Question

A semiconductor company has established a plant overseas in South Africa, where the power grid is somewhat unreliable. Which of the following economic risks is most relevant to the circumstances of the semiconductor company?
a. Infrastructure
b. Potential naturalization of private assets
c. Lack of natural resources
d. Security risk

Answer 1

Answer:

A. Infrastructure

Explanation:

Based on the scenario been described in the questions, the economic risk in the circumstance relevant to the semiconductor company is know as infrastructure risk.

Economic risk is the chance that macroeconomic situation like, government regulations, exchange rates, infrastructure or political stability will be an hindrance to an investment, that normally affects business in a foreign country.

Answer 2

Answer:

A. Infrastructure

Explanation:

Economic risks refers to the likelihood of a country's macroeconomic conditions affecting investments or domestic/foreign businesses prospect. There are various forms of economic risks. In this case, Infrastructure is the main economic risk affecting the semi-conductor company. Due to the fact that the power grid of south Africa is somewhat reliable and the company needs it for continuous manufacturing process, by moving to south Africa, they bear the risks of infrastructure (economic risks)