MGT 2228 – Global Entrepreneurship Activity #3: Political Risk
Verified
Added on 2022/08/21
|3
|1191
|15
AI Summary
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
MGT 2228 – Global Entrepreneurship Activity #3: Political Risk Assessment (4%) Instructions: Based on the one of the countries you selected in Week 2 Activity (Hofstede Framework), complete the table below. Websites and research references are provided. Name of the Country:[fill in] Provide a description of the Political System in that Country: China is a country with several opportunity and prospect for business. The country has grown up to be one of the most influential and powerful countries in the world. It has grown up to be one of the most attractive countries for expansion of business as there are immense scope of technological advancements and fast growing systems in the country. Another reason why companies are targeting China for expansion is low cost of labor. However, there are many rules and regulations which companies must abide by, in order to operate in China. China is also categorized as a country which with political unrest making it difficult for companies for business operations. China is often characterized to be one of the countries with strict government laws and regulations. This tend to interfere with the Chinese markets and operations of the country. The government in China is of a socialist type. They introduce new regulations and laws which directly affect business environment. The changes unsettles the political scenario in the country which also affect foreign traders. Therefore, if a company develops international planning for long term, it might not be applicable as they get subjected to political instabilities. The presence of Communist Party in China is quite strong and influential. This should be taken into consideration by the companies as these directly impact business and its operations in the market. The companies who plan to expand their businesses or export to China, should keep in mind that the products and strategies should be aligned with the dominant ideology in the country. There have been instances that products and companies have faced challenges and ban because they did not conform to the dominant ideological setting in the country. The international policies in the country are quite strong, which mean that there are laws and restrictions which companies must abide by, to operate in China. The recent developments of trade war in China have left negative effects in the operation of companies, especially the traders from America who operate in the region. The ruling political party is Communist Party which is also often attributed as the reason behind the strictness which is faced by companies in the region. The country has positioned itself as a destination with great prospects and Foreign Direst Investments to be made as it ranks third in the world because of its great record of FDI. Even though there are internal tensions in the country, China maintains diplomacy at the international level as they are a permanent member of the UN Security Council. The government makes attempt to maintain well and working relationship with other
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
powerful countries in the world. Companies may get subjected to limitations and challenges in operations due to taxation, control of ownership and expropriation. Only companies with licenses and approval from the government. What is the EDC position? The position of EDC in China is Open which suggest that perusal of Business is active in the country. EDC stands for Export Development Canada which determines the risks and factors which are involved in the process of expansion of businesses. According to this data, businesses will be able to evaluate the factors which plat at large during the operation of the companies in a foreign setting. EDC helps to rule out the risks when products are sold internationally and protect the business from threats and risks during the process of growth (Edc.ca 2020). It helps Canadian investors and exporters to conduct businesses in China as well as different parts of the world by offering relevant and important businesses. The position is determined while taking into consideration restrictions of Government of Canada, corruption risks and political and human rights. Some other factors are also taken account of, which include diversification, size of economy and risks of natural disasters. What is the Risk rating? The Risk Rating as can be interpreted from the Global Short Term Risk Map of Fall 2019 is Medium to High. What is the country’sBusiness Environment vs. Regional Average The Business Environment as opposed to Regional Average is presented by World Bank Governance indicators. The Control of Corruption in China is 47 while 70 is the regional average, given that 100 being the best and 0 being worst. Rule of Law in China is 45 while the Regional Average for the same category is 74. Government Effectiveness is 68 whereas the score of Regional Average is 80. The last component is Regulatory Quality which is 49 for China and 79 has been marked to be the Regional Average. It can be interpreted that, there is difference between the Business Environment which is found in China as opposed to the Regional Average (Public.tableau.com2020). The Control of Corruption, Rule of Law and Regulatory Quality of the country are low as compared to the Regional Average. On the other hand, Government Effectiveness is better as compared to the other parameters to judge political risks which are involved in the country. What are the top Canadian exports to that country? The top Canadian Exports to China are Grains and Oilseeds, Pulp and Paper, Travel Services, Lumber and Forestry Products and Food and Beverage (Public.tableau.com 2020). The share of Total Exports for Grains and Oilseeds is 22% and the growth rate
is 20% considering 3 years is average to mark the growth. Similarly, the share of Total Exports for Pulp and Paper is 14%, Travel Services is 8%, Lumber and Forestry Products is 5% and Food and Beverage is 5%. The growth Rate for Grains and Oilseeds is 20%, Pulp and Paper is 9%, Travel Services is 8%, Lumber and Forestry Products is 2% and Food and Beverage Products is 23%. The ranking has been generated on the basis of Gross Export Value. The total amount of Canadian Export is $30,617 Million in 2018. References Edc.ca (2020).Country and market info | EDC. [online] Edc.ca. Available at: https://www.edc.ca/en/country-info.html [Accessed 28 Jan. 2020]. Public.tableau.com (2020).Tableau Public. [online] Public.tableau.com. Available at: https://public.tableau.com/profile/edc.s.economic.and.political.intelligence.centre#!/ vizhome/CountryProfileEN_0/Dashboard3 [Accessed 28 Jan. 2020].