Risks in International Business
Just as there are reasons to get into global markets, and benefits from global markets, there are also risks involved in locating companies in certain countries. Each country may have its potentials; it also has its woes that are associated with doing business with major companies. Some of the rogue countries may have all the natural minerals but the risks involved in doing business in those countries exceed the benefits. Some of the risks in international business are:
(1) Strategic Risk
(2) Operational Risk
(3) Political Risk
(4) Country Risk
(5) Technological Risk
(6) Environmental Risk
(7) Economic Risk
(8) Financial Risk
(9) Terrorism Risk
Strategic Risk: The ability of a firm to make a strategic decision in order to respond to the forces that are a source of risk. These forces also impact the competiveness of a firm. Porter defines them as: threat of new entrants in the industry, threat of substitute goods and services, intensity of competition within the industry, bargaining power of suppliers, and bargaining power of consumers.
Operational Risk: This is caused by the assets and financial capital that aid in the day-to-day business operations. The breakdown of machineries, supply and demand of the resources and products, shortfall of the goods and services, lack of perfect logistic and inventory will lead to inefficiency of production. By controlling costs, unnecessary waste will be reduced, and the process improvement may enhance the lead-time, reduce variance and contribute to efficiency in globalization.
Political Risk: The political actions and instability may make it difficult for companies to operate efficiently in these countries due to negative publicity and impact created by individuals in the top government. A firm cannot effectively operate to its full capacity in order to maximize profit in such an unstable country’s political turbulence. A new and hostile government may replace the friendly one, and hence expropriate foreign assets.
Country Risk: The culture or the instability of a country may create risks that may make it difficult for multinational companies to operate safely, effectively, and efficiently. Some of the country risks come from the governments’ policies, economic conditions, security factors, and political conditions. Solving one of these problems without all of the problems (aggregate) together will not be enough in mitigating the country risk.
Technological Risk: Lack of security in electronic transactions, the cost of developing new technology, and the fact that these new technology may fail, and when all of these are coupled with the outdated existing technology, the result may create a dangerous effect in doing business in the international arena.
Environmental Risk: Air, water, and environmental pollution may affect the health of the citizens, and lead to public outcry of the citizens. These problems may also lead to damaging the reputation of the companies that do business in that area.
Economic Risk: This comes from the inability of a country to meet its financial obligations. The changing of foreign-investment or/and domestic fiscal or monetary policies. The effect of exchange-rate and interest rate make it difficult to conduct international business.
Financial Risk: This area is affected by the currency exchange rate, government flexibility in allowing the firms to repatriate profits or funds outside the country. The devaluation and inflation will also impact the firm’s ability to operate at an efficient capacity and still be stable. Most countries make it difficult for foreign firms to repatriate funds thus forcing these firms to invest its funds at a less optimal level. Sometimes, firms’ assets are confiscated and that contributes to financial losses.
Terrorism Risk: These are attacks that may stem from lack of hope; confidence; differences in culture and religious philosophy, and/or merely hate of companies by citizens of host countries. It leads to potential hostile attitudes, sabotage of foreign companies and/or kidnapping of the employers and employees. Such frustrating situations make it difficult to operate in these countries.
Although the benefits in international business exceed the risks, firms should take a risk assessment of each country and to also include intellectual property, red tape and corruption, human resource restrictions, and ownership restrictions in the analysis, in order to consider all risks involved before venturing into any of the countries.
Introduction to Property Management
If you own any sort of property, be it residential or business related, you will need someone to manage it. The question you are probably asking is how professional management can help you?
So, what is property management? It’s the managing, or handling, of real estate property by someone other than the owner. Most often, it is handled by a management firm, that might handle more than one client’s real estate properties. Other styles include hiring someone to live on site and take care of tenants’ requests, as a building superintendent or other building manager – but this style of management has fallen out of favor in recent years.
It goes without saying that quality is a big issue with this service. A good management firm will act as a go-between for the real estate owner and the tenants, handling any questions and complaints that the tenants might have so that the owner is not forced to deal directly with them. This kind of service can include doing many different things, from collecting rent to hiring groundskeepers and repair people. They can keep an eye on repairs that need to be done, and suggest improvements on the property to the real estate owner.
In most states, those offering this service must be certified and licensed, most commonly as real estate brokers. This is especially true if the property managers (or someone in the the management team) is helping to negotiate leases, or collect rent on behalf of the property’s owner. In other states (such as Connecticut), there may be no licenses required for these tasks. Most property managers are still required to register with the state they work in.
Property managers can also be essential in keeping an eye on your property – making sure that no one is vandalizing your real estate, and taking care of problem tenants as well. The actions that manger may have to take can include eviction, as well as involving the authorities, tasks that a real estate investor may not want to have to do. They can also be used as arbitrators between tenants, when disputes arise that are not severe enough to involve the police or other authorities.
When done well, property management is the answer to a lot of issues that real estate investors might face. The management team can do the hands on work while the investors reap the profits.
Marketing Environment and the Factors Involved
Marketing environment is made up of all the factors and forces that influence marketing. These forces can be internal like departments (other than marketing such as finance department and human resource department) or external like competitors, suppliers, economic or political situation. To understand them better, marketing personals divide them in two categories namely macro environment and micro-environment. Let’s have a look at some of the important factors involved in marketing environment.
Internal factors:
All the departments involved in business management affects the process of marketing as well, for example the finance or research department in large enterprises. Marketing department is bound to keep their expenses under the budget set by the finance managers or to consider recommendations from the research department. Similarly the supplies and collections can have an impact on marketing as well.
Customer markets:
Different types of customers markets include consumer markets (B2C), business markets (B2B), government markets (B2G), also a new type of customer market has emerged as a result of globalization i.e. international market. Where most other departments will treat these markets similarly, marketing team has to treat them all in different manner. Though most advertising campaigns are targeted to consumer market, the type of customer market does affect marketing decisions on the whole.
Competition:
Competition is becoming more and more influential in a company’s approach towards marketing. Competition stems from the business that is offering the same product as yours. A business has to counter this competition through marketing; some times businesses do try to have a hit at their competitors in advertisements (though not candidly). The level of competition is also a decisive factor when planning on how much to spend on marketing.
Different types of publics:
Another important microenvironment factor is the publics (government, consumer associations, financial or media publics). All of them can have an affect (positive or negative) on company’s reputation and marketing.
Demography:
Good marketing managers tend to spend plenty of time in conducting demographic research for their targeted consumers. Demography is the research of gender, age, race or anything else related to consumers. International businesses are concerned about various races (Asians, Hispanics, etc) and their different set of demands. While the terms like “baby boomers” or “generation X” were invented to reflect the specific age groups of consumers.
Economic Factors:
All the variables of economic markets like inflation, rate of exchange, fiscal policies and monetary policies fall under macro environment factors. They affect all businesses, and needless to say their marketing efforts as well.
Other Factors:
Other notable macro and microenvironment factors are marketing intermediaries, political stability (or instability), new technologies or natural forces.