7/30/2019 Risky Business - international

1/3

Summary:Venezuela is a country that has a lot of natural recourses with a good location close to

North American market. The most important natural resource is the oil. They have

great reserves of oil that that represent approximately 300 billion barrels. One of the

main characteristics of their oil is that itsheavy; this heavy oil can be found in Orinoco

basin. This heavy oil cannot flow easily and expensive to produce.

Venezuela was suffering from income inequality and high rates of poverty and

unemployment before the election of the President Hugo Chavez. He was elected in

1999 and reelected again in 2000 and 2006. He decided to follow political and

economic policies by leading a Bolivarian revolution in which he ordered the Venezuelan

state-owned petroleum company Petroleos de Venezuela; the worlds fifth largest

exporter of oil to switch some of its money in order to fund the president social and

political goals. The company production declined lately because of underinvestment in

infrastructure and development of new fields of oil. The president signed several

agreements with countries such as Cuba in addition to some Caribbean nations to

encourage the domestic and foreign policy programs which also had an impact on the

companys revenues. In addition he signed an agreement with china to sell them oil.

The president used his political power to stand against any organization which does not

support his polices and goal.

In addition, Venezuela is considered as a risky business environment due to the

continuous increase in inflation rates and currency devaluation; in which any investment

in this country will not be able to grow enough in order to get over inflation over

time. As well, it will affect Venezuelan businesspersons investments negatively due to

currency devaluation in which it will have an impact on the currency exchange rate. In

addition, the Bolivarian revolution has divided Venezuela into two sides; people who

supported the government policies and people who opposed those polices. This division in

the country because of the political issues led the environment to be even more risky

when it comes to investment. Therefore, Venezuelan businesspersons seek to invest in a

situation which is better and promising more than their current situation.

7/30/2019 Risky Business - international

2/3

Problem:As we mentioned, Venezuela was suffering from income inequality which refers to the

unfair distribution of income as well as suffering from poverty and high unemployment

rate.

Solutions:President Hugo Chavez promoted the Bolivarian revelation to reduce income inequality

and to support the countrys economic independence.

- He implemented his polices by encouraging socialism and social programs in orderto reduce poverty and benefit his people. In which he ordered the Venezuelan

state-owned petroleum company to sell 115,000 of oil a day at special prices to

Cuba in exchange of 20,000 Cuban medical professionals to operate in clinics in

the poor areas of Venezuela and in return of Cuban experts. He also made the

medical and health care services free to be accessed by all Venezuelans. He also

signed an agreement one million barrels a day to china. In return, china will fund

several development projects which include housing energy and industrial growth.

- He implemented price controls on different goods such as food to control thehigh rates in inflation.

- The president also nationalized several companies and his targets were oil,cement, steel, rice processing and packaging. His purpose from nationalizing such

firms is to control the high unemployment rate and so that everybody can

benefit from the countrys natural resources. In other words, he didnt like the

idea that the private sector is making money more than the government sector,

so he took over such firms in order to control the private sector workers

salaries and to equalize both sectors to reduce income inequality.

-

7/30/2019 Risky Business - international

3/3

Opinion:In our opinion, we support the president idea of leading a Bolivarian revolution in which

he benefited his country and had a broader goal which was making Latin America as one

union.

We believe that the policy which he implemented such as polices to support socialism

and many other social problems to reduce poverty were beneficial for many of his people

specially people in the poorer areas in which he tried his best to lift the poor people

up.

As well, implementing nationalization was also a good idea in which it decreased the

unemployment rate which helped many unemployed people to find jobs in companies

where they couldnt find a job in it before. He also wanted to make the countrys

national resources accessible by everyone since he believed that these resources belong to

everybody and no one owns them.