Explain the exposure for Edison Corp. to each of the seven political risks discussed in the slides. Assess whether you believe each risk is low, medium or high and what your strategy and corporate policy might be to alleviate these risks or adjust your business model should one arise. Your report should look like the following. The length of your answer depends on the likelihood of the risk and the range of options. Note: The entries below are examples of how to approach the answer. There are more categories than listed here. Consult the slides for the complete list of risks. Attitudes of Consumers Brazil: Provide answers in the context of a US company doing business in Brazil. China Provide answers in the context of a US company doing business in China. U.S. Provide answers in the context of a US company doing business in U.S. Actions of local governments: Brazil: Provide answers in the context of a US company doing business in Brazil. China Provide answers in the context of a US company doing business in China. U.S. Provide answers in the context of a US company doing business in U.S. The task is to start a global car company. Your first three markets are the U.S., China and BrazilEach factory can produce 150,000 Country: Expected Annual Demand Expected Price Brazil: 100,000 cars BRL 112,000 China: 150,000 cars CNY 210,000 US: 200,000 cars $ 30,000

Each plant has a different cost structure and currency exposuresAnd each has different construction costs Cost Item US Brazil China Aluminum $2,000 BRL4,000 $2,000 Steel $2,000 BRL 4,500 $2,000 Battery CNY 70,000 CNY 70,000 CNY 70,000 Labor and $5,000 BRL 20,000 CNY 32,000 Other

Country AnnualProduction Cost Brazil 150,000cars BRL 12.5 billion China 150,000 cars CNY 19.8 billion US 150,000 cars $4 billion

Other information for the production department:It costs $1,000 to ship each car from one country to another country. Shipping rates are quoted in USD globally.Cars entering Brazil from another country face a 20% tariff.Cars entering China from another country face a 25% tariff.Cars entering U.S from another country face a 10% tariff.Your marketing department does not feel that you can pass along the tariff to customers. You must leave prices at the levels they provided aboveThere are no tariffs on imported parts in any of these countries. Understand how to analyze country riskConsider types of country risk and how to protect against them or incorporate them into your analysis. Country risk reflects the adverse impact on cash flows, asset values and business models due to the events occurring in that country.

Political Risk Attitudes of consumers:Preference for local brands or customs Actions of local governments:Tax p o l i c y, re g u l at i o n , o w n e rs h i p re s t r i c t i o n s Blockage of Fund Transfers:Capital controls, restrictions on dividends out Currency Inconvertibility:Another limitation on getting cash repatriation War Government Bureaucracy: Delays in approvals, failure of support Corruption:Demand for bribes, favoring a local competitor