Financial Innovation and Portfolio Risks

Introduction

Various types of commercial transactions such as sales, private and governmental, logistics, investments and conveyance which are playing a significant role between two or more countries to execute international business strategy. On the other hand, various types of risk factors also consider the success of international marketing such as geopolitical risks, environmental risks, technological risk, country risks and economic risks. Besides that, in this report, international marketing strategy of Tesco which is a UK based organization will be discussed with global risk assessment in Sri Lanka. Moreover, a suitable and effective conclusion will be provided after analyzing potential risks of Sri Lanka nation which are situated in the tropical region.

Tesco is one of the prestigious organizations in the world which was established by John Cohen in 1919. In addition, Tesco is recorded in the London Stock Exchange and to make risk management finishing for its employees, Tesco arranged a decent working air where they require their staff to feel acknowledged and regarded. On the other hand, the management has turned into the greatest British retailer into Sri Lanka and is likewise one of the world’s biggest retailing outlets of supermarket chain. In any case, Tesco is a massive enterprise so they put into improvement and preparing which develop their aptitudes and understandings of risk management. Along these lines it improved correspondence amongst them and specialists are consistently requested their perspectives of how they are encountering this. Subsequently, risk management is the result of a few states of mind fixated by a worker or a workhand. In other sense, these demeanors are locked in with the occupation and inside the states of specific elements, for example, compensation, social connection at work, administrators of livelihood, and states of work. Moreover, various types of global risk factors which Tesco might face in Sri Lanka will be described in this report (Predicting outcomes of investments in maintenance and repair of federal facilities, 2012).

International Strategy and Business Model

Figure: business model

Source: https://thumbs.dreamstime.com/z/business-model-8311314.jpg

Specifically, it can open a supplementary that creations candidly, or go into a combined endeavor with a neighborhood assistant, or build up a skilful licensing plan whereby the practiced franchise possesses. While Tesco’s can’t trade its produce yet, it can pick among various methods of process in the distant business sector, approximately of which may include an advanced level of responsibility of assets than others. Thus Tesco’s costumes the expenditure of extension to an enormous degree depend on upon sort of management privately in business area and circles the development technique privileged and also transverse over dissimilar marketplaces.

According to this business model, critical factors of business are infrastructure, competencies, value configure, cost, customer, product and service, profit and distribution. In addition, in Sri Lankan market how Tesco will expand the business will be discussed by this business model(Li, 2011).

Global risks that might Tesco face

In order to expand the business into the completely Sri Lanka country, an organization has to face five types of global risks including several aspects. In addition, theses global risks are discussed below:

Geopolitical Risks

Organizations that make interest in a Sri Lankan market the government of Sri Lanka can create a pontifical pressure which may be a reason of threats in new market. Besides that, Sri Lanka is surrounded by oceans so, the climate of Sri Lanka is different than any American country. Besides that, financial foundations deal with outside companies and expand their revenue. In addition, some reason of negative impact on financial situation of Sri Lanka are political, social and economic value. In other words, the geopolitical risks are influenced by many aspects such as political disputes, trade disputes, military conflict, terrorism, changing the balance of power, failing states. A firm can’t adequately work to its full limit keeping in mind the end goal to expand benefit in such a shaky Sri Lanka’s political turbulence. In addition, the radical actions and insecurity make it difficult for groups to effort adeptly in these states because of bad standing and result completed by persons in the highest administration. Moreover, the antagonistic government of Sri Lanka may supplant the cordial one and consequently, seize foreign assets.

Terrorist risks

9/11 disaster is a conspicuous diagram, and these meetings could emphasis on the administrators of extensive worldwide officialdoms for kidnapping and captivating of convicts so as to store their terrorist exercises. Such disappointing circumstances make it hard to work in Sri Lanka. It prompts potential unfriendly demeanors, damage of foreign organizations or kidnapping of the businesses and representatives. Kidnapping and other criminal activities in Sri Lanka can be harmful for Tesco. On the other hand, government has to fulfil the demand of those terrorist in different situation. These are attacks that may come from the absence of trust, certainty and contrasts in culture and religious theory by subjects of Sri Lanka. Moreover, terrorist activity is growing all over the world and they are getting proper training to successfully execute their dangerous mission. However, violence can afraid customers to visit outside and build its productivity and might effects Sri Lankan market (Schoeneborn & Scherer, n.d.).

Environmental risks

In terms of the environment which are influenced by many factors such as global warming, population, extreme climate, destruction of rain forests, urbanization and resource depletion in Sri Lanka. Air, water, and ecological contamination may influence the wellbeing of the residents, and lead to an open objection of the subjects. These issues may likewise prompt harming the notoriety of the organizations that work together in Sri Lanka (Learning to manage global environmental risks, 2001).

Technological risks

Talking about the technological risks which is effected by the computer system failure, computer virus, data theft, cyber-attacks, biotechnology product design faults. Data theft and cybercrime is developed rapidly and many hackers are doing their sins perfectly. As a result, huge amount of fund can be replaced from virtual bank account in 10 sec in the global digital field (Grimvall, 2010).

Country risks

According to the current overall situation of the nation is the main cause of Sri Lanka risks such as culture clashes, disease, population growth, migration, aging water and food shortages. The culture is one of the vital factor because the people of America and People of Sri Lanka have their individual cultural background. So, they obviously have different taste which may be a vital risk portion for the Tesco(Raimbault & Barr, 2012).

Economic risks

The economic risks are the most critical factors among all risks factors because the economic value influences the growth and development of that nation as Sri Lanka (Simsek, 2013). Besides that, this economic risks includes following aspects such as financial crises, recession, commodity price and currency volatility, excessive Sri Lankan government debt and economic crime in Sri Lanka. Though, the changing of foreign venture or/and residential financial or fiscal arrangements. One of the major factor is economic condition of Sri Lanka. Conflicts in exchange rate depends on economic value and whole business industry has to face difficult situation because share value decide organizational reputation (Platon, Frone, & Constantinescu, 2014).    

Financial Risk

Once a company wants to expand its business into different nation, the first and critical aspects comes that is funds. Without any financial support or sponsorship Tesco unable to build outlets and supermarkets in Sri Lanka. In other words, they needs to take financial help from Banks, other established companies or shareholders to expand business in Sri Lanka. At times, firms’ advantages are seized, and that adds to financial losses. Most nations make it troublesome for foreign firms to repatriate supports along these lines driving these organizations to contribute its assets at a less ideal level(Codina, 2009).

Potential international variables

Discussing potential variables of international markets, the most critical component is economic development in Sri Lanka. Moreover, the business sector introduction is similarly critical and political variables additionally impact international business sector.

Client behavior

Then again, the client behavior is variable as indicated by an alternate nation. In terms of Sri Lanka clients lean toward the comfort products yet the clients of USA are searching for stable products at a sensible cost. Nevertheless, Australian clients lean toward best products regardless of what is the cost. Along these lines, the client behavior is a fundamental variable in the promoting procedure (Boyd & Chinyio, 2006).

Target statement

The division is essential since it figures out which section ought to be focused on the organization. In addition, there are four sorts of portions are recognized, for example, demographic, geographic, use and psychographic. In this report, the demographic portion in Sri Lanka which incorporates a few qualities elements of buyers, for example, age, sex, material status, occupation and so forth is concentrated.

Marketing and distribution process

Keeping in mind the end goal to depict the showcasing procedure, the ad is assuming a huge part. Regarding super markets of Tesco in Sri Lanka is a new open door in the business sector. Individuals should be honored about this through an appropriate ad. Aside from that promoting in online networking in Sri Lanka is exceptionally successful.

Positioning procedure

Positioning demonstrates a picture of a specific product which can be introduced to clients in specific country like Sri Lanka. The positioning practice incorporates some powerful variables, for example, value, quality, contender, repositioning and so forth. So as to make a decent impression of product on the psyches of the intended interest group, aggressive situating is assuming a noteworthy part(Reedy & Schullo, 2004). In addition, product characteristics additionally improve the elements of the products in Sri Lanka. For an illustration, Tesco ought to reduction oil utilizing and it has no symptoms on assimilation.

Execution arrangement

Execution technique incorporates around a few phases, for example, statistical surveying, time utilization, and assets arrangement. Above all else, a statistical surveying ought to be directed and as indicated by a result, the organization ought to execute the procedure. Moreover, the expense of the product relies on upon the Sri Lankan shopper’s behavior.   

Marketing issues/issues that Tesco faces in the expansion

Making expansion to other nation or locales is essential or the organizations while they will make more benefit in their business. Depending upon the business procedure, the Tesco has confronted numerous ramifications while they have drawn nearer for the business expansion in Sri Lanka. Numerous ramifications are noticeable and among those most vital issues are specified underneath:

Capital issues

The association is not that abundantly acknowledged by everybody, and they have recently developed the organization. In this way, they have a remarkable financial issue while they will make improvement in their business by extending the business in Sri Lanka or district (Kaynak, 2002).

Globalization impact

Globalization greatly affects verging on each organization. In addition, the organizations are not acclimated to the impact, and they will adjust the globalization. In any case, it is particularly troublesome for any organization to adjust a specific globalization in another locale while they are making the build up their business. Moreover, Tesco is likewise confronting this issue while they will grow the organization in Sri Lanka.

Competitor issue

In the innovative foreign market, the organization needs to confront numerous competitors who will make their impression in the business. In addition, this is a standout amongst the most critical issues in the expansion of the business in Sri Lanka. Along these lines, they must be more worried about this part where they need to face competitors (Shelegia, 2012).

Conclusion

At the end of the report, it is clearly notified that Tesco needs to analyze each and every market condition in a different region. In other sense, they should expand their sales and services in a favorable foreign market after rectifying all global risk factors. The globalization is a sort of rivalry between the international linkages which incorporates tie nations, foundations, and individuals in a worldwide economy. Some worldwide patterns are distinguished in this area, for example, the equalization of development is changing towards developing markets. To animate the economy, the requirement for productivity is expanded. Governments present new strategies for the economic development and financial dependability. With respect to the variable, it incorporates numerous strategies and enactment presented by the administration. This political variable develops the economic qualities. Though, the economic variable incorporates some danger evaluations, for example, loss of productivity, loss of foreign direct investment and the danger of coin swapping scale. With the assistance of different sorts of policies, the economic dangers are determined. Those methodologies are the quantitative methodology, subjective methodology, agenda methodology and mix of all methodologies. However, Tesco needs to focus on various risk factors of global business explanation in Sri Lanka. Moreover, if Tesco wants to expand their business in Sri Lanka, they needs to overcome and control all global risk factors which are discussed in this report. 

References

Boyd, D. & Chinyio, E. (2006). Understanding the construction client. Oxford: Blackwell.

Codina, M. (2009). Financial Regulation: The Risks of Unintended Consequences or Early Mover Disadvantages. Australian Economic Review, 42(4), 477-481. http://dx.doi.org/10.1111/j.1467-8462.2009.00569.x

Figuié, M. (2013). Global health risks and cosmopolitisation: from emergence to interference. Sociology Of Health & Illness, 35(2), 227-240. http://dx.doi.org/10.1111/j.1467-9566.2012.01539.x

Grimvall, G. (2010). Risks in technological systems. London: Springer.

Hettne, B. (2010). Development Beyond Market-led Globalization. Development, 53(S1), 37-41. http://dx.doi.org/10.1057/dev.2009.84

Kaynak, E. (2002). Strategic global marketing. New York: International Business Press.

Learning to manage global environmental risks. (2001). Cambridge, Mass.

Li, J. (2011). Rethinking international and global strategy. Global Strategy Journal, 1(3-4), 275-278. http://dx.doi.org/10.1002/gsj.30

Platon, V., Frone, S., & Constantinescu, A. (2014). Financial and Economic Risks to Public Projects.Procedia Economics And Finance, 8, 204-210. http://dx.doi.org/10.1016/s2212-5671(14)00082-3

Predicting outcomes of investments in maintenance and repair of federal facilities. (2012). Washington, D.C.

Raimbault, C. & Barr, A. (2012). Emerging risks. Farnham, Surrey: Gower.

Reedy, J. & Schullo, S. (2004). Electronic marketing. Mason, Ohio: Thomson/South-Western.

Schoeneborn, D. & Scherer, A. Communication as Constitutive of Terrorist Organizations. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.1437101

Shelegia, S. (2012). Is the Competitor of my Competitor also my Competitor?. Journal Of Economics & Management Strategy, 21(4), 927-963. http://dx.doi.org/10.1111/j.1530-9134.2012.00353.x

Simsek, A. (2013). Financial Innovation and Portfolio Risks. American Economic Review, 103(3), 398-401. http://dx.doi.org/10.1257/aer.103.3.398

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