Considering Risks in International Business

Topics: Risk, Investment, Government Pages: 3 (917 words) Published: December 28, 2006

Business by itself requires high awereness of risks, taking these risks, managing them and gain profits from them. The literature names this task as "entrepreneurship". Entrepreneurship is the practice of starting new organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started.

Turning to international business, the situation seems hazier. In the international area the risks are less identified, more difficult to take and manage. The environment, cultural development and social structure are not stable, often changing, hence there are not certain single solutions over risks, it needs following changes in political, economical and natural aspects, high flexibility and quick response. On the other hand the business form is also one of the most important task to consider. However the business shall be a simple international trader (exporter-importer) or highly integrated with other societies such as multinational companies.

To measure the extent of these risks we can divide the environment commonly into three catogories. First of all the business form has to take the economical risks into account, than it must consider the risks may arise from politcal environment and finally the natural risks should be investigated.

From the wiev of economical risks, the business which is investing in international scope searches informations such as: the type of the economic system, economic size and stability, growth rate, GDP, GNI, PPP (Purchasing Power Parite), inflation, existence and influence of capital markets, availability of economic infrastructure and ability or intention to meet its financial obligations of the revelant country or countries. It isn't hard to imagine these...
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