Risk Assessment Of International Business
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In this report the concept is focused on the risk assessment of the international business so that assessment has been done in the form or PESTEL analysis. C&H Garment is the firm that is about to invest in the RWANDA special economic zone in which offers the various incentives like liberal and the simplified economic regulations for establish the business(Ballestas and et.al., 2015). Rwanda is a small land in South Africa where the special economic zone has been located. The risk assessment in locating new business in Rwanda SEZ is done in this framework.
The risk assessment in establishing a new business in Rwanda special economic zone can be done on the basis of the various factors which can make impact on the system of the organization. The risk % in a business should be less so to minimise the chances of risk in the new operated business the risk assessment is very necessary to be done. Here the risk assessment can be done is terms of PESTEL analysis of Rwanda special economic zone(Nduwayezu and et.al., 2014). The factors are shown below:
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Political: The political background of Rwanda is quite unstable, they are focused from the last so many years to enhance their economy. They are motivated to reduce the poverty and the resist people from their place. The political have impacts of their economy because still the Rwanda is considered as the low income nation. The political face of the Rwanda is determined for their foreign exchange through production thus C&H Garment can face a big amount of risk in the architecture development of their business(Moses and Etuk, 2015).
Economic: Basically the economy of Rwanda is fas stable now, in past decades their economy got suffered due to the civil war and genocide, but after introducing the SEZ in Rwanda the economic status has made growth of 8 %, their foreign investment is centralized on the tea, coffee, and tourism. There change in exchange rate can increase the risk of economic growth of C&H garment.
Social: Social background of this Rwanda is based on the orthodox mentality. The population of Rwanda is from a rural area, in which 52% of population is of women. The people have lived in traditional way and also 45% of total population is under poverty line so C&H Garment may have the risk of producing clothes of modern fashion which may not likeable by the local people.
Technological: The SEZ have already so many organizations with the latest technology for the smooth operations of their working. The C&H have to make more funds for implementing the latest technologies in their workplace. If organization want to invest in the technology and equipment the risk of fewer investors can be seen in the organization and it can make impact on the whole structure of the organization(Kateera and et.al., 2015). If market have changed and more advanced technologies came to the market so in such case the training and development program should be provided to the employees so in such activities the expanses can mismanage the economy of C&H so this can be seen as a risk.
Environmental: The environment of Rwanda can be the valuable for the organization, because the resources from the environment are enough to build a business structure. But the main problem is the population of Rwanda, it is growing on the resources like land, water, and other non renewable resources. The non renewable resources are consumed by the people of Rwanda so the risk land degradation, soil erosion and loss of biodiversity can be stand in front of C&H. The climate of Rwanda got changed in any time so organization can see the risk in maintenance of their current system also the anticipation of the future changes should be needed.
Legal: The legislation on the international business is quite strictly followed by the foreign investors. The organization have to maintain their system under all the trade rules and regulations applied by the government of the Rwanda(Rosa and et.al., 2014). The Rwanda special economic zone is carried over with the trade act 1999. The formats of the operations can be changed by the government so there is a risk for the organization to make changes accordingly.
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In this context the risk analysis has been done in the terms of various factors of PESTEL analysis. It is concluded that risk must be analysed before establish the business in economic zone. The Rwanda special economic zone have so much of exposure for the organization. Each organization should do the risk assessment before locating their business.
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