Axetem Inc Developing Country Political Risk Analysis Financial Memo


Question Description

Deliverable Length: 5-6 paragraphs

Axetem, Inc. wants to explore the possibility of establishing a factory and a customer service center in a developing nation to take advantage of a less expensive labor force. The first step in a series of various feasibility studies is a political risk analysis. You have been asked to put together a team to start the process.
Compose a memo to your team that includes the following:
* To what does the term political risk refer?
* Give at least 3 examples of sources of political risk.
* Explain what distributive and catastrophic political risks entail, and explain which type is likely to be a more significant factor in a developing country.
* Explain the ethical implications of distributive risk.

Tutor Answer

School: University of Maryland

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Running head: FINANCIAL MEMO


Financial Memo



TO: CEO Axetem Inc.
FROM: Team Leader
DATE: May 24th, 2019
SUBJECT: Political Risk- Financial Advice
As already discussed, Axetem Inc. has been considering the idea of coming up with a
factory and a customer service center in Sri Lanka, as a developing nation. The intention of
the move is to leverage on cheaper labor provision. To achieve its objective, the company has
created a team that can assist in the feasibility study of the project. The first consideration is
the likely political risk that Axetem will have to deal with should a factory be set up in Sri
The political instability in Sri Lanka can easily expose Axetem to political risk. The effect
would be negative investment returns. From the reports...

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