International Business Opportunities in Southern Sudan.
Autor: maryamawale73 • March 21, 2016 • Essay • 2,108 Words (9 Pages) • 842 Views
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COURSE: MKT 4010 (A)
SEMESTER: SPRING 2016
INSTRUCTOR: DR. CHARLES MUHIA
TASK: GROUP ASSIGNMENT: INTERNATIONAL BUSINESS OPPORTUNITIES IN SOUTHERN SUDAN.
DONE BY:
RAMPURI MUNIRA YUSUF 642045
MARIAN ABDI AWALE 641854
PRIYANKA NITIN JETHWA 641252
OTIENO MICHELLE WESONGO 636089
LOICE ADHIAMBO AKELLO 639967
DATE SUBMITTED: 17TH FEBRUARY 2016
The following questions are answered using the information given:
- Conduct a Political Risk Analysis (PRA) of Southern Sudan and advice the Kenyan firms and businessmen intending to go there.
Political Risk Analysis is the risk that an investment's returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policy makers, or military control. Political risk is also known as "geopolitical risk," and becomes more of a factor as the time horizon of an investment gets longer.
Political risk analysis involves understanding the legal and regulatory parameters within which a firm must operate, whether in its domestic environment and/or in a host country overseas.
The following are the steps involved in Conducting a PRA (Political Risk Assessment):
- The first step would be to identify the organisations assets and calculate their values. Sudan already has commercial services and hospitality industries that have started developing facilities in Juba, Yei, Rumbek,Torit, Kopeta and Kongor. An organisation should seek to establish their assets that stand to be affected in the case of instability and compute the value of these assets.
- The second step would be to identify vulnerabilities and threats to these assets in the host country. Risk is diverse from country to country depending on political stability and governing rules of the host country. Currently the Southern Sudan government has agreed to observe peace by signing a comprehensive peace agreement in Kenya. They spent a lot of resources to see that the negotiations of the agreement succeeded. Further risk can be classified in three categories according to how it affects an organisations routine.
- Quantify the probability and business impact of these potential threats. In this step a firm is tasked with predicting how any form of risk identified in the previous steps will affect the company. The most difficult task, however, is to anticipate changes in host-country goal priorities, new regulations to implement reordered priorities, and the likely impact of such changes on the firm’s operations.
- Provide an economic balance between the impact of the threat and the cost of the countermeasure. Once all the potential threats have been identified and their impact measured, it is important for a firm to seek possible ways of managing the risk or avoiding them. This is where a company may choose to:
- Invest in an insurance policy to cover the company whereby all risk is shifted to another party.
- Form industry alliances and associations.
- Give political incentives to leaders.
- Demonstrate concern for host country’s society.
For multinational companies, political risk refers to the risk that a host country will make political decisions that will prove to have adverse effects on the multinational's profits and/or goals. Adverse political actions can range from very detrimental, such as widespread destruction due to revolution, to those of a more financial nature, such as the creation of laws that prevent the movement of capital.
The risk that an investment's returns could suffer is as a result of political changes or instability in Sudan. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policy makers, or military control. Political risk is also known as "geopolitical risk," and becomes more of a factor as the time horizon of an investment gets longer.
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