On Tuesday we had a group meeting to discuss the general approach and outline for our course group paper in Global Perspectives class. It was suggested to meet at one of the bar lounges on the campus, so our almost 2-hour meeting was over pizza and beer. Very inducive environment for discussing any business issues, including the global ones, I would say. 
The goal of the paper is to provide a country risk analysis for the US company that is considering entering a foreign country (for FDI-Foreign Direct Investment) for the first time. “The paper should present a risk assessment (political, economic, financial)…designated to be used by potential entrants to the country” – quoted from the syllabus.
We started almost positive that if we advise a company to do FDI, they should go into natural resources sector, namely oil and natural gas extraction. The reasoning for that was that this is arguably the most lucrative sector of Russian economy. However the longer we discussed, pulling out all various facts from different sources on the internet, the more we were getting inclined to advise the “client” not to invest in Russia whatsoever.
We finally agreed that even though the rewards can theoretically be very high, the political risk far outweighs the potential benefits. You can adapt to harsh climate, cultural idiosincrasies, economic model pecularities. But there is no compensating factors for unpredictability of the country’s political system. And we are not even talking here about revolutions, for which Russia has been infamously known in the past, even relatively recent past. We are talking about the politically “stable” environment that has been established there in the last ten years.
A very starking example is the recent ill fate of Shell in developing a Sakhalin-II project. A good rundown on the story was published in Fortune magazine.
So as a result of the meeting we put down a rough outline and distribution of the parts for write up between the five of us. I ended up being in charge of the political risks. At least there is enough material all around on this aspect of the analysis. Just as I expected, the course is very involving and keeps my interest up.
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