| Anytime businesses decide to operate or expand | | | | I've decided to break this international business risks |
| internationally, they face certain and specific risks. | | | | post into separate posts in a series to make it easier |
| These international business risks can be determined | | | | to follow and to make it more concise and to the |
| by a number of different factors including country | | | | point. You can click on my author link and find the |
| history, cultural values, mores, geographical traits and | | | | rest of the posts in the series which will include all |
| of course legal precedents of chosen international | | | | factors discussed in greater detail. They will include |
| location. The company or firm must consider all of | | | | everything from political risks of corruption, unstable |
| these factors before making a solid and final decision | | | | institutions, and red-tape. I will also be looking at |
| to move abroad. The firm must always keep in mind | | | | currency risks, intellectual property risks, ownership |
| their competitive advantage at home and compare | | | | risks, and finally market risks and all that they involve. |
| that standing prior to entering the international | | | | In the end it should be understood that these risks |
| business realm. They must keep in mind that risks are | | | | are not the only risks that a firm may face when |
| always relative to the size and stability of the firm's | | | | considering, expanding, and beginning to do business |
| competitive advantage. | | | | internationally. There are certainly other risks that |
| Basically, there are six primary international business | | | | absolutely must be analyzed by the firm. The firm |
| risks which are most often faced by firms | | | | must be extremely thorough in doing their due |
| considering entering the international business realm. | | | | diligence analysis before entering any country with |
| Again, they are always tied closely to the firm's | | | | the intent of establishing themselves there. Before |
| competitive advantage. A firm's competitive | | | | making any major and "life-altering" decisions, the |
| advantage is broken by "type", "scope", | | | | company must understand the amount of risk that is |
| "transferability", and finally "translate-ability". All of | | | | currently and already present there, and most |
| these factors break into degrees of low risk to high | | | | importantly, how much of that inherent risk is the |
| risk and must always be considered in the plan. | | | | firm willing to take upon it and assume. |
| When doing this risk analysis, S.L.E.P.T. comes in very | | | | In closing I would like to simply state possibly the |
| handy. SLEPT stands for Social, Legal, Economic, | | | | obvious but some that needs to be stated and |
| Political, and Technological. In this case, the firm would | | | | restated many times so that it's importance really |
| have to look at the inherent risks in the firm being a | | | | sinks in. And that simply that deciding to enter a |
| wholly owned operation, a joint venture, a franchise, | | | | country is always a very, very serious decision that |
| licensing issues, and export ability. On the other side | | | | can and will make or break a firm and so it's |
| of the coin, they would also need to look at marker | | | | imperative that the decision makers do not skimp on |
| risks, ownership risks, intellectual property risks, | | | | the analysis involved. Due diligence is of utmost |
| currency risks, and finally political risks. | | | | importance here. |