Singapore Automotive Industry Risk Assessment - Case Study Example

The paper "Singapore Automotive Industry Risk Assessment " is a perfect example of a business case study. The core purpose of undertaking country risk assessment is to identify the specific country imbalances that may increase the risk of achieving the expected return on investment in the context of international business. It is apparent that any direct investments and business transactions have some degree of risk in relation to the expected returns. It is also important to note that consideration of direct investment to another country involves additional risks that exclusive of the domestic risks (Hirjani 2015). The underlying additional risks also referred to as country risks are attributed to differences in economic structural frameworks, socio-political frameworks, trade policies, currencies and geographical locations of various countries.

The concept of risk pertinent to direct investment in a country has been defined by many scholars as potential uncertainties that are likely to reduce or adversely affect the returns of cross-border direct investment. Country risk analysis in international business is founded on the account that growing imbalances in political factors, economic and social introduces the risk of a decrease in the direct investment returns (Hirjani 2015). These imbalances constitute specific risk factors and various categories of risk. Identification of these risk factors and their influence level in a specific country creates country investment risk assessment.

Overview of Singapore Automotive Industry

It is evident that Singapore's automotive manufacturing industry is not large compared to other developed countries such as Japan and Germany. However, Singapore in recent years has become a suitable choice for many automotive companies. The companies have chosen Singapore as their headquarters, assembling and distribution of spare parts, production centres as well as research and development (Euler Hermes 2016). Data and statistics indicate that until 2012, the automotive industry in Singapore had been declining but it has significantly recovered since 2013.