Managing Risk in the Foreign Markets

Managing Risk in the Foreign Markets

Chapter 1

Question 1

The all four basic components of the definition of business corruption cover the main theme of the corruption. Normally, corporate corruption is defined in two forms: first one is engaging in bribe-making, whereas second is the violation of professional and ethical standards of the business. Therefore, all the four components stated in the definition are covered under this definition.

Question 2

Outlaw Trade: In this category, we find practices and activities that do not originate with the public sector. The organizations, individuals, and linkages among individuals and institutions may create behaviors that are harmful to the country, economy, and citizens. But there is a flip side to the discussion. We may learn that outlaw trade is, in fact, not harmful (Gascoyne-Bowman, 2012). We will pay close attention to the four elements - goal, misbehavior, system damage, and stakeholder harm - in different situations before we draw a conclusion on whether or not we have corruption.

Economic Corruption: In this category, we deal with practices or behaviors that deprive individuals or organizations of their property or livelihood. In this context, excessive or inequitable taxes or government fines, violations of civil rights, or other penalties are forms of corruption (Morgenson, 2011).

Question 3

Transparency International gives a simple definition of political corruption, describing it as an abuse of entrusted power by political leaders for private gain, to increase their power or wealth. Mostly times, it does not necessarily involve the transfer of money, it may take the form of “trading in influence", or bestow a special favor, which poisons the politics and threatens democracy. While the definition speaks of political leaders, political corruption also applies to state officials, who, under the powers represent a higher authority, including political leaders (Heidenheimer & Johnston, 2002).

On the other hand, organizational corruption is defined as an attack on the norms because organization deviates from the original and ethical path. The basis of the organizational corruption based on the greed, arrogance and the sense of personal entitlement. Therefore, the individuals who had their control over the organizational resources lead the organization towards the corruption.

Question 4

According to Transparency International, "Corruption involves the abuse of power been delegated to private purposes”.

This definition can isolate three elements of corruption:

abuse of power;

for private purposes (so do not necessarily benefiting the person abusing power, but also including many members of his immediate family or friends);

A power that one has been delegated (which can come from the private sector and public sector).

Transparency sometimes also uses this definition: "abuse of power to aim for personal enrichment.

Question 5

The goal of COFACE is to assign the rating to a country that reflects the extent to which a country's political, economic and financial stance persuades the financial assurances of the local companies. On the other hand, business climate risk rating system is numerical system that provides the qualitative analyses of the country's economic, political and financial factors.

Question 6

The basic difference between AON political risk map and COFACE is that AON map ...