BKelly Unit 5 Economic Risk and Foreign
Economic Risk and Foreign Investment
Bobby Kelly
Kaplan University
MT220: Global Business
November 15, 2014
Ravi and Keith recently were contacted by the leader of a Jordanian soft-drink bottling about the possibility of setting up a joint venture in Lebanon to manufacture Zip-6 and expand the brand in the Middle East. The Jordanian firm is considerably smaller with no experience on a global scale but has strong family ties to the Jordanian Royal Family. The Jordanian firm is financially sound and with strong customer support within the Kingdom of Jordan. Ravi is entice by the proposal being of Iranian descent, he would like to contribute to jobs creation and financial stability to that region of the world. Ravi is concerned about making any foreign direct investment in Lebanon because of the instability in the area and poor political leadership in many of the neighboring nations. Ravi concerns are legitimate because economic risks according to Hill, (2014) refers to “The likelihood that economic mismanagement will cause drastic changes in a country’s business environment that hurt the profit and other goals of a particular business enterprise.” (p.82). All possible economic risks involved with such a joint venture entry should be analyzed before any decision can made.
Lebanon Background
Lebanon has a history of political turmoil. In 1943 Lebanon was granted independence but still faced many political dilemmas. After the Lebanon’s civil war they continued to face years of political instability. Sectarianism played a major role in the political struggle. According to Merriam-Webster sectarianism is defined as bigotry, or hatred arising from attaching importance to perceived differences between a subdivision within a group, denomination of religion, or regional or factions of a political movement (Merriam-Webster). Syria, Lebanon neighbor, has been influencing Lebanon’s foreign and internal policies. Israel also a neighbor has been attacking Lebanon and
Bobby Kelly
Kaplan University
MT220: Global Business
November 15, 2014
Ravi and Keith recently were contacted by the leader of a Jordanian soft-drink bottling about the possibility of setting up a joint venture in Lebanon to manufacture Zip-6 and expand the brand in the Middle East. The Jordanian firm is considerably smaller with no experience on a global scale but has strong family ties to the Jordanian Royal Family. The Jordanian firm is financially sound and with strong customer support within the Kingdom of Jordan. Ravi is entice by the proposal being of Iranian descent, he would like to contribute to jobs creation and financial stability to that region of the world. Ravi is concerned about making any foreign direct investment in Lebanon because of the instability in the area and poor political leadership in many of the neighboring nations. Ravi concerns are legitimate because economic risks according to Hill, (2014) refers to “The likelihood that economic mismanagement will cause drastic changes in a country’s business environment that hurt the profit and other goals of a particular business enterprise.” (p.82). All possible economic risks involved with such a joint venture entry should be analyzed before any decision can made.
Lebanon Background
Lebanon has a history of political turmoil. In 1943 Lebanon was granted independence but still faced many political dilemmas. After the Lebanon’s civil war they continued to face years of political instability. Sectarianism played a major role in the political struggle. According to Merriam-Webster sectarianism is defined as bigotry, or hatred arising from attaching importance to perceived differences between a subdivision within a group, denomination of religion, or regional or factions of a political movement (Merriam-Webster). Syria, Lebanon neighbor, has been influencing Lebanon’s foreign and internal policies. Israel also a neighbor has been attacking Lebanon and
References: Hill, C.W. (2014). Global business today (8th ed.). New York, NY: McGraw- Hill. Lebanon: Resources. (n.d.). Retrieved from http://globaledge.msu.edu/countries/lebanon/resources The World fact book. (n.d.). Retrieved from https://www.cia.gov/library/publications/the-world- fact book/geos/le.html