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Country Risk Case Study: Aroma Nyonya

956 Words4 Pages

Country Risk Country risk can be best explained as the probability that changes in the business environment in another country where you are doing businesses. In this case, Aroma Nyonya wanted to run their business in China. Besides, the business that Aroma Nyonya is doing may adversely impact the operations that resulting in a financial loss. Hence, under the country risk the company could understand the risk that they may faces by analysing and understanding the economic risk and political risk.
a) Economic Risk Economic risk referring to the chance that macroeconomic conditions like exchange rates, government regulation, or political stability will affect an investment, usually in a foreign country. As an example, let assume Aroma Nyonya wanted to build their own branches anywhere in China to expand their …show more content…

What does it mean by in stability here it could be a change in government, legislative bodies, other foreign policy makers or military control. As an example, the election in China are currently held. So, what Aroma Nyonya need to be understood is that, some political parties could implement their ideology such as overhaul overall laws & regulation in the country. This idea for implementation could affect the industry that Aroma Nyonya is currently doing.
In addition, Aroma Nyonya is also impacted with various political decisions that governments made. It can affect either specifically to that industry or the overall economy. These include taxes, spending, regulation, currency valuation, trade tariffs, labour laws such as minimum wage, and environmental regulations. So, to ensure that Aroma Nyonya could avoid or minimizing allthose political risks, Aroma Nyonya can purchase the political risk insurance to remove or mitigate certain political risks.
Financial Risk / Currency

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