International Business Risks
The Risks of International Business
There are a number of challenges in conducting business internationally that are not issues for local companies. While each foreign country may have its investment potentials, many also harbor risks only associated with global business activity. Sometimes the risks involved in doing business in a particular country exceed the benefits.
Here is a brief overview of some of the risks multi-national corporations face while doing business in foreign countries. 1) Strategic risk involves the ability of a firm to make strategic decisions in order respond to the forces that are a source of risk. These forces, such as the threat of new entrants in the industry, threat of substitute goods and services, intensity of competition within the industry, bargaining power of suppliers, and bargaining power of consumers, impact the competiveness of a firm. 2) Operational risk is the threat caused by the breakdown of machineries, supply and demand of resources and products, shortfall of the goods and services, lack of perfect logistic and inventory which leads to inefficiency of production. 3) Political...
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