Question

Dave is a research analyst at Geo Corp, a U.S. based firm, specializing in organic farm produce. Since the management is considering entering a foreign market, Dave begins to study the risks associated with this move. After gathering sufficient data regarding the internal factors of the new market, he categorizes the risks based on the type. Which of the following is most likely to be considered a political risk?

Answer 1

Political risks in entering a foreign market refer to potential risks and uncertainties related to the political environment of the new market. This could include changes in government policies, instability, conflicts, or political unrest that could impact the business. In this scenario, Dave would analyze the political risks by assessing government stability, potential policy changes, and the overall political climate of the new market.

Step-by-step explanation:

When considering the risks associated with entering a foreign market, one category is political risks. In this context, political risks refer to any potential risks or uncertainties related to the political environment of the new market.

For example, political risks could include changes in government policies, instability or conflicts within the country, political unrest, or any other factors that could jeopardize the stability and profitability of the business.

In Dave's case, analyzing the political risks of entering a foreign market would involve assessing the stability of the government, potential policy changes that could affect the organic farm produce industry, and the overall political climate in the new market.