Country Risk And Strategic Planning Essay

3498 words - 14 pages

The purpose of this paper is to inform the reader, of the American Cheese Company who has recently conducted a strategic risk analysis to determine how the company would handle some possible risks for the new global business venture. The research team for American Cheese Company on assessing the country of Ireland as well as other global business ventures reported these risk evaluations. Political systems have a huge impact on today's global business.The American Cheese Company, when considering global expansion must look at all government regulations and laws that must be met in the varied governments of the world market. The democratic society is where individuals who have a voice in making political policies a greater expression of freedom and operating other businesses in a democratic country. Totalitarianism on the other hand restricts the freedom of the citizens in their personal and business pursuits. Regardless of the political climate, many countries need legal systems to protect the rights of their citizenship and the infrastructure of the government. Legal systems and regulatory statutes can vary with each country and a company should make certain that the laws of that country protect patents, copyrights, trademarks and interests of that company. Companies must be advice on regulatory statutes such as environmental regulations, product safety and regulations on safety for their employees. The other risk that the American Cheese Company must take into consideration is the exchange of monies from one country to another.One of the risks is the unpredictability of the exchange rate because of fluctuating prices and inflation. Due to the unpredictability of the exchange rate many companies' initial investments could ultimately become more expensive adding adverse consequences to their profitability. "Many countries" put restrictions on convertibility of currencies such as the "ability of residents and nonresidents to convert the local currency into foreign currency, making international trade and investments more difficult" (International Business, 2004, pg. 21). Governments can allow residents and nonresidents to exchange unlimited amounts of currency, this is said to be freely convertible, and externally convertible allows for only nonresidents to convert currency without any limitations. Non convertibility restricts residents as well as nonresidents to convert to a foreign currency. The other risk factor the American Cheese Company should consider is the competitive risk in the global business strategy.When companies start operating in other countries assessing where their competition is and where their competition could come from are important factors before proceeding with their expansion plans. Will the products or service being brought to a new market be able to with stand other companies brining similar products and services into the same market? How much investment will be needed to make the company a success? Many companies sell...

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