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?

Question

Quizplus · Accepted Answer

Laws prohibiting foreign ownership of local firms in the new market is a political risk as it is related to the legal and regulatory environment of the new market. Political risks refer to any potential harm to a firm's operations resulting from political instability, changes in government policies or regulations, or other political events in the foreign country.

Dave Is a Research Analyst at Geo Corp