Foreign Business Risks

What are political risks in foreign business?

• Increased taxation and regulatory burdens imposed by the foreign government.

• Potential negative impact of political factors on the operations and profitability of a company operating in a foreign country.

• Difficulty in repatriating profits and funds due to currency controls and restrictions.

• All of the above

What are economic risks in foreign business?

• Supply chain gaps

• Radical changes in Currency exchange values

• Corrupt practices in procurement and supply

• All the above

What are legal risks in foreign business?

• Legal risks in foreign business refer to potential legal issues and challenges that companies may face when operating in a foreign country.

• Legal risks in foreign business only apply to small companies.

• Legal risks in foreign business are limited to intellectual property issues.

• Legal risks in foreign business are minimal and rarely occur.

What are cultural risks in foreign business?

• Cultural risks in foreign business are challenges and uncertainties arising from differences in cultural norms, values, beliefs, and practices between the home country and the foreign market.

• Currency risks

• Political risks

• Legal risks

What are exchange rate risks in foreign business?

• Difficulty in forecasting future cash flows.

• Potential losses due to fluctuations in currency exchange rates.

• Increased transaction costs due to currency conversion.

• Limited access to foreign markets due to currency volatility.

What is the impact of currency depreciation on a country's export?

• It makes the country's exports more expensive.

• It makes the country's exports cheaper.

• It has no impact on the country's exports.

• It reduces the country's export volume.

What are the risks associated with supply chain in foreign business?

• Difficulty in managing logistics due to geographical distance.

• Disruptions due to political instability or natural disasters.

• Increased costs due to tariffs, customs, and taxes.

• All of the above

Due to the discovery of a rich gold reef in South Africa and the resultant inflow of investment, the SA Rand strengthen significantly. This will ___

• lower orders for coal from Japan

• lower imports of corn from Europe

• increase SA orders for pharmaceuticals from Sweden

• All of the above

A major Swedish business was found to bribe the President of Venezuela to open release the owner of a huge oil exporting business. The Swedish Krona declined significantly which caused ___

• a decline in orders for Swedish products

• Lowering of Swedish orders for Japanese cars

• decrease in cost of all imported good into Sweden

• a decrease in price of Apple computers in Sweden

If the SA Rand weakens against the currency of Japan (it's biggest buyer of SA iron ore)

• Japan could buy more ore due to the lower net price

• Japan will buy less ore due to uncertainty

• Japanese product will be cheaper for South Africans

• There will be no change in income for ore exporters or importers