#553 Discuss four types of risks involved in international

Discuss four types of risks involved in international - Business Statistics

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Free Chegg Question

Discuss four types of risks involved in international business. Pick a country of your choice and explain the intensity of these business risks in that country with valid reasons

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Any business comes with great risk involved in it, the same is the situation with International business. Some risks are as follows

1. Political Risk - Politics of the nation affects the business of any nation and international business. Political decisions and policies of the present government have a large impact on business. If there is political instability then nothing can survive from loss.

2. Foreign Exchange Risk - Policies of governments and international organizations such as IMF decides the fate of the international business. There is a risk of fluctuations in forex exchange shortfall which can affect business largely.

3. Protectionism- Governments can decide about the economy and trade weather to keep the market open for international firms or protect local businesses from multinational companies.

4. Cultural Risk- There has to be a risk for business because of cultural diversity in the world which gives less chance to some businesses to flourish.

In a country like India which is a developing nation with a large population and diversity, these risks can be observed very clearly.

In India, there have been many instances of political instability which had affected international business. India faced a Foreign exchange crisis in 1991 due to a balance of payment crisis. Government and central bank need to manage foreign exchange to reduce the risk.

In India, the Risk of protectionism can be observed because many local companies have got the upper hand for survival from multinational companies. Also, the Cultural risk in India is very much active because of the diversity of languages, foods, castes, religion gives a risk in international business as everything affects the market as a whole.