International Financial Management - Essay Example

veral risks associated with the social, economical and political characters of the country, in which the investment is proposed to be made, as these will have a direct bearing on the growth and profitability of the firm concerned. Hence the firm should undertake a comprehensive analysis of all the related issues and decide on the investment. In the given instance the company JMC Plc is considering an investment proposal to produce and market sportswear in Egypt. This paper envisages presenting a detailed report on the country risk analysis of Egypt with respect to the proposed investment and also the economic arguments for and against the foreign direct investments from different standpoints.

The purpose of the Country Risk Analysis report is to provide an in-depth critical information and analysis on the trade environment in the different countries. The risk factors associated with a country may be analysed in terms of its: “The political environment is characterised by an extremely strong executive and many areas, such as interior, defence, and justice, are outside parliamentary review and control.” Business Anti-Corruption Portal Though the government run by Hosni Mubarak appears to be stable, there is an all round inefficiency crept in the judicial and public service sectors.

This shows a negative outlook for the proposed investment in the country. In general redundant labour has led to low marginal productivity. This has also caused overlapping job responsibilities which raises the cost of conducting the business to the producers and the investors. Business Anti- Corruption Portal reports “Businesses are likely to encounter corruption in meetings with public offices, as officials in various government departments are known for bribery, embezzlement and tampering with official documents.

On average, companies report to spend 8 % of sales on unofficial payments to get things done. For example, 27 % of companies claim that tax inspectors expect gifts