Question Details

Assauer Inc. would like to assess the country risk 



1. Reducing Country Risk. MNCs such as Alcoa, DuPont, Heinz, and IBM donated products and
technology to foreign countries where they had subsidiaries. How could these actions have
reduced some forms of country risk?

2. Country Risk Ratings. Assauer Inc. would like to assess the country risk of Glovanskia. Assauer
has identified various political and financial risk factors, as shown below.
Political Risk Factor Assigned Rating Assigned Weight
Blockage of fund transfers 5 40%
Bureaucracy 3 60%
Financial Risk Factor Assigned Rating Assigned Weight
Interest rate 1 10%
Inflation 4 20%
Exchange rate 5 30%
Competition 4 20%
Growth 5 20%
Chapter 16: Country Risk Analysis 283
Assauer has assigned an overall rating of 80 percent to political risk factors and of 20 percent to
financial risk factors. Assauer is not willing to consider Glovanskia for investment if the country
risk rating is below 4.0. Should Assauer consider Glovanskia for investment?



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