How does product market competitiveness affect risk exposure to multinational firms
How does product market competitiveness affect risk exposure to multinational firms
Homework Answers
Product Market competition affects the unsystematic risk component of any investment. Unsystematic risk is that component of risk that is firm-specific instead of industry-specific. So, how a company handles competition will determine its unsystematic risk factor.
Competition determines an individual firm's success. Lesser the competition better it is for the firm. Less competition will help a firm to have a better share of the market and hence better returns for the investors. Also, competition affects how the company manages its cash flow. A company might have to channel majority of its resources in tackling competition and it might miss out on opportunities that could create more value to the firm.
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How does product market competitiveness affect risk exposure to
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