Japan country risk analysis Assignment Example | Topics and Well Written Essays - 2000 words

Japan country risk analysis - Assignment Example Indeed, the market has experienced a growth rate of 2.8% at the end of 2012 that has been stimulated by domestic consumption (Global Edge, 2013). This is as shown in the graphical representation from IMF below. Source (IMF, 2012). Source (IMF, 2012). Consequently, this reflects that the domestic demand of commodities is expanding positively to enhance the sales for organizations operating in Japan. This means that Japan is a vital place for multinationals to locate since it is able to enhance their sales revenue due to the rising local consumption that is currently experiencing shrinkage in many countries worldwide. Indeed, a market population of 127.8 million coupled with the rising private demand in the market, Japanese market promises to be the best destination in the global market for multinationals. However, the deflation or the fall in prices in the market (0.3%) as indicated in the table above has threatened the savings in the economy that is vital in promoting the availabilit y of credit for the investors intending to set up new or expend businesses in Japan. Nevertheless, the proposal by the government to increase the consumption tax has seen the households opting to save more which has pushed the saving to 6% currently form the previous 2.2% on their disposable income (S$P, 2011). Thus, the credit market is experiencing a rising deposit to enable foreign investors to acquire credit to set up their business. Furthermore, the economic strength of Japan is one of the crucial factors that make the country one the best attractive destination for multinational organizations globally stimulating a concrete trade surplus (SEB, 2012). Owing to the surplus and steady balance of payment structure, the country is experiencing a reserve level that is the... In assessing the viability of locating or starting a business in a foreign country, a country risk analysis is vital in allowing investors to identify associated risks or opportunities that might affect the business in future. This is because a country risk analysis undertakes an in depth investigation on the economic, political and social factors that affects the financial and strategic derailment to the firms in realizing their business objectives (Wagner, 2012). This helps the investors in realizing the profitability and sustainability of a business they intend to start in a given country. The country risk analysis of Japan shows that the country has a mixed signs of attractiveness to multinational organization intending to expand their international territory. This is shown by its favorable economic risk rating due to its economic environment the country offers to prospective multinational firms. In contrast, the political risk depicts a negative environment due to the current political tensions surrounding the future stability of the country. Furthermore, the aging population of Japan reveals a destination that may be expensive in acquiring an effective and efficient work force. However, the education system of Japan has the capacity of producing the best effective and efficient work force in the global market. Nevertheless, Japan has shown that it is capable of supporting the profitability and survival of multinationals even after tragic series of events. This means that Japan offers a good destination for multinational firms seeking to expend their international te rritory operation.