IFM_PP_Ch16

Definitionofpoliticalrisk 1definitionofpoliticalrisk

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Unformatted text preview: f country risk when making financial decisions A. Why Country Risk Analysis Is Important 1. Definition of Political risk 1. Definition of Political risk is the potentially adverse impact of a country’s environment on an MNC’s cash flows 2. Some Adverse Impacts: a. A terrorist attack b. A major labor strike in an industry c. A political crisis due to a scandal within a d. Concern about a country’s banking system cause a major outflow of funds e. The imposition of trade restrictions on country that may imports B. Political Risk Factors B. 1. Attitude of Consumers in the Host Country 2. Actions of Host Government a. Lack of Restrictions: especially copyright protections in the software industry 3. Blockage of Fund Transfers B. Political Risk Factors B. 4. Currency Inconvertibility Case in point: Chine...
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This document was uploaded on 10/05/2013.

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