There are numerous risks, which domestic firms doing business overseas face. The distance between two nations,...

There are numerous risks, which domestic firms doing business overseas face. The distance between two nations, along with the unfamiliarity with foreign nation’s laws, spurs a plethora of risks that complicate business relations and transactions. In addition, the differences between two nations currencies and culture elevate the potential for business dealings to go awry.

Discuss three additional risks that may complicate doing business overseas.
Discuss what you believe to be the most significant risks for a restaurant that wants to expand to an overseas market.

Expert Solution

1) The additional risks identified while doing business overseas are as follows-

1. Interest rate risk- The fluctuations in interest rate structure of one country can affect business in which it operates. The rise in variation of interest rate risk gives birth to inadequacy in markets. Moreover, fluctuation in floating exchange also affects interest rates.

2. Credit risk- It is the risk that party in overseas market or debtor may fail to honor his obligations leading to bad debts. It is present in foreign exchange and international trade.

3. Settlement Risk- It is one of the important mechanism as to settle down payments. Failing to settle payments due to time difference leads to occurrence of settlement risk.

2) Most significant risks for restaurant expanding overseas are listed as under-

Liquidity Risk- Inadequacy of liquid funds tends to occurrence of liquidity risk. This is because restaurant business is cash-intensive industry requiring proper flow of funds to carry on business.

Risk of low sales- The restaurant business may have everything under its roof starting from diversified menus to quick staff, but may experience risk of low sales. This is because inexperience to handle wide range of customers at peak times.

Risk of High costs- Opening restaurant requires capital for food, labor and ancillary costs like rent, utilities and marketing. Thus, proper planning is required as such costs may hamper sales and eradicate profits.

jeff jeffy answered 7 months ago

Explain the risks and obstacles for a U.S. based company doing business overseas.

1. what are the two risks that you see with doing business with other nations? 2....

1. what are the two risks that you see with doing business with other nations? 2. At this point in the class, do you agree with the theory that if every country specializes in what they manufacture best, all prices will drop and everyone's economy will thrive? discuss why you feel that way. 3. What are the dangers of not being able to produce the products you consume?

What are the multiple risks that a company might face in doing business in a particular nation?.

What are the multiple risks that a company might face in doing business in a particular nation?. Assume a U.S. corporation, XYZ Company, is considering building a glass factory in a nation that has an authoritarian government leader, a non-convertible currency, and very strict export restrictions. Explain what are the risks XYZ Company needs to understand and weigh as the company considers making this direct foreign investment.

Discuss benefits, costs, and risks of doing business in spain?

What are the factors that contribute to the risks of doing business in a country?

Please provide a discussion of the numerous implications of doing business abroad and how these issues...

Please provide a discussion of the numerous implications of doing business abroad and how these issues impact and organization. Then provide a detailed discussion of how doing business in countries with different currencies can be particularly challenging and how failure to consider currency risk can have significant negative impact on an MNC.

Write an overview of FCPA and the risks that can be present by doing business in...

Write an overview of FCPA and the risks that can be present by doing business in India.

Find the WACCs for two firms in the same industry, one of which is doing well...

Find the WACCs for two firms in the same industry, one of which is doing well and one of which is doing poorly. Do the WACCs seem appropriate for the situation?

1. Why does many companies entering international business ignore the element (cost) of doing business overseas?...

1. Why does many companies entering international business ignore the element (cost) of doing business overseas? 2. What were some of the reasons interest dropped on freight derivatives in 2002? Had this occurred to a lesser extent at any time previously?

Doing business in global markets can be tricky,but the benefits that come from overseas successjustify much...

Doing business in global markets can be tricky,but the benefits that come from overseas successjustify much of the risk. That’s what Electra BicycleCompany’s founders discovered after theirbusiness’s growth suddenly halted. Throughoutthe early 2000s, many bicycle manufacturers concentratedon producing mountain and speed bikeswhile discontinuing casual models. BennoBazigerand JeanoErforth of Electra didn’t follow the fad,though, choosing instead to stick with cool,upright bikes perfect for cruising city streets. The company thrived for years thanks to theirunique “comfort bikes.” However, major competitorslike Schwinn eventually...

Question