Macro and Micro-political Risk: Germany and Greece(USE AS GUIDE ONLY)

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Running head: MACRO AND MICRO-POLITICAL RISK: GERMANY AND GREECE

Macro and Micro-political Risk: Germany and Greece
MACRO AND MICRO-POLITICAL RISK: GERMANY AND GREECE
Macro and Micro-political Risk: Germany and Greece
Alon and Herbert (2009) discussed micro-political risks to multinational firms that stand
in contrast to macro-political risks both within and beyond governmental control. Micro-
political risks can stem from macro-political risks and from local economic, societal, and
governmental factors present regionally in terms of specific actions and behaviors that could
become burdensome to foreign firms. While Alon and Herbert advanced an innovative
methodology by which firms can assess national, regional, and local variables and therein
develop an assessment risk profile, most U.S. firms would not necessarily need such an analysis
performed to know that Germany is ostensibly a better choice over Greece if given a choice
between the two European countries.
An American company looking to establish a presence in Europe would undoubtedly
choose Germany over Greece given the present economic climate. Even if Greece were doing
well, Germany is a larger market and is a segue into other European markets due to its proximity
to Central and Eastern Europe. Moreover, Germany has a stronger and more stable economy
with less associated risk, even though the corporate tax rate is less in Greece at 26 percent
compared to Germany’s 29.8 percent (although at 50,000 euros, Greece’s rate climbs to 33
percent). Though tax evasion is common in Greece, the government has been compelled by the
EU to crack down more on evaders, which puts firms going there at a higher risk of being
audited.
Alon and Herbert (2009) also ranked labor conditions as an important factor in risk
assessment (p.131). In looking closer at the data presented, it is clear finding cheaper labor is

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Course: Macro and Micro-political Risk: Germany and Greece(USE AS GUIDE ONLY)
Subject: Macro and Micro-political Risk: Germany and Greece(USE AS GUIDE ONLY)
Subject code: Macro and Micro-political Risk: Germany and Greece(USE AS GUIDE ONLY)
Year of study: 17-18
Document
Section: Homework & Assignments
Made on: 29-01-2020
Type: .pdf
Pages: 5
Language: English
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Macro and Micro-political Risk: Germany and Greece(USE AS GUIDE ONLY)