Challenges And Risks Of A Global Economy

Strategic planning is essential prior to any individual or company deciding to engage in international business whether as direct/indirect investment or through trade. An evaluation of risks should be considered and strategies developed accordingly prior to any potential investment in a foreign country. One such risk which requires consideration is political risk i.e. "governmental or societal actions and policies, originating either within or outside the host country, and negatively affecting either a select group of, or the majority of, foreign business operations and investments."

However, the investment was not without risks. There are four types of risks in international business called cross-culture risk, country risk, currency risk and commercial risk. Cross-cultural risk refers to a situation or event where a cultural miscommunication puts some human value at stake. Country risk describes the potentially adverse effects on company operations and profitability holes by developments in the political, legal, and economic environment in a foreign country. Currency risk is the risk of adverse unexpected fluctuations in exchange rates. Commercial risk refers to potential loss or failure from poorly developed or executed business strategies, tactics, or procedures (Boter & Wincent, 2010). Investment in Rulmenti Grei, Timken might face the salient risks of political and economic instability. Romania’s economic growth was slower, inflation was higher, and the labor force was more volatile. Furthermore, there might be a risk of re-nationalization. It is said that economic risk analysis tells corporate leaders the ability of a particular country to pay its debt while political risk analysis tells them whether that country will pay its debt. Political risk measures the stability of individual countries through the

POLITICAL AND BUSINESS RISKS Last Name 3between various countries may negatively impact on the global business operations. As such, afirm cannot effectively operate to achieve its full capacity and maximize its profits. Political risksalso include the legal legislations that a country imposes on the international businesses that openup their operations in these countries. The government may devise a policy that limits theoperations of the multinationals in the country. Such legislation by the government is a hindranceto the efficient operation of the international businesses.Business risk refers to the likelihood that a company will have lower profits thanexpected (Wild & Han, 2014). There are a number of factors which influence the risk; theyinclude the price of commodities, sales volume, competition, the economic conditions and thegovernment interventions. These factors negatively influence the global business operations.Therefore, as large

Title of Essay: Identify three major political and economic global risks for businesses from the list of twelve discussed in week 16

The process of globalisation has been the catalyst for increased global interconnections. (Costello, 2004). Global interconnections are linked to developments in transport, communications technologies along with the increased influence of large regions of the globe. These changes are also responsible for the breaking down of national borders and the creations of a virtual business globe. The enhancement of business opportunities in social globalisation in Australia has benefited the creation of jobs and employment.

Executives face an ever-increasing portfolio of risks that is broader and more complex. The world is getting more volatile as it gets more connected, while external and geopolitical "over-the-horizon" risks are becoming both more relevant and tougher to manage with globalization. Due to this all organizations need a unique way of thinking about OTH and emerging risks, and in many cases a dedicated process to manage these risks. It is imperative for organizations to have a structured approach to tracking over-the-horizon events that could negatively impact company performance or potentially bring

Why does globalization exist, why are countries softening their borders and working together in an unprecedented new way? The answer to this question is demand. The demand to have the latest phone, laptop, or artistically woven basket made by a designer from across the globe. In order to deliver the product and meet the demand what needs to occur Friedman labels the “supply chain symphony” (126). Factories in China need to know when and where the products for their device are located, even before the customer orders it. This requires

The global economy has always been a topic of discussion, whether the discussion is about its improvement or disintegration. Coming out of the 2008 recession, there was little hope for an improvement in the global economy, and citizens of the world were less than optimistic about growth opportunities. That being true, it appears that most individual economies have reached a near-stable state, in which they are not oscillating much; but whether that can be expected to last is now the question on economists’ minds. There is argument as to whether or not to expect the economy to crash this year, 2016, and why it would or

There are all types of risks involved if one is small business manager or a manager of a larger corporation. The responsibilities on a day-to-day basis can be vital towards the success of the organization. The company facilities can be associated with working capital, production, and sales. The manager would need to reflect a common awareness of the potential risks that can be involved. Although, there can always be a risk involved in an organization, the manager would and should have the capability to identify the type of risks that the company can surface. In this paper, one will provide a further explanation on the various risks and along with presenting a way for financial managers on a moderate approach towards these risks.

risks. The management has decided to venture into the global market to increase its profits.

In business, in the word of investment can be defined as the outflow of money for the purchase of valuable item with an expectation of positive future return or the purchase of equipment or inventory by owner in order to improve future business. (Kahraman, 2011) Moreover, the part of decision-making acts a crucial role in business investment that depends upon the investor’s profit expectation, the availability to finance the investment and the potential cost of assets. (Virlics, 2013) However, risk and uncertainty are the basic terms to the decision-making framework. Risk can be defined as the probability of outcomes or loss that is caused by internal or external vulnerabilities where the probabilities of the possible negative occurrence

In business, the word of investment can be defined as the outflow of money for the purchase of valuable item with an expectation of positive future return or the purchase of equipment or inventory by owner in order to improve future business. (Kahraman, 2011) Moreover, the part of decision-making preforms a crucial role in business investment that depends upon the investor’s profit expectation, the availability to finance the investment and the potential cost of asset. (Virlics, 2013) However, risk and uncertainty are the basic terms to the decision-making framework. Risk can be defined as the probability or threat of outcomes or loss that is caused by internal or external vulnerabilities where the probabilities of the possible negative

Several literatures have derived theories to explain and measure the risk management and regulation challenges faced by businesses in their operations. According to Cox (2007), businesses are affected by diverse risks both in their internal and external environment. Among them include financial and marketing risks, violence crises, and natural disasters. Due to uncertainty of the consequences, several authors have described risk management as the counter measure to reduce impact. Risk is defined as events whose unfavorable consequences have a far reaching effect or are unacceptable. In recent studies, risk assessment is a critical topic for research, since risk occurrence is present in every business environment. Szylar

Managers running modern corporations such as multinational enterprises are often associated with operational risks well beyond what was thought. These organisations manage production establishments and deliver services overseas and are more likely to get involved in bribery and corruption due to ethical failures. Operational risk is the risk of loss as a result of internal failures in a corporation, people or external events which will lead to the collapse of financial institutions. Effective risk management is extensively depending on the ability of a company to sense potential fraud issues, analyze the situation critically and adopt the best approach to remedy the situation. In short, a manager has to apply sets of knowledge and risk management skills dealing with these situations but marshalling such knowledge in an effective way is always tough.

Some nations are making enormous progress to lift their citizens from the hollows of poverty. Consequently, billions of