Financial Risks
      Several types of financial risk are encountered in international marketing; the major problems include commercial, political, and foreign exchange risk.
      _____ (1) _____. They include solvency, default, or refusal to pay bills. The major risk, however, is competition which can only be dealt with through consistently effective management and marketing. _____ (2) _____. Such risk is encountered when a controversy arises about the quality of goods delivered, a dispute over contract terms, or any other disagreement over which payment is withheld. One company, for example, shipped several hundred tons of dehydrated potatoes to a distributor in Germany. _____ (3) _____. The alternatives for the exporter were reducing the price, reselling the potatoes, or shipping them home again, each involving considerable cost.
      Political risk relates to the problems of war or revolution, currency inconvertibility, expropriation or expulsion, and restriction or cancellation of import licenses. _____ (4) _____. Management information systems and effective decision-making processes are the best defenses against political risk. As many companies have discovered, sometimes there is no way to avoid political risk, so marketers must be prepared to assume them or give up doing business in particular market.
      Exchange-rate fluctuations inevitably cause problems, but for many years, most firms could take protective action to minimize their unfavorable effects. _____ (5) _____. International Business Machine Corporation, for example, reported that exchange losses resulted in a dramatic 21. 6 percent drop in their earnings in the third quarter of 1981. Before rates were permitted to float, devaluations of major currencies were infrequent and usually could be anticipated, but exchange-rate fluctuations in the float system are daily affairs.

A. Political risk is an environmental concern for all businesses.
B. One unique risk encountered by the international marketer involves financial adjustments.
C. Commercial risks are handled essentially as normal credit risks encountered in day-to-day business.
D. The distributor tested the shipment and declared it to be below acceptable taste and texture standards.
E. Floating exchange rates of the world’s major currencies have forced all marketers to be especially aware of exchange-rate fluctuations and the need to compensate for them in their financial planning.
F. Many international marketers go bankrupt each year because of exchange-rate fluctuation.
Public Relations
      Public relations is a broad set of planned communications about the company, including publicity releases, designed to promote goodwill and a favorable image.
      _____ (1) _____. Since public relations involves communications with stockholders, financial analysts, government officials, and other noncustomer groups, it is usually placed outside the marketing department, perhaps as a staff department or outside consulting firm reporting to top management. This organizational placement can be a limitation because the public relations department or consultant will likely not be in tune with marketing efforts. _____ (2) _____.      Although the basic purpose of public relations is to provide positive influence on the public image, this influence generally may be less than that provided by the other components of the public image mix.
_____ (3) _____. Publicity on the other hand should not be divorced from the marketing department, as it can provide a useful adjunct to the regular advertising. _____ (4) _____.
      The point we wish to emphasize is that a firm is deluding itself if it thinks its public relations function, whether within the company or an outside firm, can take care of public image problems and opportunities. _____ (5) _____. Many of these have to do with the way the firm does business, such as its product quality, the servicing and handling of complaints, and the tenor of the advertising. Public relations and directed publicity may help highlight favorable newsworthy events, and may even succeed in toning down the worst of unfavorable publicity, but the other components of the public image mix create more lasting impressions.

A. Publicity may be in the form of news releases that have favorable overtones for the company initiated by the public relations department.
B. Furthermore, not all publicity is initiated by the firm; some can result form an unfavorable press as a reaction to certain actions or lack of actions that are controversial or even downright ill-advised.
C. Publicity then is part of public relations when it is initiated by the firm, usually in the form of press releases or press conferences.
D. Many factors impact on the public image.
E. It surely causes heavy losses to the company.
F. Poor communication and no coordination may be the consequences.