Risk Analysis in International Business

Adhish Kumar SinhaPGDM E-Biz 2013-15

Political

Economical

Social

Technological

Cultural

Operational

Reputational

Natural

Risk Analysis

Risk analysis is a technique used to identify and assess factors that may jeopardize the success of a project or achieving a goal.

Risk Analysis

Type Of Risk

How it is related ? Example :-

Political RiskPolitical Risk refers to the risk that a host country will make political decisions that will prove to have adverse effects on the

multinational's profits and/or goals.

Electronic component manufacturers setting up manufacturing facilities in Indonesia can take advantage of incentive and concession under

ASEAN FTA agreement.

Economical RiskEconomical Risk are macroeconomic

factors that affects consumers purchasing power and spending . Market vary greatly in their level and distribution of income .

Explosive growth in fast food restaurants, leisure products and services in Vietnam due to rise in

income of young population with booming economy .

Social RiskSocial Risk is related to the things that

affect our attitudes, interests and opinions. These forces shape who we are

as people, the way we behave and ultimately what we purchase.

For example within the UK people's attitudes are changing towards their diet and health. As a

result the UK is seeing an increase in the number of people joining fitness clubs and a

massive growth for the demand of organic food.

Technological Risk

Technological Risk exposure to loss arising from activities such as design and

engineering, manufacturing, technological processes and test

procedures.

For example the Internet is having a profound impact on the marketing mix strategy of

organisations. Consumers can shop 24 hours a day from where ever they want and however

they want via smart phones, laptops and tablets.

Risk Analysis

Type Of Risk

What it is related ? Example :-

Cultural Risk

Cultural Risk the possibility that business will go terribly wrong as a

result of a lack of understanding about executing in a new, culturally foreign

market .

Even if you currently do business only in the United States, your organization may appeal to United

States-based Latinos, requiring you to translate your site and published materials.18 Don’t assume that this practice will give your Spanish members value.

Operational RiskOperational Risk typically viewed as risks

associated with errors in planning or executing ongoing systems (financial, quality

assurance, manufacturing, and so on).

When Union Carbide’s subsidiary near Bhopal, India, released toxic gases, it was found to have

been caused by a significant failure in operations

Reputational RiskReputational Risk reputation is damaged overseas, it can affect your domestic

brand.

Canadian energy companies that are extracting oil from the Alberta tar sands have been

increasingly targeted by activists because of the perceived damage to the environment caused

by their oil-extraction activities.

Natural RiskNatural Risk identify the availability of

natural resources and whether business is feasible due to impact of environment

Local Rosewood furniture manufacturers identifies availability of alternate raw material in

Laos.