Country Risk Analysis.docx

Managers in international businesses will need to evaluate the attractiveness of a country as a market or location for a facility or investment. Knowing how to think about events and situations will help the manager make that evaluation. Learning about the environment is the first step a manager makes to manage risk in a foreign location. Country risk assessment is an assessment of a country’s economic situation and politics to determine how much risk to employees, property, and investment exists for the firm doing business there. Credit ratings: These are the ratings that are given by the credit rating firms to analyze the investment risks. However the Sovereign Credit Ratings are provided for the foreign investments. This rating enables the host countries to know the risk profile of the investment. There are different types of risks that are taken into account while giving the rating for the investment they are local currency risk default risk. currency risk, transfer risk. counter party risk. Differentiate the various risks contained in major sovereign rating worldwide: Local Currency Risk is the risk involved in the investments of the home country due to currency rate changes where. the default risk is a kind of risk that which lies in every investment usually said to be as country risk also. This risk occurs due to change in legal regulations of the country, Political and economic changes. While. the currency risk plays a vital role in rating an investment as there will be change in the value of currencies of different countries. This risk cannot be easily predicted as the change in the value of currency occurs due to capital markets whereas transfer risk investments will be given a different rating as this kind of risk arises only when the currencies of host as well as home countries are transferred for remittances. Counter Party Risk is a kind of risk that which occurs if any of the parties of investment failures to complete the transaction that is required this risk is given more importance while giving sovereign credit risk rating as it occurs mostly between the investments of different countries.

A company’s way of doing business depends a lot on the nature of the culture of the company’s origin. From the cultural dimensions of China, we can say that the business structure of Sony was quite hierarchical where positions were valued. The sense of competition also developed slightly but not to an extent of the cut throat competition. The business of Sony is driven by challenges and initiatives because the Chinaese culture is quite competitive and masculine in nature. Also as it’s the tendency of China and Chinaese people, the business practices of Sony try to avoid uncertainties as well as any kind of loop hole. So we can see how important is the culture of the country in determining a company’s way of doing business.

Hierarchy and decision-making processes: Chinaese business culture is characterized by distinct hierarchies. Chinaese are firm believers of the notion that one should portray his actions based on the status and power one has. One should never go beyond the scope of his power and status. The hierarchy is based on the consensus and cooperation of team as a whole. Decision making process is a top-down process where the major responsibility of decision-making is on the top management. The decision flows from layer to layer, requiring affirmation from each layer and hence, decision making is a cumbersome and time-consuming process in China.

Types of conflicts that may be encountered: Chinaese try to keep their personal feelings aside and try to have composure at work. Chinaese never tend to show their emotions at a public place or work. If they are angry or in times of a conflict, they will humbly fall silent. Conflicts within groups are resolved through hierarchy. The Chinaese are very loyal to their group. An enemy of the group becomes their own enemy.

Preferred managerial qualities: Chinaese work in a collaborative work environment. A Chinaese manager often wants to discuss the performance of his subordinates. He likes to give frequent feedbacks. Decision is taken by a consensus and hence, is a long time-consuming process.

Privileges and/or favoritism as it relate to sex, religion, class, or status: Chinaese rarely show favoritism at work based on person preference as the Chinaese like to keep their personal life and personal preferences aside. Workplace is thoroughly professional. Favoritism and giving preferences is considered unfair and unjust.

Ethnicity and gender issues: China is a highly masculine society. So the power is mostly in the hands of Chinaese males. Gender equality is a problem area in China as the women there have to strive beneath the glass ceiling. In China, most of the people are Chinaese. People from other ethnicity are usually the labor class who had migrated to China for work.

Customs that may have an impact on the organization’s way of doing business: Chinaese are very traditional people. They are high risk avoiders so do not like any change. The age-long customs and traditions are highly valued and no reforms have been attempted on the same.

Business etiquettes in China:

Talk less Give value and appreciation to group effort and not to an individual Business card is considered sacred, handle them very carefully Value the privacy of Chinaese people