Report (50 marks) 3000 words Case Scenario: In the year 2010, 5 business graduates of Southern Cross University came together to pursue their dream of starting a new business. They conducted a...

CHEERS Company Case Risk and opportunities
Introduction:
It's not always easy to decide to invest in another country. That is because before making such a decision, it is important to consider many steps. Basically, risk analysis is an important step which enables an investor to predict and generate potential future cash flows as well as to make smart investments based on the current status of the country. In our case, an Australian corporation is trying to make the option between investing in Brazil and India and developing its subsidiary. Different facets of the country must be considered and analyzed for successful decision-making processes. It is important to determine cultural and legal problems, government regulations and financial or monetary risks, and economic factors. As exposures, these threats can kill an investment if they are not considered. In fact, it is crucial in making a sound investment decision to have a proper understanding of the economy in addition to exchange fluctuations. As a result of taking the necessary investment steps, prospects for investment in foreign countries emerge. Therefore, this paper is a study of CHEER's executive company's risks and investments prospects in Brazil and India. Often, industry and the business environment in the host country are the best path to the market entry strategy.
Analysis of Risks and Opportunities
Risks in Brazil:
Brazil is known as one of the world's most competitive developing countries. In terms of nominal GDP, the country's economy is the ninth highest in the world. The 2016 GDP of the country is estimated at $1.77 billion and is derived primarily from services and exports, according to the IMF estimations. However, it is nothing but easy to invest in Brazil because of its exposure to numerous different risks.
Financial risks:
Multinationally, currency risk is one of the key risks to be considered by any Brazilian company. Basically, these risks are also driven by changes in the exchange rate which dramatically change business value (Holtbrügge and Kreppel, 2012). The most common types of threats to CHEER are likely to be transaction risk. This involves possible future changes in cash flows and outflows due to changes in the value of a given currency. One of the world's most volatile is Brazilian currency. The 2013 FXCM volatility ranking for Brazilian Real was seventh (Campbell, 2013). The monetary risk ultimately affects the ability of a country to attract multinational corporations. Several studies however have demonstrated progress, particularly since the country transformed their system of exchange into fixed systems in 1999 (Gaeta, 2012). Increasing the number of companies affected by exchange-rate fluctuations was critical in this transition. In addition, the government will encourage and sensitize businesses to the consequences and ways of adapting the monetary risk. However, it is important to note that Brazil appears to be more risk-free than other emerging economies, for example. By using swaps and other operating instruments, businesses have been able to cope with monetary risk (Borodina and Shvyrkov, 2010). The global CHEER company can also pursue a policy of leadership and postpone taking into consideration the expected currency changes.
Political Environment:
Another serious risk facing companies in investing in Brazil is political risk. Given the country's uncertainty, businesses and organizations should be aware of the possibility of the government changing its laws and regulations that might otherwise have harmful effects on the returns (Gouvea and Montoya, 2013). According to Campbell (2013), corruption in Brazil is another significant problem that has a huge effect on both local and international operating firms. The state-controlled scandals have threatened the credibility of several multinationals. In general, bad management perpetuates these practices. However, international governments should ensure that sufficient action is taken to hedge these risks.
Regulated by Government:
Policy legislation plays a key role in deciding the attractiveness of the country to foreign companies. This may entail the enactment of new laws regulating the activity of a corporation. In the last several years Brazil's government has passed many laws with a view to enhancing data security and eventually to reducing corruption, thanks to its political climate. Yet these measures have shown that global corporations have raised liabilities. These risks are also extremely difficult to cover, because only marginally protect multinational corporations can standard instruments to protect the expected profits, such as the insurance, contracts and commercial engines. Nevertheless, companies can cover these risks by changing the collection of applied strategies that enable the foreign managers to handle their risks. Likewise, the hunt for policy factors, such as policy preferences can play an integral role in hedging policy risks that, in effect, can affect the rules of government.
Opportunities in Brazil
Market Size:
The decision to invest in Brazil provides many opportunities.The existence of broad market dimensions offers an effective atmosphere to join and develop international corporations. In particular, both national Brazilian and international corporations have made a competitive bid to host the Rio de Janeiro 2016 Olympic Game. Rio was undeniably the first South American city to host both the Olympics and football World Cups. Until today, large investments have been attracted by the nation in the variable field of the economy. This huge market will serve as a basis for the development, particularly in Southern Brazil where tourists visit all over the world, of an artisanal beer company that has less but more demand. Even the nation's huge population contributed to the large size of company. According to the United Nations report, the urban population of Brazil is above 85%. This is much higher than in other developing countries with a 45-75% urban population. The high level of urbanization therefore involves the clear potential of business growth (Bentlin et al. 2011),
Economic Growth:
Brazil is ranked one of the fastest growing...