A starting point for assessing the potential return and risk of your business is

Question

A starting point for assessing the potential return and risk of your business is to review general background information about the potential customers that may someday purchase your services. Go to www.cia.gov and review the information provided in the "World Factbook" Country Profile for South Korea (SK). Questioni: identfhy the type of information isted here that may have some influence on the return and the risk of this business (of course, always explain WHY this information is relevant for y firm).

Explanation / Answer

Following are the key points that may have need to check when doing a business in South Korea and simulataneously have an influence on risk and return of the business:
1. South Korea is a peninsula which has coal, tungsten, graphite, molybdenum, lead, hydropower potential in abundance. This means a business in power, technology and industry will thrive there.
2. Major chunk of the population being in 30s is a good sign for the availability of labor.
3. Despite being hit badly by the Asian crisis of late 90s, South Korea has regained the economic stability. With efforts to increase wages and government spending, consumer confidence has increased which has been seen in the GDP growth.
4. South Korea is believed to grow at a rate of 3%, which is common for advanced economies. In PPP terms, South Korea stands 15th which is a good sign for a business to start and operate there.
5. Inflation revolves around 1% whereas interest rates are around 3.5%. Business can get cheap loans or debt.
6. Being an advanced country well connected by roadways, waterways and airways, brings down the transportation costs.
7. Government has open heartedly welcomed the businesses from other countries. Lobbying or red taping is generally low in South Korea.
8. Issues with the neighbour country Noth Korea can be a big problem.

We can use the above information and conduct a NPV analysis to check how these factors will affect the risk and return.

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