Question

Assuming you are financial analyst of a multinational company that involve in a particular industry. You are responsible to give a recommendation either to invest or not in a country X. 

Your task:-

Choose one industry that relevant to the company (you may decide). 

Choose one country to analyse the risk of the country (political and financial risk). You may refer risk rating to support your argument.

Describe the cost and revenue motivation for the consideration to invest in the country that you have chosen earlier in b)

Answer 1

Industry: Manufacturing of Cars

Country : X

Political risk : The country which I wanted to invest is politically stable as it is a democratic form of government. Most of the law are already mandated and won't change very often. So political risk is there but very less. In this if the leading political party support us there would be no one stop.

Financial risk : Country X is financially stable but a developing country. So there is good and ample scope to invest for better profits. Risk is low as the wages and standard of living in the country is low.

It is one of the most populous country in the world. Which means I can get more labour at a very low cost. My cost of production will also go down as there are abundant resources and labour force to support my production. Country X already got a good reputation in World market that they maintain good quality. So Financial risk is low.

When my cost of production will go down my revenue even at a standard level will generate profit. So it is good investment.