The UK has had
to adjust its laws and rules to reflect its new status as a non-EU
member. The UK has also had to negotiate new agreements with
other countries on various issues such as data protection, intellectual
property, aviation, security, and fisheries. The EU has had to adapt its
laws and rules to cope with the loss of one of its largest and most
influential members. The EU has also had to deal with the
implications of Brexit for its internal market, budget, institutions, and
policies.
o Social effects: Brexit has affected the social values and norms of both
the UK and the EU as well as other countries. The UK has
experienced a rise in social divisions, tensions, and hostility along the
lines of age, education, income, region, and nationality. The UK has
also witnessed a decline in social cohesion, trust, and tolerance as
well as an increase in racism, xenophobia, and hate crimes. The EU
has experienced a surge in social movements, protests, and campaigns
for or against further integration, enlargement, or reform. The EU has
also seen a change in social preferences, attitudes, beliefs, and
behaviors regarding democracy, identity, diversity, and solidarity.
o Technological effects: Brexit has affected the technological
development and innovation of both the UK and the EU as well as
other countries. The UK has lost access to some of the EU’s
programs, funds, networks, and collaborations that support research,
education, infrastructure, or entrepreneurship in various fields of
science, technology, engineering, and mathematics (STEM). The UK
has also faced challenges in attracting and retaining talent, skills, and
capital for its innovation ecosystem. The EU has lost one of its
leading contributors, partners, and competitors in technological
innovation. The EU has also had to adjust its strategies, priorities, and
 policies to foster its digital transformation, competitiveness, and
sovereignty.
 Ecological effects: Brexit has affected the ecological conditions and
challenges of both the UK and the EU as well as other countries. The UK
has departed from some of the EU’s environmental standards, regulations,
and commitments that address the issues, risks, or opportunities related to
climate change, biodiversity loss, resource depletion, or pollution. The UK
has also had to develop its own environmental policies, plans, and targets
that reflect its national interests, capabilities, and ambitions. The EU has lost
one of its key allies, supporters, and role models in environmental action.
The EU has also had to cope with the consequences of Brexit for its green
transition, leadership, and cooperation.

I hope this answer was helpful to you. If you have any feedback or follow-up

questions, please let me know. 😊

Yes, a change in the elected government can significantly affect the business environment in
a country. Government policies, regulations, and economic priorities often shift with changes
in leadership, which can have both positive and negative impacts on businesses. Here are
some views and examples to illustrate how a change in government can affect the business
environment:

**1. Regulatory Changes:**

- **Impact:** A new government may introduce or repeal regulations that directly impact
businesses. This can include changes in labor laws, taxation policies, environmental
regulations, and industry-specific rules.
- **Example:** In the United States, when President Donald Trump's administration took
office in 2017, it implemented a series of deregulation initiatives, particularly in industries
like banking and energy. These changes had a profound impact on those sectors.

**2. Economic Policies:**

- **Impact:** A change in government can lead to shifts in economic policies, such as
fiscal stimulus packages, trade policies, and monetary policies. These changes can affect
inflation rates, interest rates, and currency values.
- **Example:** In 2021, the new Biden administration in the U.S. proposed a $1.9 trillion
economic stimulus package to combat the economic effects of the COVID-19 pandemic. This
had implications for various sectors of the economy.

**3. Trade Relations:**

- **Impact:** Changes in government leadership can lead to shifts in a country's trade
relations, affecting import/export regulations and trade agreements. These changes can
impact global supply chains and the competitiveness of businesses.
 - **Example:** The Brexit vote in the United Kingdom in 2016 led to a change in the
government's stance on trade relations with the European Union, resulting in significant
consequences for businesses operating between the UK and EU.

**4. Foreign Investment:**

- **Impact:** Governments can influence foreign investment policies and incentives. A
change in leadership may attract or deter foreign investors based on their perceptions of the
new government's economic approach and stability.
- **Example:** When Mexico elected a new president, Andrés Manuel López Obrador, in
2018, there were concerns about his economic policies and their potential impact on foreign
investment in the country.

**5. Political Stability:**

- **Impact:** A sudden change in government can lead to political instability, protests, or
even conflicts, which can disrupt business operations, supply chains, and overall economic
stability.
- **Example:** The Arab Spring uprisings in several Middle Eastern countries in the early
2010s resulted in political instability, which had negative impacts on businesses operating in
the region.

**6. Environmental and Social Policies:**

- **Impact:** Changes in government can affect environmental and social policies, leading
to new sustainability requirements or incentives for businesses.
- **Example:** The European Green Deal, introduced by the European Union in response
to the climate crisis, has significant implications for businesses operating within the EU, as it
sets ambitious environmental goals and regulations.

In conclusion, changes in elected governments can indeed have a profound impact on the
business environment. Businesses must closely monitor and adapt to shifts in government
policies, regulations, and priorities to navigate the changing landscape effectively.
Understanding and engaging with the new government's goals and policies can help
businesses mitigate risks and seize opportunities that arise from political transitions.