IBUS1101 Lecture Notes - Lecture 6: Country Risk, Local Economic Development, Consumer Protection
18 Jul 2018
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Document Summary
Country risk is defined as exposure to potential loss or adverse effects on company operations and profitability caused by developments in a country"s political, economic and/or legal environments. Sometimes termed political risk, it is one of four major types of international business risks (discussed above). Each country and its economy has unique political and legal systems that often pose challenges for company performance. At the same time, the political and legal context may also present opportunities for companies. Preferential subsidies, government incentives, and protection from competition reduce business costs and influence strategic decision making. Many governments encourage domestic investment from foreign mnes by offering tax breaks and cash incentives to employ local workers. Example: coca-cola"s business fell off in germany when the government enacted a recycling plan. New laws required consumers to return non-reusable soft drink containers to stores for a refund of 0. 25 euros. Rather than cope with the unwanted returns, big supermarket chains pulled coke from their shelves.
