international risk
Post on 06-Apr-2018
219 Views
Preview:
TRANSCRIPT
-
8/2/2019 International Risk
1/17
INTERNATIONAL
BUSINESS RISK
Presented To: PresentedBy:Dr Rajeev Gupta Sir Sumeet Rawat
Arpita Nagar
Shreya Jhawar
-
8/2/2019 International Risk
2/17
Introduction
According to theOxford EnglishDictionary risk refers toThe possibility ofsomething badhappening or expose to
danger or happening orloss
-
8/2/2019 International Risk
3/17
Risk in International business
Risks in
International
Business
Commercial Risk
Financial
[Currency]
Risk
Country Risk
Cross
Cultural Risk
-
8/2/2019 International Risk
4/17
Cross cultural Risk
Corporate Culture Differences.
Differences in National Cultures.
Cross-Cultural Competencies of Key Players.
Language difference impede effective
communication.
-
8/2/2019 International Risk
5/17
Risk Factor1:Corporate Culture Differences
What is the degree of "fit" between theclient's corporate culture and the vendor's?
How close are their vision and values? Is one bureaucratic, the other
entrepreneurial? Human risk
Risk Factor 2: Differences in National Cultures
The globalization revolution is in its infancy,while national cultures are longstanding.
Cultural conditioning is deep. Despite surface similarities in the interconnected
world, the underlying attitudes, thought patterns,assumptions and expectations of differentcultures vary widely.
-
8/2/2019 International Risk
6/17
Do people tend to be individually autonomousor group-oriented?
Egalitarian or hierarchical?
Risk Factor 3: Cross-Cultural Competenciesof Key Players
In addition to the technical, managerial,leadership and interpersonal skills requiredfor their jobs
The people need to have cross-cultural
competence if they are to be successful andnot put their company at risk.
This includes both knowledge about othercultures and the ability to adapt to cultural
differences.
-
8/2/2019 International Risk
7/17
Financial Risk
Financial risk isnormally any riskassociated with anyform of financing. Riskis probabilityof unfavorable
condition in financialsector & probability ofactual return being
less than expected
-
8/2/2019 International Risk
8/17
Currency risk
It arises from the change in the price of one
currency relative another (related to commodity
i.e. grain, metal) will change
Currencies appreciation or Depreciation. interest rate fluctuation, and other harmful
economic condition create uncertainty of returns.
When currencies fluctuate significantly, the value of the
firms assets, liabilities and operating incomes may besubstantially reduced
-
8/2/2019 International Risk
9/17
Contd
Financial Risk include also:
Equity risk: or the risk that stock prices will changes.
Tax Risk: You must comply with the tax laws of the local
country.
Credit risk :is the risk of loss due to a debtor's on-
payment of a loan or other line of credit (either the
principal or interest (coupon) or both
-
8/2/2019 International Risk
10/17
-
8/2/2019 International Risk
11/17
Contd..
Commercial risk is the risk of loss due to counterpartyor markets.
It is that risk in which a foreign debtor will beunable to pay its debts because of business events,such as : bankruptcy.
This risk mainly arises due to :-
1) Longer distances between you and yourcounterparty.
2) Different cultural, political and economicalenvironment .
3) Different national and international regulations.
-
8/2/2019 International Risk
12/17
Contd
Strategic Risk:
Strategic risk is the business risk of :-
1) An immature strategy.
2) An inactive review process.3) A dis-empowered management
unable/ unwilling to take strategicdecisions.
This risk is an exposure to loss resultingfrom a strategy that turns out to be
defective or inappropriate.
-
8/2/2019 International Risk
13/17
Contd
Operational Risk :-Operational risk is the risk of loss resulting from :-
1) Inadequate or failed internal processes.
2) People and systems
orfrom external events in a business.
Technological Risk
Exposure to loss arising from activities such as design andengineering, manufacturing, technological processes and testprocedures.
-
8/2/2019 International Risk
14/17
Country risk
Country risk refers tothe risk of investing ina country, dependent
on changes in thebusiness environmentthat may adversely
affect operating profitsor the value of assetsin a specific country.
-
8/2/2019 International Risk
15/17
Country Risk
Source of country risk
Political System
Government
Political parties Legislatives bodies
Lobbying groups
Trade unions
other political institution
Legal System
laws regulation, and rules
that aims to
Ensure orders in
commercial activities
Resolves disputes
Protect intellectual
property
Tax economic Output
-
8/2/2019 International Risk
16/17
Country [Political Risk]
Political risk is generally viewed to be a biggerproblem in emerging markets.
The political actions and instability may make it
difficult for companies to operate efficiently in the
countries.
The culture or the instability of a country.
Exposure to potential loss or adverse effect on
company operation and profitability caused bydevelopment in a countrys political and legal
environment.
-
8/2/2019 International Risk
17/17
top related