Business Risk Analysis

Global Business Analysis ProcessInternationalRegionalCountryBusiness risk analysisPotential conflicts and reconciliation with stakeholdersMission statement

Global Business Analysis ProcessInternational

EconomicsPoliticsFinanceTerrorismHealthEnvironmental (Global Warming)

Global Business Analysis ProcessRegional

Impact of political and economic history on regionRegional alliancesCountry selection• Market size and growth• Barriers to entry

– Tariff – Non-tariff restrictions

• Previous experiences in country• Timing

Global Business Analysis Process

CountryCulturalPoliticalEconomicLegal Physical Environment

Global Business Analysis ProcessBusiness risk analysis

Political, legal, and regulatory risks

Exchange and repatriation risks

Taxation and double taxation risks

Market risks – 4/5 P’s• Product• Price• Place• Promotion• People

Distribution and supply chain risks

Social and cultural risks

Labor availability and issues

Global Business Analysis Process

Potential conflicts and reconciliation with stakeholders:

StockholdersEmployeesStrategic partnersGovernmentRegulatorsNGO’s

Mission statement

Mission StatementsWhat is our business and who are we?

Identification of stakeholders and their claims:

Labor

Customers

Suppliers

Stockholders

Management

Community

Deciding Which Markets to EnterRegional free trade zones

The European UnionNAFTAMERCOSULAPEC

Evaluating potential marketsPsychic proximity – difficult to quantify, but very important

Business Risk AnalysisCountry and business risk analysisInitial screening

Basic need potential Foreign trade and investment

Second screeningEconomic forces Financial forces

Third screeningPolitical and legal forces

Fourth screeningSocial forcesEconomic forces

Fifth screeningCompetitive forces

Business Risk AnalysisCountry and business risk analysisApplication of STEEP factors related to country

Social-demographic

Technological

Economic

Ecological (environmental)

Political (legal)

Business Risk AnalysisCountry and business risk analysisSWOTT analysis

Strengths

Weaknesses

Opportunities

Threats

Trends

Business Risk AnalysisCountry and business risk analysis

Initial screening

Basic need potential

Foreign trade and investment

Business Risk AnalysisCountry and business risk analysis2nd Screening: Economic and Financial forces

Economic indicatorsBalance of paymentsBudget deficitsDegree of inflationExchange controlsCurrency convertibilityGross domestic product (GDP) and growth rate of the target country

Business Risk AnalysisCountry and business risk analysis

Third screening -Political and legal

forces

Entry barriers

Profit remittance barriers

Other possible barriers

Business Risk AnalysisCountry and business risk analysisFourth screening – Sociocultural forcesSocial forcesEconomic forces

DemographicsCulturalReligiousEducational levels of populaceHealthLabor and unemployment

Business Risk AnalysisCountry and business risk analysisFifth screening: competitive forces

Number, size, and financial strength

Market share

Marketing strategies

Distribution and supply chains