Novartis' Expansion Project in Bolivia
Novartis’ Expansion Project in Bolivia
08
Fall
Manoella Talavera
Carolina Perez
Marcos Echeverri
Jorge Quintana
Alexandria Guerra
Walter Leon Fleming
International Business
Fall 2011
Bolivia’s General Socioeconomic and Political Framework
Due to the political, economical, and social instability, Bolivia is a difficult and tremendously risky place to do business as an outsider company.
Political Analysis Understanding the political structure of a country is very important when trying to do business internationally. When multinational corporations plan to invest in a new country they must understand the political system and culture. Bolivia has faced political instability for over the past century. Since Evo Morales was elected as president, many changes have been made to protect some of the natural resources and mandate foreign investment. Morales’ political influence has played a large roll in the regulation of foreign investment and business. Since his inauguration, Morales has nationalized the hydrocarbon industry and the telecommunication industry. This has caused many companies to negotiate new contracts. Although Bolivia’s legal framework is open to foreign investment, many foreign companies and investors are affected by many of the inconsistent regulatory decisions. These issues often cause uncertainty with investors when deciding to invest. In addition the easily corrupted judicial system also causes a threat to many investors that decided to invest in Bolivia. Several problems that come up when investing in Bolivia result from the weak judicial system. Many of the property and contractual rights might be enforced, but the process can take a lot of time due to corruption and political influence. This also could be a potential threat to companies that want to expand into Bolivia. Political protests against the government are another issue that might affect foreign investors when attempting to do business in Bolivia. Many of these
08
Fall
Manoella Talavera
Carolina Perez
Marcos Echeverri
Jorge Quintana
Alexandria Guerra
Walter Leon Fleming
International Business
Fall 2011
Bolivia’s General Socioeconomic and Political Framework
Due to the political, economical, and social instability, Bolivia is a difficult and tremendously risky place to do business as an outsider company.
Political Analysis Understanding the political structure of a country is very important when trying to do business internationally. When multinational corporations plan to invest in a new country they must understand the political system and culture. Bolivia has faced political instability for over the past century. Since Evo Morales was elected as president, many changes have been made to protect some of the natural resources and mandate foreign investment. Morales’ political influence has played a large roll in the regulation of foreign investment and business. Since his inauguration, Morales has nationalized the hydrocarbon industry and the telecommunication industry. This has caused many companies to negotiate new contracts. Although Bolivia’s legal framework is open to foreign investment, many foreign companies and investors are affected by many of the inconsistent regulatory decisions. These issues often cause uncertainty with investors when deciding to invest. In addition the easily corrupted judicial system also causes a threat to many investors that decided to invest in Bolivia. Several problems that come up when investing in Bolivia result from the weak judicial system. Many of the property and contractual rights might be enforced, but the process can take a lot of time due to corruption and political influence. This also could be a potential threat to companies that want to expand into Bolivia. Political protests against the government are another issue that might affect foreign investors when attempting to do business in Bolivia. Many of these