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Country Risk Analysis
Country Risk Analysis
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Executive summary:
MAFASA pickles industry ltd is a Bangladeshi based multinational corporation. the company
create traditional pickles and sell domestic and international market. Company create and packet
the pickles locally then export it to various country in this paper we will describe our mission
vision, we will do swot analysis of the company. we will calculate risk of country we well discus
about their economy we will choose to country to compare with each other. And at the end
choose one country to do business with we will explain how we are planning to market our
product and all the restriction we will face in the process.
Contents
Introduction:.................................................................................................................................. 2
Mission:.................................................................................................................................... 2
Vision....................................................................................................................................... 2
Products of MAFASA Pickles:........................................................................................................ 2
SWOT Analysis of MAFASA PICKLES:.........................................................................................3
Country risk analysis...................................................................................................................... 4
United Arab Emirates:.................................................................................................................... 4
Political Risk factor:....................................................................................................................... 7
Financial risk factors:..................................................................................................................... 8
Japan.......................................................................................................................................... 10
Political Risk factor...................................................................................................................... 12
Financial risk factors:................................................................................................................... 13
Japanese economy analyses:.......................................................................................................... 15
GDP:...................................................................................................................................... 15
GDP annual growth rate:........................................................................................................16
Market Strategy........................................................................................................................... 17
Conclusion:................................................................................................................................. 18
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Introduction:
MAFASA pickles industry ltd is a Bangladeshi based multinational corporation. Creating
traditional Bangladeshi pickles with modern techniques. Sharing our tadeonal taste with other
countries by exporting them. MAFASA prides itself on being an organization that has performed
excellently not only on a domestic level but on a global level as well. As an environment friendly
organization, MAFASA want to set an industry-wide benchmark in its home country through its
continuous contributions to the economy. Bangladesh is known as the country of six seasons. It
has an ideal weather for agriculture and hence, the cultivation of fruits and vegetables. We utilize
this scope to produce our product locally and export our product globally sharing our countries
agriculture value.
Mission:
Our mission is to produce finest pickle and represent our countries taste and culture to the
world.
Vision
To serve happiness to our customers through delicious, premium quality pickles.
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4. Green Chili Low Salt Pickle: chili is always a very important part of spices. It comes together
with unique blend of taste which gives rise to a tongue-tickling accompaniment for any meal.
With any traditional meal just a little of this green chili Pickle will give a fiery touch. But
unlike other chili pickles, our one is low salt which means low sodium. This is specially
made for the people who have high blood pressure and other health issues. Our Green chili
Pickle can be enjoyed by hypertensive people without any hesitation.
Opportunities Threats
There are good opportunities of profits as It has to compete with other old and well-
consumers would like to buy a unique known brands. E.g., Pran.
product in a lower price. Our pickle has a new flavor; therefore, it
There are opportunities of expansion of will be a risk as people are used to with
the company in other countries. the taste of the old pickles.
Increase the product variation with It has a lot of substitute products.
production at a larger scale.
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Country risk analysis
Before starting a business in another country, we have to see the stability of that country. To
measure that we have to do a country risk analysis. For our project, we have chosen 2 countries
to analyses to see if we can expand our business to one of them.
The countries are.
● United Arab Emirates
● Japan
The United Arab Emirates is a rapidly developed country with 9.77 million citizens. The country
had a GDP of 354.28 billion USD in 2020. The oil-rich nation imported goods worth 18.4 bn
USD in 2020. The ease of starting a new business UAE ranks 16 among the 193 nations
worldwide in 2020. (The economist)
To calculate risk, we have to mind 2 factors into consideration
● Political factor
● Financial factor
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Derivation of the Overall Country Risk Rating Based on Information (5 being the higher risk 1 is
the lower)
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Inefficient 1 10% 0.1
Bureaucracy
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Political Risk factor:
● The attitude of Consumers in the Host Country: UAE is a capitalist country as we are
planning to export our product there. This point is very important. UAE is a desert
country because of that they don't have the capacity or raw material to produce our
product locally. UAE hosts large numbers of migrant workers that came from south Asia.
Who loves our product as it reminds them of the taste from home? So, the risk of this
factor is low.
● Actions of Host Government: Though the Uae is a capitalist country it has a tight
government restriction on regulation. If we export our product in the UAE we have to go
through some extra paperwork and permission as our product is food-based. The import
duty of the product is 5% but it depends on location.in UAE there are “free zones” where
customs duties are not payable. Any company registered in one of the free zones can
import goods into that free zone without having to pay customs duties. Also, corporate
income tax is payable under a progressive rate system, with rates up to 55%. Because of
tight government restrictions, the risk is high.
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Financial risk factors:
● Interest rate: The benchmark interest rate in the United Arab Emirates is 1.50 percent in
2021.
Interest rate
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2021 2020 2019 2018 2017
● Exchange rate: the exchange rate of 1 Bangladeshi taka is 23.052 United Arab Emirates
dirham. That means the emirate’s currency is stronger. because of that, the risk is high on
this factor.
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Inflation rate UAE
4.00%
3.00%
2.00%
1.00%
0.00%
2020 2019 2018 2017
-1.00%
-2.00%
-3.00%
As to the data adobe, the inflation rate is low and decreasing from last year so the risk is low.
● Industry competition: our product is pickled so our industry is the food industry. The
pickle food industry in the UAE is moderate competitive than other industries. But still
competitive. The key players are the USA, INDIA, JAPAN. PRAN company from
Bangladesh also exports pickles there. so, the risk factor we have chosen is moderate.
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Japan
Japan is a developed nation with 126.3 million citizens. The country had a GDP of 5064.87
billion US dollars in 2019. The island nation imported goods worth US$634.6 billion in 2020 of
which 10% was food. The ease of starting new business japan ranks 29th among the 193 nations
worldwide in 2020. (The economist)
Derivation of the Overall Country Risk Rating Based on Information (5 being the higher risk 1 is
the lower)
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BY COMPANY TO COMPANY TO OF FACTOR
FACTOR (WITHIN FACTOR
A RANGE OF 1–5) ACCORDING TO
IMPORTANCE
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RISK CATEGORY
● The attitude of Consumers in the Host Country: Japan is a small island country east of
Asia. Because it is an island country, they have to import 25% of their food from
overseas. In 2020 10% of the total import was food. People in Japan accepted outside
food as part of their daily diet. Also, Japanese people like pickled foods. But they also
prefer products made inside their country a bit more. so, the risk here is moderate.
● Actions of Host Government: Japan as a country has some rules and regulations for
importation inside their country. But following the proper paperwork, all these rules
became easy to handle. import duty of food-related products is 10%. The additional
corporate tax is 15%. There are no restrictions on importing pickle related items inside
the country. If a Japanese representative is in the company most of the regulation is
becomes easy to handles so the risk here is moderate.
● Blockage of Fund Transfers: Japan government monitors all overseas transfers exceed
over 2 million yen to prevent financial terrorism. The monitoring is handled by the Bank
of Japan. a “Report on Payment or Receipt of Payment” must be presented to the Minister
of Finance if a transaction is exceeding JPY 30,000,000. There is no limit on the amount
of money one can send with proper documentation. so, the risk is low here.
● Inefficient Bureaucracy: Japan follows Elite bureaucracy. They are the people who will
govern Japan. But down the line, many reforms happened and Bureaucracy is reducing.
Japan is a country with high morals so their Bureaucracy is efficient.
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Financial risk factors:
● Interest rate: according to the World Bank collection of development indicators last
recorded lending interest rate (%) in Japan was reported at 1 % in 2021.
Interest rate
1.01%
1.00%
0.99%
0.98%
0.97%
0.96%
0.95%
0.94%
0.93%
0.92%
2021 2020 2019 2018 2017
If we see the last 5 years data, we can see that Japan’s lending interest rate is stable in
2019-18 and decreased from 2020 and increase back to 1% in 2021. the interest rate is
1% which is low. because of that, the risk is low in this factor.
● Exchange rate: the exchange rate of 1 Bangladeshi taka is 1.2918 Japanese yen. That
means the Japan’s currency is weaker and we can make a profit from it. because of that,
the risk is low on this factor.
● Inflation: inflation rate can have an impact on customers buying power.
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Inflation rate Japan
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
2020 2019 2018 2017
-0.20%
From the data, we can see that the inflation rate is decreasing every year for the last 3 years.
Which is a good sign. Because of that, they will be low on risk.
● industry competition: Japan has a massive food industry yet they have to import food
from abroad. So, Japan’s industry is a bit competitive country like the USA, India
export pickles every month
after concluding the risk analysis, we can see United Arab Emirates has got 2.95 and Japan got
2.46 points. as we state more points indicate the higher risk. the country we choose will be Japan.
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Japanese economy analyses:
GDP:
According to official data from the World Bank the Gross Domestic Product (GDP) in Japan
was worth 5064.87 billion US dollars in 2019. The GDP value of Japan represents 4.49 percent
of the world economy.
year 2019 2018 2017 2016
Rate 5064.87 4954.81 4866.86 4922.54
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GDP annual growth rate
10.00%
5.00%
0.00%
2021 2020 2019 2018 2017
-5.00%
-10.00%
-15.00%
Import Prices: Import Prices in Japan increased to 104.10 points. In Japan, Import Prices
correspond to the rate of change in the prices of goods and services purchased by residents of
that country from, and supplied by, foreign sellers. Import Prices are heavily affected by
exchange rates.
Year 2021 2020 2019 2018 2017
points 104.10 94 95 97 93
Import Prices
106
104
102
100
98
96
94
92
90
88
86
2021 2020 2019
Japan is county that export their 25% of the total foods from overseas. Also, their currency is
weaker than our so we will make some profits. As we are planning on export, we emetizes on the
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political side more. in which Japan passed with no problem. Japan is a import based country so it
will be good choice to choose this country.
Market Strategy
The strategy of your business we will export our product to Japan. The production and packaging
of our product will be done in Bangladesh and we will export ready to eat product. the product
needs special climate to create which is only available in our country. We will export by cargo
and shipyard. we need to have a real presence in the export business in Japan, which implies we
will have to rent an office room or warehouse to load our exports. Import quota items also
require an import license, usually valid for four months from the date of issuance. We will ship
our product to local convenient store around the country to sell. there are more than twenty
thousand seven eleven stores in Japan. so, we can use these stores as our distribution network
Imperfect and Perfect theory
When it comes to trade, Japan has various non-tariff obstacles that may influence economic
activity by hindering or delaying the importation of foreign items into Japan, even though tariffs
are typically low in Japan. U.S. firms may still face non-tariff obstacles in the following sectors
despite increased competition, U.S. and foreign government pressure, and other reasons.
Japan-specific standards (formal, informal, de facto, or otherwise). A requirement in particular
industries or projects for firms to demonstrate past expertise in Japan, thus excluding new market
entrants. Official rules that promote domestically produced goods while discriminating against
imported goods. Licensing authority is concentrated in the hands of industrial groups with a
small membership base, significant market impact, and the capacity to control information and
operate without supervision.
Cartels (both official and informal); and cross-holding and interconnection of commercial
interests among Japanese firms that penalize suppliers outside the conventional business group.
Personal ties are culturally important in Japan, therefore there is a reluctance to dissolve or
change professional partnerships.
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Conclusion:
export industry is a major industry in Bangladesh. But products like pickles are not getting
enough attention. There are lot of opportunity for expending this business around the world. To
correctly analysis the economy and with calculated risk we hope we will rich a grand level
someday.
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Reference:
https://data.worldbank.org/indicator/FR.INR.LEND?locations=JP
United Arab Emirates GDP | 1973-2019 Data | 2020-2021 Forecast | Historical | Chart
(tradingeconomics.com)
Japan - Lending Interest Rate - 1960-2017 Data | 2021 Forecast (tradingeconomics.com)
United Arab Emirates Interest Rate | 2007-2021 Data | 2022-2023 Forecast | Calendar
(tradingeconomics.com)
International Money Transfer Policy: Japan | STICPAY
Bangladesh Taka (BDT) to Japanese Yen (JPY) exchange rate history (exchangerates.org.uk)
Japan Import Prices | 1960-2021 Data | 2022-2023 Forecast | Historical | Chart | News
(tradingeconomics.com)
Japan Import Prices | 1960-2021 Data | 2022-2023 Forecast | Historical | Chart | News
(tradingeconomics.com)
Japan Lending interest rate - data, chart | TheGlobalEconomy.com
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