Objectives

Objectives
•To identify the common factors used by MNCs to measure a country’s political risk;
•To identify the common factors used by MNCs to measure a country’s financial risk;
•To explain the techniques used to measure country risk;
•To explain the roles of “local color” and “local reality” in international business relations; and
•To explain how the assessment of country risk is used by MNCs when making financial decisions.


Why Country Risk Analysis Is Important
Country risk represents the potentially adverse impact of a country’s environment on the MNC’s cash flows.
Country risk can be used :
q to monitor countries where the MNC is presently doing business;
q as a screening device to avoid conducting business in countries with excessive risk; and
q to improve the analysis used in making long-term investment or financing decisions.
Political Risk Factors
q Attitude of Consumers in the Host Country.
Some consumers may be...