WK1Assgn_Armstrong_Earl

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Walden University *

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6623

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Information Systems

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Oct 30, 2023

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docx

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Week 1 Assignment: ENVIRONMENTAL AND CULTURAL IMPACT ON RISK Prepared by: Earl P. Armstrong Jr Date: September 9, 2023 Walden University WMBA 6623: Enterprise and Project Risk Management Dr. Stuart G. Towns

In the realm of international business, effective risk management is pivotal for success. The case study of a company exporting frozen chicken to Russia sheds light on how the cultural and environmental factors surrounding the Russian buyer influenced the identification of risks and the available strategies for addressing them. This essay will delve into the influence of the Russian business culture on the identified risks and the subsequent risk response strategies. Additionally, it will evaluate whether choices could have been made in response to these risks (Hampton, 2015). Impact of Cultural and Environmental Factors on Risk Identification The Russian business environment played a vital role in pinpointing the risks tied to this endeavor: Expropriation Risk: Russia's history of government actions, such as the confiscation of the Hotel Europa, underscored the expropriation risk. The Russian government's ability to take actions that could negatively impact foreign investments made this risk a significant concern. Therefore, the Russian business culture directly contributed to the identification of this risk. Credit Risk: The Russian business culture, marked by delayed payment practices, led to the recognition of credit risk. Demanding upfront payments or obtaining letters of credit was not practical. The prevailing norms in Russia introduced uncertainty for the U.S. company. Physical Security Risk: The challenging security situation in Russia influenced the acknowledgment of the physical security risk. This risk became evident when containers arrived empty, emphasizing the necessity for distinctive risk mitigation strategies.

Impact of Cultural and Environmental Factors on Risk Response Choices The Russian business culture also affected the available options for responding to these risks: Expropriation Risk: Traditional insurance was not the initial choice due to uncertainties regarding whether the government's actions could be classified as expropriation. Instead, alternative strategies were explored. The company considered options like purchasing an old reefer vessel for storage and partnering with a well-connected Russian entity. This demonstrated an ability to adapt to the local environment and a willingness to seek unconventional solutions. Credit Risk: Given the culture of delayed payments in Russia, the decision to require payment for one cargo before releasing the next cargo was a practical response. This approach aligned with local business practices and created incentives for the Russian partner to fulfill payment obligations. Physical Security Risk: The security situation in Russia prompted the decision to place guards on the train, representing a proactive response to an immediate issue. While this choice proved effective, it also reflected an adjustment to the specific security challenges inherent in the Russian environment. Evaluation of Risk Response Choices

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