Risks And Opportunities In China And South Africa For Commercial Essay.

Evaluation of Commercial Risks

Discuss about the Risks and Opportunities in China and South Africa for Commercial Risks.

The evaluation of the different types of the risk factors, as well as the opportunities, is considered to be vital for the establishment of a business within a selected firm. There are some of the commercial risks which affect the marketing and business strategies of international companies in various countries (Armstrong, 2014).  This research paper will help in reflecting the commercial risks, financial risks as well as the different kinds of country risk factors for execution of the business process in China and South Africa.  

The different commercial risks merely refer to the critical losses which arise from the concerned market segments or the respective trade partners.  The most frequent risks are the loosing of the financial and confidential documents, mostly for those owners who resides outside of china and have their business in China.  The management of the commercial risks throughout china has increased significantly as soon as there has been a rise in the difficulties of the country’s economy (Darst, 2013).  The growth in the supply of money was found to be low for china prior the year 1978, there were certain commercial risks from the low supply, planned and the steady flow of the money and the financial system (Darst, 2013).   Soon, the demand for money as well as the credit increased giving rise to the inflation rate and therefore these risks are considered to be of the potential threat for any of the company planning to settle its business process throughout the concerned market segments of china. Moving, to South Africa the commercial risks affects the economy development of the country to some extent.     Poverty, hike in the food prices, scarcity, agricultural policies, and rights and the climate change are seen to be the most crucial commercial risks throughout South Africa (Fabozzi and Markowitz, 2011).    The food security is one of the repaid growing concerns for the government of South Africa.  On the other hand, poverty is one of the crucial factors that affect the economic growth of any firm executing its business process in South Africa.

It has been seen that the change in the exchange rates plays a vital role in the companies' executing their respective business processes internationally (Forests under climate change: potential risks and opportunities, 2015).   There are categories under the financial risk management section; they are capital management, operational risks, credit risks, treasury and market risk,   regulatory risk, insurance and the actuarial risks. Throughout Africa and the different regions of east Africa, the management and the mitigation of the different market risks are considered to be of very important. Moving to the next is the capital management risk which affects the business model of the existing company as well as to the new company entering it to the market segments.  China is having a large amount of debt as compared with the other developing nations and it is recorded that the economy’s financial debt has tripled over the past few years.  Moreover, it has become very difficult for china to deploy all the concerned capital productively over a shortest possible time (Internationalization in Egypt: Risks and Opportunities, 2012). For many of the companies, it was very difficult to make the banking loans secured with the help of the shadow banking systems.  

Evaluation of Currency (Financial) Risks

In order to execute and establish a particular business within a country, the most crucial is to identify the factors which can affect the business growth of the company concerned.  The business climate and the credit risks of china need to be recognized as these factors can help in generating a good amount of the sales revenue for the firm by reducing the various other losses.  The expansion of the shadow banking and the increase in the high debt makes it very difficult for any company to get settle its business process throughout the china (Jahn, 2012).   Moreover, there are potential risks in South Africa which need to be identified by the various companies planning to expand its market segments in South Africa.  Poverty inequalities are major risks and cause potential threat to the businesses as to settle their business methods in South Africa. There are sources of social risks which can affect the business process of any firm in various other ways (Lammle, 2011).  The infrastructures including the transport along with the energy are two of the major shortcomings which are considered to be the major risks of South Africa. 

The cross-cultural management is of vast importance as the diverse cultures in an organization results in conflicts between the employees associated with the firm.  Some of the top cross-cultural risks are as follows, unable to understand the local market demands, failing in recognizing the subculture and the regional differences, failing in understanding the local practices of concerned businesses, failing in adaptation of effective cross-cultural management practices. It has been seen that there are different cultures of people coming from globally throughout South Africa among whose conflicts takes place (Saaty and Vargas, 2013). Therefore, it becomes very crucial to maintain the effectiveness of the employees by providing them suitable training regarding the business needs and by making them understand regarding the cooperation in the workplace (Truss, Mankin and Kelliher, 2012). Furthermore, china is also facing the same problem regarding the employees coming from different countries. Therefore these are the risks which merely affects in reducing the profitability and growth of the concerned country within the particular country.    

The facts reflected about South Africa and China critically evaluates that the financial and the different types of the country risks needs to be identified in order to increase the desired growth of the business processes of the firm. 

The entry strategies are of much importance for the establishment of a company within the selected countries.  Higher volatility throughout the business market segments crucially affects the development and growth of a concerned business.  Some of the recommended strategies are exporting, licensing, franchising, management contracting, contract manufacturing and Turnkey projects.  

Evaluation of Country Risks

Advantages

It is the crucial way of gaining the different types of foreign returns on the name of customer service, trades as well as the assets. The primary advantage is that it has the limited financial commitments which help in retaining the maximum profits to the firm concerned.  Moreover, it involves a commitment for the longer time in the selected country, as for example McDonald Corporation (Werner, 2014).  There is royalty throughout the payment process received from the different companies. The firm gets relieved from many of the costs as well as the potential risks for opening new market segments. 

Disadvantages  

There are certain disadvantages such as no location of the economies as there remains no manufacturing.  There remain crucial risks regarding the reputation of the primary company throughout worldwide.

Advantages

There is an easy implementation of these strategies throughout the countries concerned. Less investment along with the minimal risks are other major advantages of this process which helps in evaluating the growth of the concerned firm (Truss, Mankin and Kelliher, 2012). 

Disadvantages  

There are certain other logical difficulties and the process is less suitable for the service products. The transportation costs sometimes became higher as well as uneconomical.

Advantages

It permits the respective firm to go beyond the barriers of investment and enhance its business processes. It is frequently used while the firm retains the intangible property. 

Disadvantages  

The major disadvantage is that the inconsistency may affect the products or the goods concerned in a negative way. It does not provide the firm full or complete control over the manufacturing along with the marketing process. 

Advantages

The client needs not to do the purchasing of the raw materials as well as the manufacturing facilities. It increases the percentages of the economic scale.

Disadvantages  

Less management and the complexity are some of its vital disadvantages. There are potential quality issues, potential security as well as the confidentiality issues.

Conclusion/Summary of the Discussion  

Identification of the country, financial and the cross-cultural risks are of great importance, as they create an enormous impact on the execution of the business process of the firm.  The paper presents the evaluation of the different types of the financial risks of South Africa along with China business market segments.

References

Armstrong, M. (2014). Armstrong's Handbook of Human Resource Management Practice. London: Kogan Page.

Darst, D. (2013). Portfolio investment opportunities in China. Hoboken, N.J.: Wiley.

Darst, D. (2013). Portfolio investment opportunities in managed futures. Hoboken, N.J.: Wiley.

Fabozzi, F. and Markowitz, H. (2011). The theory and practice of investment management. Hoboken, N.J.: John Wiley & Sons.

Forests under climate change: potential risks and opportunities. (2015). Meteorologische Zeitschrift, 24(2), pp.157-172.

Hughes, R., Kinder, A. and Cooper, C. (2012). International handbook of workplace trauma support. Chichester, West Sussex: Wiley-Blackwell.

Internationalization in Egypt: Risks and Opportunities. (2012). CBR, 11(09).

Jahn, H. (2012). China’s Megacities: Risks, Opportunities and Environmental Health.Public Health Forum, 20(2).

Lammle, T. (2011). CCNA. Hoboken: Sybex [Imprint].

Saaty, T. and Vargas, L. (2013). Decision making with the analytic network process. New York: Springer.

Truss, C., Mankin, D. and Kelliher, C. (2012). Strategic human resource management. Oxford: Oxford University Press.

Werner, J. (2014). Human Resource Development ≠ Human Resource Management: So What Is It?. Human Resource Development Quarterly, 25(2), pp.127-139.