This paper will discuss techniques to external investment strategies, techniques to internal investment strategies, and analyze risks associated with investment decisions.…
Political, legal, regulatory risks, exchange and repatriation of funds risk, competitive risk assessment as well as tax and double taxation must be considered with a business plan, especially when going international .…
In the fast moving business world, companies and firms are increasingly confronted with risk, risks that are complex and global. Emergence of new technology has made it possible for organizations and consumers to be exposed to the whole world on a scale that has not been seen before and at faster rates, hence exposing organizations to various risks; risks that may or may not be able to be anticipated or speculated or at times an organization might not be able to create solutions fast enough for these threats. Each organization is unique and operates in many areas of the world and will have risks that are both similar and different and each company may choose to mitigate the risks that may arise from vast operations differently. Organizations may choose to use one or more techniques to offset their risks, such as buying forward contracts, options, using tax incentives, etc. General Motors (GM) is a multinational organization, where they operate in countless countries over the world with assets, liabilities and sales; which is also vulnerable to risks associated with operating globally.…
Political risk happens when a country’s government unexpectedly changes its policies, which now negatively affect the foreign company. These policy changes can include trade barriers which serve to limit or prevent trade. Some governments will have tariffs in exchange for the right to export item into their country. (Investopedia) A foreign government could come and nationalize and seize control of a company’s assets. Obviously the seizure of a company is extreme but not unheard of.…
Political risk is the risk that a sovereign host government will unexpectedly change the rules of the game under which businesses operate.…
Political risk is the likelihood that the outside speculation of a business will be controlled by a mass of the administration's strategies. The suggestion to purchase out a Venezuelan soda pop maker and bottler Zip-6 in Venezuela will represent a potential hazard because of the Venezuelan economy that uses an administration process made up of trade controls, sponsorships and value controls. The political tension between the two nations is also due to the recent expulsion of senior U.S. diplomats by the Venezuelan government.…
Wagner stated that “the exercise of political power is the root cause of political risks in international business.” (p. 1) Every country has some type of political risk of doing business in that country; however, every country may not be impacted the same way. The impact of political risk is country specific. Eun and Resnick stated that “political risk that firms face can differ in terms of the incidence as well as the manner in which political events affect them.” (p. 405) Political risk can range from tax increases to briberies and extortions. The key factor for businesses is to have a clear understanding of the political risk of that country and the consequences that could potentially impact its business. The purpose of this paper is to assess the political risk that is associated with doing business in the three foreign countries known as Korea, China, and Japan.…
Our global growth is subject to economic and political risks. We conduct our operations in virtually every part of the world. In 2010, approximately 53% of our revenue was attributable to activities outside the United States. Our operations are subject to the effects of global competition. They are also affected by local economic environments, including inflation, recession and currency volatility. Political changes, some of which may be disruptive, can interfere with our supply chain, our customers and all of our activities in a particular location. While some of these risks can be hedged using derivatives or other financial instruments and some are insurable, such attempts to mitigate these risks are costly and not always successful, and our ability to engage in such mitigation has decreased or become even more costly as a result of more volatile market conditions.…
to go global. Identify possible risks that the company could be facing and how it can…
Political risk insurance is a type of insurance that can be taken out by businesses, of any size, against political risk—the risk that revolution or other political conditions will result in a loss. Political risk insurance is available for several different types of political risk, including (among others): Political violence, such as revolution, insurrection, civil unrest, terrorism or war;Governmental expropriation or confiscation of assets;Governmental frustration or repudiation of contracts;Wrongful calling of letters of credit or similar on-demand guarantees;Business Interruption; and Inconvertibility of foreign currency or the inability to repatriate funds.…
At the moment, there is a large number of multinational firms that don’t fully understand or comprehend how to deal with the high political risk in Libya, This is significant since political risk can have a substantial affect on firms, as current events are showing in Libya, Before this paper discusses this, firstly you the reader need to understand what exactly is political risk, in essence political risk is defined as the risk of losing money as a result of unstable governments or regulatory environments, acts of terrorism, wars, and military coups are all extreme examples of political risk, expropriation of resources by the government, or merely the threat can also have a disturbing effect on share prices as seen from the events in Libya, Syria, Egypt, Bahrain and Tunisia.…
government is pressing both its agencies and its citizens to adopt open-source software, a policy that could inflict some nasty wounds on Microsoft and other technology companies. These are examples of political risk, broadly defined as the impact of politics on markets. Political risk is influenced by the passage of laws, the foibles of leaders, and the rise of popular movements - in short,…
The political environment in a country affects business organizations and could introduce a risk factor that could cause them to suffer a loss. The political environment could change as a result of the actions and policies of governments at all levels, from the local level to the federal level. Businesses need to be prepared to deal with the fallout's of government politics locally and internationally.…
One way to manage political risk is to buy political risk insurance. Organizations that have international operations use this type of insurance to mitigate their risk exposure as a result of political instability. There are indices that provide an idea of the risk exposure an organization has in certain countries. For instance, an index of economic freedom ranks countries based on how political interference impacts business decisions in each country.…
This refers to the potential for instability, corruption and violence in a country or region where business takes place. In regions where political risks are high, it is difficult and costly for entrepreneurs to buy, protect and dispose of resources. Other risks include political and physical violence, extortion and corruption which involve bribes and other forms of unethical payments. These will add to the new ventures.…