ABSTRACT
This chapter began with a discussion of risk. It discusses that many emerging markets have more risks. Before multinational companies (MNCs) enter a country, the international managers must consider how risk might affect their investments. Tesco's managers, for example, decided that entering the US market with many stores all at once is risky, but worth the potential financial loss, because the potential pay-off is high. Thus, risk plays an essential role in considering any financial investment, and as the example shows, assessment of risk is very complex when investment crosses borders. The chapter concludes with a discussion of the types of financing that exporters often use to cover cash flow needs between the time when the exporter begins production of goods and when the company finally receives payments from an importer. Working capital financing from commercial banks allows companies to borrow up to certain amounts, often with revolving credit similar to a credit card.
