Under Pressure, Dubai Company Drops Port Deal 1. Discuss the role of political factors-both in the united states and in Dubai- played in the reversal of the port deal. Solution: This case talks about the disparity of the American political parties against the ownership of port operation by the state owned Dubai company. The republicans and Democrats being the opposition party were disfavoring the sale of some terminal port operation to DP World an Arab state company.
Even though Bush being the president of the ruling party was not able to stop the transfer of control of the terminals due to the force of political decision. The force that played in the reversal of the port deal was mostly security issues related with Arab world, there was a huge protest about economic security of United states. The Democrats and Republicans were backdrop of concern about possible terrorist attack . Whereas the ruler of Dubai was willing to transfer the lease to the American company to avoid any further damage.
He also had to withdrew the deal to maintain a friendly relationship and to maintain a political stability in the host country. 2. How did the concerns of the US public result in a business decision by a Dubai company? Solution: As it is said in the case, that the outcome did nothing to solve the underlying issue exposed by an uproar that has consumed the capital for weeks. It means that the people were not happy but were panic stricken with the fact . The terror of 9/11 has created a phobia in mass.
As we have been learning from the start that completion and trade makes everyone better off, it would be very unfair and unjust if the transportation is nationalized. There is a high chance of cartel if its nationalized. 4. What are the implications of DP worlds withdrawal from global business and investment? Solution: It tries to imply us that not only economical but political understanding is also very necessary to start a successful business venture. Understand the political sentiment of the country also plays a very vital role in business decision.
Various factors such as expropriation , forced sale of equity to host country, nationalization, discriminatory treatment to foreign country, barriers to repatriation, loss of technology, interference in management decision making, dishonesty by government officials are some of the various political risk today. So assessment of the political risk before entering into the foreign borders is what the case is trying to imply. Submitted By: Jayanta Mani Kayastha Roll No-11109 International Management IVth trimester SAIM College