Identify the more obvious risks faced by MNCs that expand internationally.

Identify the more obvious risks faced by MNCs that expand internationally.

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December 22, 2021
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Identify the more obvious risks faced by MNCs that expand internationally.

Answer and ExplanationSolution by a verified expert

Explanation
1. Currency exchange fluctuations; this affects the economic gains a business can claim and can further wipe them away in case of wild fluctuations.

2. Political climate; examples of a business that is struggling with government regulations in new markets is Uber.

3. Overestimating a local market's economic potential, creating a big picture of a particular market's potential based on a company's domestic experience is a mistake an MNC can make.

4. Cultural sensitiveness and assumptions; different social norms and expectations exist in different regions and cultures. If an MNC fails to understand these norms and cultures, then the business is at risk of sinking.

5. Infrastructure quality and services; local transportation, technology, and energy are great determinants of the cost of doing business.

Answer

1. Currency exchange fluctuations

2. Political climate

3. Overestimating a local market's economic potential

4. Cultural sensitiveness and assumptions

5. Infrastructure quality and services

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