Question

Executives must consider the benefits and risks of competing internationally when making decisions about whether to expand overseas. Executives also need to determine the likelihood that their companies will succeed when they compete in international markets by examining demand conditions, factor conditions, related and supporting industries, and strategy, structure, and rivalry among its domestic competitors.

For these executives that may face many uncertainties in a global marketplace, assess the three possible risks that may be faced by decision-makes seeking to expand in global markets. Analyze all three risks listed below. In your own words, analyze what conditions may be present in a country that would cause concern for these decision-makers. Explain what political risks may be present. Describe the economic and cultural risks that may also be present. You do not need to select a country. Your responses to all three risks can be a general overview of potential problems that executives want to review and assess the potential negative impacts.

Political risk refers to the potential for government upheaval or interference with business to harm an operation within a country.

• In extreme cases, a company’s assets in a country are seized by the national government. This process is called nationalization.

Economic risk refers to the potential for a country’s economic conditions and policies, property rights protections, and currency exchange rates to harm a company’s operations within a country.

Cultural risk refers to the potential for a company’s operations in a country to struggle due to differences in language, customs, norms, and customer preferences.

Your response should be around 150 to 200 words.

Answer 1

Answer: The international marketing is full of uncertainty and before entering a new foreign market, the companies need to analyze the macro environment in which they are expected to operate. The three most important factors to consider are

1. Political factor: The attitude and policies of the government towards the foreign companies and investment plays an important role in the success of the firms. The government regulations, quality of governance, policies of the government, corruption level and political stability in a country determine the success or failure of the firm.

2. Economic factors : Factors like economic growth, strength of financial institutions, inflation rates, purchasing power and sentiments of the customers directly contribute towards the success of the firms

3. Cultural factors: The local culture defines the attitudes and consumer behavior inside a country. People prefer to purchase products that reflect their culture and cultural choices. When there is a mismatch between the company’s offering and cultural choices of the people, the products are not accepted.

Thus the executives need to consider these factors while making decisions related with internationalization