Page 26 - eBook: EXIM for Beginner

Country risk. Weigh the benefits of your company doing

business abroad against the potential pitfalls. Poor

infrastructure such as roads, bridges and

telecommunications networks can make it expensive to
operate a business in another country.

Economic conditions such as high unemployment or a
largely unskilled labor force can be barriers to entry.

Rogue nations may have untapped potential, but may

also pose risks such as terrorism, internal conflict and civil

unrest. Anti-foreign sentiment among citizens, workers and
government officials may also make doing business

abroad especially challenging. Other country risks include

crime and corruption.

For example, governments may restrict access to

markets, impose bureaucratic procedures on business
transactions, and limit the amount of earned income that

firms can bring home from foreign operations. The degree

of government intervention in commercial activities varies
from country to country.

Country risk also includes laws and regulations that

potentially hinder company operations and performance.
Critical legal dimensions include property rights,

intellectual property protection, product liability, and

taxation policies. Nations also experience potentially
harmful economic conditions, often due to high inflation,

national debt, and unbalanced international

trade (Cavusgil, Rammal, & Freeman, 2011, p.13).