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Sources of Risk in Global Business

KEY TERM AND WHY CHOSENSources of Risk in Global Business- Global businesses are exposed to a number of risks. The interest in this subject is purely academic. I once worked for a company that outsourced a large percent of its labor to China. I often hear about the tax breaks and cheap labor found in other countries, which also peaked my interest. Surely, companies face obstacles when decided to deal globally, choosing this topic allowed me to research those obstacles and the risks companies face when dealing globally. EXPLANATION OF THE KEY TERMSources of risks faced by global businesses include political, economic and cultural climates. Economic risk is the chance that economic conditions will affect an investment. The risk that an investment’s returns could suffer as a result of political changes or instability in a country is defined as political risk. Political risk also includes any instability as a result of change in government, legislative bodies, foreign policy makers, or military control. Cultural risk refers to the unforeseen resistance that can occur without knowing how doing business will be received or perceived by the new market. MAJOR ARTICLE SUMMARYRisk Management in Global Sourcing compares business practices to what is taught on the academic level. The article provides realistic examples from both levels, integrating knowledge from the two. The author begins by narrowing down the subject of Supply Chain Risk Management to global sourcing. The article presents and interprets risks as both bad and good. The author concludes the article by identifying areas where further research should be conducted to bridge the academic and “real-world” gap in risk management.
DISCUSSION (In your own words, discuss each of the following points)Maunuj argues that the risks associated with global supply chains are both political and economic. In Managing Political Risk in Global Business, Jones and Lubinski provide the history of…

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