Pfizer, a US-based MNC, is considering constructing a pharmaceutical plant in Zimbabwe. Zimbabwe is home to Moringa, a miracle tree whose leaves will be used in manufacturing a new anti-diabetes drug. The drug will be exported and sold in Europe and US. The company wishes to carefully assess the countrys risks, as Zimbabwe has been known to nationalize foreign businesses over the last decade. The firm plans to borrow funds for the project in Zimbabwe, through the African Development Bank. The loans interest rate will be fixed for the first three years, then will vary with Zimbabwean inflation. The firm is less concerned with Zimbabwean dollar exchange rate, as the product will not be sold in Zimbabwe. At the same time, the companys CEO does not want to invest in any foreign direct investment project with an overall country risk score exceeding 3.50/5.00.

The firms analysts identified the following political and economic risks that they believe are relevant to Zimbabwe, but asked you to research and assign risk factor ratings and assess the overall countrys risk.

a) Research about doing business in Zimbabwe and assign risk ratings to each factor below (5-very risky, 1-very safe). Explain the reasons behind your ratings.

Political Risk Factors	Rating	Weight	Explanations
Nationalization		70%
Corruption		15%
War		15%
Economic Risk Factors	Rating	Weight	Explanations
Interest rate		40%
Inflation		40%
Exchange rate		20%

b) Suppose you believe that Zimbabwes political risk factors generally outweigh the economic risk factors. Assign an overall weight to the political risk factors and an overall weight to the economic risk factors, then assess the countrys overall risk. Given your result, explain whether Pfizer should or should not invest into a plan in Zimbabwe.