You are to research a Foreign Direct Investment (FDI) focusing on the Country Risk involved in the investment. The following issues should be discussed: -
Political risk including the possibility of (1) blocked funds, (2) changing tax laws, (3) public revolt against the firm, (4) war and (5) a changing attitude of the host government toward the Multinational Corporation.
Financial risk factors including (1) inflation, (2) interest rates, (3) GNP or GDP growth, (4) exchange rates and (5) labour costs.
A broad discussion of how the Country Risk may be incorporated into the Capital Budgeting decision.
You can choose one of the following FDI’s for an Australian company.
(a) A gold mine in South Africa.
(b) A software development business in India.
(c) A sugar cane plantation in Argentina.
(d) A biotechnology business in Sweden.