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Country Risk

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Country risk

The government of different countries will make regulations and restrictions to benefit their people, however in doing so, it might affect the parties involved. Recently, the new US trade policies has left Samsung devastated. President Trump imposed tariffs on imported solar panels and washing machines. This directly affects Samsung as they export a bulk of their washing machines to the United States. Of course, looking beyond just the U.S, in the case that there are any other such regulations and or restrictions imposed onto certain products or services Samsung plays a huge part in providing the market to, it would mean more an increased difficulty in pushing their products.

With such tariffs in place, it could potentially cause US consumers to stop purchasing washing machines from Samsung due to the increase in price. As a result, Samsung would have lesser sales. Tariffs and other international trade restrictions are often imposed in order to benefit the imposing country interests and allow their local brands and corporations to stay in competition. Hence on a larger scale, it would also limit other countries consumers from purchasing other products from Samsung, given that their countries impose similar restrictions.

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When doing international trade, country risk would be one of the challenges that would arise. This is because country risk is something that is beyond their control, whatever restrictions or actions other countries take are not within Samsungв scope of influence. Every company will have to face factors that they are able to deal with and solve as well as more prominent problems that will push them to adapt in order to remain profitable and maintain a presence on the international market.

Recommendations

When we look into the solutions or measures that Samsung could implement to either solve or quell the effects of country risks, we first look into preemptive measures that act as a safety net as well as solutions that may partially or wholly nullify the problem.

First off, foresight is key. Samsung could keep track of different countries regulations and monitor changes. Through measures such as risk analysis, they will be able to somewhat predict or at least prepare for external countries rules and regulations to work against them. This would minimise their losses as they will be able to reduce production numbers for the predicted countries. Hence, keeping up to date with such matters would enable them to brace against potential risks as well as provide them with effective recourse if the situation requires.

Furthermore, we have more immediate solutions to counteract these situations where rules and regulations change unexpectedly, therefore posing a risk to Samsung business. Samsung could firstly diversify their products and services, which they already do to a certain extent. Diversification of products is important in this case as if certain restrictions would to be imposed on some of their products, they would still be able to source revenue from the unrestricted variety of their goods. Samsung could also expand their customer base by expanding to other countries, hence providing them business continuity in the case that their business relations cease to exist with other countries.

Of course, these measures are only effective to a certain extent and hence why country risks still exist. However, with them in place acting as a safety blanket for Samsung, they minimise the potential losses and hence makes unfavourable situations more bearable.

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