Page 238 - International Marketing

240 International Marketing BRILLIANT'S

Introduction
Risk is a reality of business life and more so of international busi-
ness. International business is complex and involves a number and vari-
ety of risk from the beginning to the end. Before going to international
trade, the exporter must assess the different types of risks and their ex-
tent so that risks may be managed carefully and may be minimised in a
planned manner.
Every exporter will be willing to export to marketes which are less
risky. In this context, developed countries are considered safer than de-
veloping countries. But two points must be considered at this stage (i)
Risks or risky markets cannot be forecasted and (ii) Risky marketers
have fierce competition because every export like to be present there.
In order to assist Indian exporter and provide cover against various risks,
the Indian government has established the Export Credit and Guarantee
Corporation (ECGC) to cover various type of risks and provide guarantee to
other organizations against credit advanced by them to exporters.
Types of Risks NPP
The various types of risks that may be experienced by an interna-
tional marketer are:
1. Commercial Risk: The commercial risk may arise from the suitabil-
ity of the product for the market or otherwise, changes in the demand and
supply conditions and changes in prices. These changes in international
markets make the international trade more risky.
The main reasons of commercial risk may be attributable to:
(a) Lack of knowledge
(b) Inability to adapt to the environment
(c) Different kinds of situations to be dealt with and
(d) Greater transit time involved.
2. Politial Risk: Political risks may arise as a result of changes in
political situations in the countries concerned (importing and exporting).
The factors affecting the political situations are:
(i) Changes in party in power in the coun- Types of Risks
tries concerned i.e. changes in the gov- 1. Co m m e r c ia l
ernment or change of government head. Risk
(ii) Coups, civil wars or rebellions; 2. Political Risk
(iii) Wars between two countries or among 3. Risks arising out
many countries. of foreign laws
(iv) Capture of cargo by enemies during war. 4. Cargo Risks
These changes in political situations affect the 5. Credit Risk
international trade.