Discussion Questions 5

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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 200 words.

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