Risk of General Political Instability: host country government is not stable but it is just a risk ex. North Korea.
Ownership Risk-risk of losing your company,property,asset etc.-ex. Nationalization of industries
Operations Risk-new government policies affect your business ex.new taxes,raised minimum wage.
Transfer Risk: government do something to change currency rate ex. Rate goes up, cause you more money to produce, rate goes down, could cause you to make less money.
•Evaluating Political Risks
•What questions would you ask?
What is the local supply and demand
What are the policies in place for business currently and in the future?
When is the next election and who are strong candidates?
Would a new government emerge and if so, what kind policies will they have?
•Consequences of Terrorism
Less trave because people are afraid
Security is more strict and so transport becomes slower and more paperwork to do
Stock market become more volatile (change often is bad for stocks because people like steady growth stocks)
•Evaluating Legal Concerns
Employment - laws to do with hiring worker, hours, schedule, wages etc.
Consumer protection laws - protects customers ex. Safety, labels that are honest
Taxation Laws -laws related to taxes
Custom duties -tariff rates and laws
Sales -ex. 13% in Ontario
Excise -tax on specific products
Payroll -tax you pay because you have workers
Business Liability laws - law to do with hiring workers, hours, schedule, wage etc.
Property Law - land taxes, how much foreigners can own
Contract Law - what information must be in different type of contracts, how binding is it?
Types of Political Risk
•Evaluating Political Risks •What questions would you ask? What is the local supply and demand What are the policies in place for business currently and in the future? When is the next election and who are strong candidates? Would a new government emerge and if so, what kind policies will they have? •Consequences of Terrorism Less trave because people are afraid Security is more strict and so transport becomes slower and more paperwork to do Stock market become more volatile (change often is bad for stocks because people like steady growth stocks) •Evaluating Legal Concerns Employment - laws to do with hiring worker, hours, schedule, wages etc. Consumer protection laws - protects customers ex. Safety, labels that are honest Taxation Laws -laws related to taxes Custom duties -tariff rates and laws Sales -ex. 13% in Ontario Excise -tax on specific products Payroll -tax you pay because you have workers Business Liability laws - law to do with hiring workers, hours, schedule, wage etc. Property Law - land taxes, how much foreigners can own Contract Law - what information must be in different type of contracts, how binding is it?