Risk & Strategies In International Business

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risk

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a situation involving exposure to danger

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economic risk

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is the chance that macroeconomic conditions like exchange rates, government regulation, or political stability will affect an investment, usually one in a foreign country.

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exchange rate risk

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The risk of an investment's value changing due to changes in currencyexchange rates. 2. The risk that an investor will have to close out a long or short position in a foreign currency at a loss due to an adverse movement in exchange rates.

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credit / sale risk

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a risk associated with the sale and accompanying transactions between two foreign markets

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high dependency risk

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occurs when a country depends too greatly on imports from one single country or when a country depends too greatly on exporting a very large number of exports to one single country

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political risk

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The risk that an investment's returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policy makers, or military control.

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legal risk

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Basel II classified Legal risk as a subset of Operational Risk in 2003. There is no standard definition, but there are at least two primary/secondary definition sets in circulation. Mcormick, R. 2004Legal risk is the risk of loss to an institution which is primarily caused by: (a) a defective transaction; or.

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purchasing power

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An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.

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gdp

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is the broadest quantitative measure of a nation's total economic activity. More specifically, GDP represents the monetary value of all goods and services produced within a nation's geographic borders over a specified period of time.

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foreign dept

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An outstanding loan that one country owes to another country or institutions within that country. Foreign debtalso includes due payments to international organizations such as the International Monetary Fund (IMF).

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franchise

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an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities, e.g., providing a broadcasting service or acting as an agent for a company's products.

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strategic alliance

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is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. This form of cooperation lies between mergers and acquisitions and organic growth.

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joint venture

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a commercial enterprise undertaken jointly by two or more parties that otherwise retain their distinct identities.