INTERNATIONAL BUSINESS 10 QUESTIONS Essay Example | Topics and Well Written Essays - 500 words

INTERNATIONAL BUSINESS 10 QUESTIONS - Essay Example If there are adverse economic conditions affecting the business environment in one country, they may escalate and affect other countries and have a high chance of ending up adopting global proportions. Most of the smaller global firms might find themselves unable to adequately compete on the international market as a result of lack of enough resources. This might cause them to eventually be forced out of business. Political Risk is the risk that a business or individual’s investments could end up suffering a huge loss mainly due to a result of a country’s instability or political changes in a country’s legislative body, government, military control or other foreign policy makers. It is also commonly referred to as geopolitical risk, while economic risk is the risk that a country’s macroeconomic conditions like government regulations, exchange rates and political stability will affect a business entity’s investment in that country to be economically unsustainable as a result of its profit revenues not being sufficient enough to repay its debts and cover its every day operating costs. On the other hand, legal risk is the risk that a company’s business transactions will contravene the regulatory policies in a country or parties in a business contract are not able to enter into any business contract. Managers can manage political risks by better understanding the political uncertainties in a given country and employing the use of mitigation tactics like risk diversification, intellectual property safeguards and buying political insurance. A subsidy is a form of assistance made mostly by governments mostly in the form of tax deductions or cash payments, to businesses like producers and have the result of being distributed as subventions within a given industry with the intention of preventing the overall decline of that industry in the interest of the general public. 4. (TCO D) Despite its advantages, FDI has been described as an "expensive"