Questions and Answers on Risk and Joint Ventures

Table of Contents

Question 1. A couple of four types of international dangers. Particularly (a) Cross-cultural risk; (b) Country risk; (c) Money risk and (d) commercial risk. Briefly express each these dangers.

Question 6. Describe advantages and disadvantages of any joint-venture or proper partnership.

Question 10. Why is air transportation and air communicate so widely used in exporting when ocean transportation is much cheaper?

Question 4. Stepping into a new market through licensing is generally the best strategy because market potentials can be analyzed with little or no investment. Comment.

Question 2. Quickly describe why has international trade in agricultural products been increasing at a slower rate than exports of manufacturing goods?

Question 5. A multinational organization will need complete control over its subsidiaries in order to make maximum use of its resources and be competitive most effectively. Comment.


Question 1. A couple of four types of international dangers. Namely (a) Cross-cultural risk; (b) Country risk; (c) Currency risk and (d) commercial risk. Briefly illustrate each these dangers.

Cross social risk:

Cross ethnical risk identifies the chance of adjustment of different two ethnicities. In international business industries most of the time mangers send their skilled and smart employees to the international sectors so that they can play a essential role available goal. But sometimes employees as well as supervisor fail to understand the neighborhood need and demand through their ethnical pattern (Moore, 1983). They cannot adjust using their foreign environment. They could find food dissimilarity, life style problem and many more think.

Country risk:

Country risk is a term which is used to determine the probable risk of investing in overseas country. In neuro-scientific international or global marketing company must invest a lot of money in the international country. But some time the federal government or local people may not in favor of the business. So in implications the company has to scarify their revenue or even investment. Mass riot or cultural and cost-effective unrest of the united states bring enormous reduction.

Currency risk:

Currency risk is also popularly known as foreign exchange risk. In the sector of international marketing a fixed price is always set by both sectors to transfer or export. But credited to natural disasters and international pressure this fixed priced can be highly revised. So one of both sides has to carry losing. Home inflation and monetary unrest will impact this sector terribly.

Commercial risk:

Commercial risk is the doubt or the likelihood of the go back of the investment in the overseas country. In the field of international business all companies forecast their possible rate of return or the earnings to allow them to understand their future on the market (Pearson, 1987). But duo to political unrest, change in the consumers living stander and the modification of the government regulation may affect it terribly.

Question 6. Describe the advantages and disadvantages of a joint-venture or tactical partnership.

Advantage of the joint venture

Joint endeavor is the recent innovative and effective way of gather of two companies. It provides a lot of facilities to both attributes that's why the number of joint venture companies is increasing day by day. It includes both company to make use of their creativity and technological growth. It also provides chance to use others regional market place. Therefore the amount of consumers increase. As impressive ideas are draw out more in this sectors proficiency can be achieved through new technological improvement (Hall, 1984). The joint venture helps both companies to use higher natural resources, and more expert employees. Which will surely increase their development amount. It also offers with their partners to talk about their common risk. Another important benefits is being elastic in the market place. Any company can act to their consumers quickly and thoroughly through joint venture. Jv also helps to understand the new market quickly and easily.

Disadvantage of joint venture:

Some demerits are also associated with the joint venture production. It's very hard and nearly impossible to discover a suitable partner for the joint venture. It takes too many time and initiatives to find appropriate joint venture spouse. Behind reasons of this problem may be considered a lot. Unclear seeks of the joint venture section could be the first reason. Then all parties may well not be interested to the aim. The aims of the jv have to be very corresponding in any other case no one will show interest. Disparity of the resources and the imbalance of the technological progress are also effective reasons not to be a part of jv (Paakkunainen, 1992). Dissimilarity and the indegent supervision system also pave the discouragement of joint venture. Lack of complete research and poor maintenance system are also responsible for this.

Question 10. How come air transportation and air communicate so trusted in exporting when sea transportation is a lot cheaper?

Transportation is the biggest part of modern international business industries. Quick response, cheap cost and the introduction power of remote area will be the vital factors of travelling sectors. Considering all other system it can be easily said air vehicles system is used regularly and more and more. The reason why behind this are extensive. Quick response is the most important and effective criterion in this sectors. All medical accessories and drugs are mostly transported through air exhibit for their call to reach necessity. Another important factor is remote control area reaching ability (Puffer, 1941). All electronic digital and perishable goods are carried by air express. It also holds the merchandise time value and necessity. For quick response the customer can receive the latest product and service so they prefer the new one alternatively than old one. So to seize new growing market most of the sellers like air exhibit. So for delicate and luxury product air express is must. On the other hand sea transportations are cheap but so frustrating. And product like daily goods and unneeded product are transferred through sea transport. It takes three to four days for delivering some products on the other palm air express will need few hours to attain the area. Bad and unstable weather is another reason of decreasing s the utilization of sea travel. Just lately the pirates' problem has increased in an alarming rate so merchandisers like air communicate over sea travelling (Bailey, 2009). It's very hard to track the delivery in sea travel which is another reason of discouraging sea shipment.

Question 4. Coming into a fresh market through licensing is generally the best strategy because market potentials can be examined with little or no investment. Comment.

Licensing is a widely used term in the field of international marketing. Specifically licensing is the process of granting request or permitting other party to work with own intellectual property like logo, trademark, motto and some other brand name. The party who granted permission to use is called licensor and the other get together who get the permission of by using this property is known as licensee. Actually licensing is a good term for the new comer available sectors. Hardly any people trust the new comer in the international business sectors. So it is so troublesome for them to stick to business. In addition new environment and new customers' frame of mind take a tough test from the new comer (Sherman, 1999). To explore the full recourse of the neighborhood environment and be popular in joining position licensing is a good process. Another important and crucial help to company is to pave the tube to work with readymade customer and using their trust. Licensing also helps his spouse by demonstrating the free advertising which can be too costly and inadequate. So automatically they'll get new and possible client to serve and get reputation. So all the way licensing provide critical facilities like present and future customer, free adverting and market goodwill with little or with no money cost.

Question 2. Briefly make clear why has international trade in agricultural products been broadening at a slower rate than exports of making goods?

In modern business areas all products and services are included in international marketing. They can be divided in two categories. First may be agricultural products and the next can be processing products. But assessing with manufacturing products, agricultural products are exported in a minor rate. The main reasons behind this are the customers living pattern. Mainly agricultural products are the main base with their livelihood. They cannot easily change it. Or they aren't interested to change it. So all their necessary livelihood things are produced by ones indigenous country (Foley, 1999). And they're produced in a high amount. So they don't really need to import them from other country. And another reason of sluggish export ratio is usually that the agricultural products aren't so ideal to store for an extended transportation without using comical which is highly unhygienic for health. So no country wishes to rely upon others about their main agricultural food. They make an effort to produce them all independently. Another reason may be profitable side. Agricultural products might not exactly be so profitable for the exporter. It are expensive to produce but the cost is practically similar to the whole county throughout the world. Agricultural products take very long time to be produced and need more space. On the other hand manufacturing products supply the competitive gain to the maker. They can be produced a lot if amount in a nutshell time by dent of better technology. That can be produced following the export order and it take short time to deliver. They can be stored for a long time. And in addition their transportation facility is not hard (Paul, 2008). So considering those factors the making products get higher main concern to export.

Question 5. A multinational organization needs to have complete control over its subsidiaries in order to make perfect use of its resources and contend most effectively. Comment.

Multinational organizations (MNCs) are corporations within one country but activate across the world with permanent amenities and employees in numerous countryside. Several types of multinational companies are Professional corporations that produce goods and sell them in a number of countries for example autos, electronics. So the key company is called father or mother company and the number company is called subsidiary company. Main company keeps the specialist to work out and implement power and the subsidiaries are bound to follow the guidelines. At the same time the subsidiaries company have to in a position to amplify their potential. Nonetheless it is so important that parent or guardian company need to have full control over Subseries Company. Usually subsidiary companies will loss the energy to produce the best. The variety companies have to check out the coordinator nation's legislation and the profitability of the parents companies. So the full control over Subsidiaries Company provides enough power to negotiate the variety government. Plus some time the host country make an effort to lure the parents company's investment and specialist so proper control over sponsor help stop this. Time parent or guardian companies have to slice the extra personnel and operating cost to maximize profitability. So without enough electricity nobody can do it. And to explore the employees most talent also to train them the mother or father company need such power. (Tsurumi, 1977). So the father or mother companies always try to explore the best of the web host country. They can use the natural resources best and can meet up with the all customers demand in a good way.


Bailey, G. (2009). Sea travelling. Pleasantville, NY: Gareth Stevens Pub.

Foley, J. (1999). The global business owner. Chicago, IL: Dearborn.

Hall, R. (1984). The international jv. New York: Praeger.

Moore, P. (1983). The business enterprise of risk. Cambridge [Cambridgeshire]: Cambridge University or college Press.

Paakkunainen, U. (1992). Jv decision. Helsinki: Helsingin Kauppakorkeakoulun Kuvalaitos.

Paul, J. and Aserkar, R. (2008). Export transfer management. Oxford: Oxford School Press.

Pearson, C. (1987). Multinational companies, environment, and the Third World. Durham, NC: Duke University or college Press.

Puffer, C. (1941). Air vehicles. Philadelphia: Blakiston Co.

Sherman, A. (1999). Franchising & licensing. New York: AMACOM.

Tsurumi, Y. and Graham, E. (1977). Multinational management. Cambridge, Mass. : Ballinger Pub. Co.

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