| Course | BUS 495 International Business |
|---|---|
| Module | Module 3 |
| Paper type | Country risk analysis |
| Length | About 1,122 words, 7 pages |
| Format | APA 7 student paper |
| School | Aspen University |
| Program | Business Administration |
| Updated | October 2026 |
Free sample paper for BUS 495 Module 3
Tangier or Monterrey: A Country Risk Analysis of Morocco and Mexico for a Wire Harness Maker's First Foreign Plant
Student Name
Business Administration Program, Aspen University
BUS 495: International Business
Instructor Name
Month Day, Year
Tangier or Monterrey: A Country Risk Analysis of Morocco and Mexico for a Wire Harness Maker's First Foreign Plant
Lakeshore Harness Company, a composite manufacturer in Toledo, Ohio, assembles the wire harnesses that carry power and signals through heavy trucks, tractors and combines. Assembly is labor-intensive, and the company has lost two contracts to suppliers with plants abroad. Its board has approved roughly $14 million for a first foreign plant employing about 400 people. Two locations remain: Monterrey, Mexico, close to the company's North American customers, and the Tangier Automotive City free zone in Morocco, close to European truck makers the company hopes to win. This paper compares the political, economic and legal environments of the two countries and recommends a site.
Why Institutions Matter to a Factory
North (1990) defined institutions as the humanly devised constraints that shape interaction, the formal rules such as laws and contracts and the informal ones such as customs and norms. Institutions reduce uncertainty by making behavior predictable; when they are weak, firms must spend more to protect themselves. For a harness plant, institutions determine whether contracts with suppliers are enforced, whether permits arrive on time and whether the rules that made an investment attractive will still hold in five years.
Henisz (2000) argued that the risk of sudden policy change depends on political constraints, meaning the number of independent branches of government with veto power and how closely their preferences align. Where power is concentrated, policies can be reversed quickly; where several independent actors must agree, change is slower and investments are safer. Kaufmann et al. (2011) describe the World Bank's Worldwide Governance Indicators, which combine many surveys and expert assessments into six measures of governance and report margins of error so that small differences between countries are not overinterpreted.
Morocco
Morocco is a constitutional monarchy. Its 2011 constitution gave more authority to an elected parliament and prime minister, but the king retains significant powers, including over security and religious affairs, so formal political constraints are moderate. Policy toward foreign manufacturing has been consistent for two decades, and governments of different parties have continued to support industrial free zones. The United States-Morocco Free Trade Agreement, in force since January 2006, eliminated tariffs on most industrial goods traded between the two countries (Office of the United States Trade Representative, n.d.), and Morocco's agreements with the European Union give products made there access to European markets. Automotive manufacturing has grown into one of the country's largest export industries, centered on Tangier and Kenitra, which means trained harness workers and experienced suppliers already exist.
The dirham is pegged to a basket of the euro and the U.S. dollar and allowed to move within a band, which limits currency swings but does not eliminate them. Legal risks include slow commercial courts and the use of French and Arabic in contracts and permits, which requires local counsel.
Mexico
Mexico is a federal republic with competitive elections, an independent judiciary on paper and several veto points, but recent changes to the judiciary and to independent regulators have raised questions about the durability of checks on executive power. Economically, Mexico's advantages are proximity and the United States-Mexico-Canada Agreement, under which most harnesses can cross the border without tariffs if they meet rules of origin. Monterrey has a deep pool of manufacturing workers and suppliers, and many automotive firms have expanded there as companies move production closer to the United States. Labor reforms in 2019 strengthened independent unions and wage bargaining, which raises labor costs but also reduces the risk of disputes under the trade agreement. Security is a serious concern in some regions, including risks of cargo theft along highways.
Economic Conditions Side by Side
The two economies differ in ways that matter to a labor-intensive plant. Mexico's economy is far larger and more tightly linked to the United States, which brings deep supplier networks but also exposure to American downturns, since a slowdown in U.S. truck orders would hit Monterrey plants first. Morocco's economy is smaller and more exposed to European demand and to drought, which periodically cuts agricultural output and growth. Wages for assembly workers are lower in Tangier than in Monterrey, while worker turnover in Monterrey's crowded industrial parks has been high as plants compete for the same people. Lakeshore's managers also weighed utilities: both free zones offer reliable power, but water and electricity prices for industrial users are set differently, and the company asked each zone for written rate schedules before scoring the factor.
Scoring the Risks
The table rates each risk from 1, low, to 5, high, based on the evidence above.
Morocco's total is 19 and Mexico's is 23, but totals hide the strategic question: which customers the plant will serve. If the plant is meant to supply North American truck makers, Mexico's trade and distance advantages may outweigh its higher scores elsewhere.
| Risk | Morocco | Mexico | Reason for the difference |
|---|---|---|---|
| Sudden policy change | 2 | 3 | Consistent industrial policy in Morocco; institutional changes in Mexico |
| Trade access to U.S. customers | 3 | 1 | USMCA and proximity favor Mexico |
| Trade access to European customers | 1 | 4 | EU agreements favor Morocco |
| Currency volatility | 2 | 3 | Basket peg in Morocco; floating peso |
| Contract enforcement | 3 | 3 | Slow courts in both countries |
| Labor cost and disputes | 2 | 3 | Lower wages in Morocco; rising wages and union activity in Mexico |
| Security and cargo theft | 2 | 4 | Higher cargo crime risk on some Mexican routes |
| Distance to Toledo headquarters | 4 | 2 | Travel and time zones favor Mexico |
Recommendation and Safeguards
Because the board's main goal is to win European contracts while keeping North American production in Toledo, the analysis favors Tangier. The company should take several precautions. It should apply for political risk insurance covering expropriation, political violence and currency inconvertibility, which the U.S. International Development Finance Corporation offers to American investors. It should locate inside the free zone, where customs and permits are handled through a single administration. Contracts with suppliers should specify arbitration rather than local courts. The company should invoice European customers in euros, which the dirham basket partly tracks, and hire a Moroccan plant manager with experience in an existing harness plant. If the company later decides to serve North American customers from abroad, Monterrey should be reconsidered.
Conclusion
Neither country is risk-free. Morocco offers stable industrial policy, access to Europe, lower labor costs and a managed currency, while Mexico offers proximity and tariff-free access to the United States with higher security and policy risks. Institutions, measured through political constraints and governance indicators, explain why these differences matter for a factory that will operate for decades. For a plant built to win European customers, Tangier is the better choice, provided the company insures and contracts against the risks that remain.
References
Henisz, W. J. (2000). The institutional environment for multinational investment. Journal of Law, Economics, and Organization, 16(2), 334-364. https://doi.org/10.1093/jleo/16.2.334
Kaufmann, D., Kraay, A., & Mastruzzi, M. (2011). The Worldwide Governance Indicators: Methodology and analytical issues. Hague Journal on the Rule of Law, 3(2), 220-246. https://doi.org/10.1017/S1876404511200046
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University Press.
Office of the United States Trade Representative. (n.d.). Morocco free trade agreement. https://ustr.gov/trade-agreements/free-trade-agreements/morocco-fta
BUS 495 Module 3 instructions, in plain terms
Aspen's catalog for BUS 495 includes political, economic and legal systems among the forces that make global business different, so a module on country environments usually asks students to assess the risk of operating in a specific country. Your classroom contains the actual Module 3 prompt; this example interprets it as a comparative risk analysis for one investment. Define the decision and what the firm stands to lose. Explain, with sources, why political, economic and legal conditions affect business. Gather current, credible information about each country, citing official sources where possible. Separate the risks by type and rate them in a way the reader can follow. Avoid judging countries by reputation alone. Recommend a course of action and describe safeguards that reduce the risks you cannot avoid.
How the BUS 495 Module 3 example is put together
The opening describes the harness maker's need for a lower-cost plant within reach of its North American customers and European prospects. North's theory of institutions and Henisz's index of political constraints explain why policy can change suddenly in some countries and slowly in others. Kaufmann, Kraay and Mastruzzi's description of the governance indicators shows how analysts compare voice, stability, effectiveness, regulation, rule of law and corruption control. The Morocco section covers the 2011 constitution, the 2006 free trade agreement, the Tangier automotive free zone and the dirham's basket peg. The Mexico section covers the USMCA, nearshoring, labor reform and security concerns. A table scores both countries on eight risks. The recommendation, safeguards and conclusion follow.
Where the marks sit in the BUS 495 Module 3 rubric
Graders of a country risk analysis check its coverage of political, economic and legal risk, the trustworthiness of its sources, how clearly it compares the options and whether its recommendation stands up. This example cites the trade representative's description of the Morocco agreement for its trade facts and uses peer-reviewed research for its concepts: North's book on institutions, Henisz's Journal of Law, Economics, and Organization article and the Hague Journal on the Rule of Law article explaining the governance indicators. The reasoning behind every score sits in the paragraphs before the table, so the grader can see why Morocco rates better on one factor and worse on another. The recommendation does not claim either country is risk-free; it chooses the site whose risks the company can best manage and names how.
BUS 495 Module 3 help: mistakes that cost marks
The most common mistake in Module 3 is a country risk paper based on impressions or headlines rather than evidence. Use official sources, recognized indexes and current data, and say when each was published. Another is listing facts about a country, such as its population and history, without connecting them to the specific business decision. Separate types of risk; a stable government does not guarantee stable exchange rates or reliable courts. Compare at least two options, since risk means more when weighed against an alternative. Avoid absolute judgments about whole countries and peoples. Recognize that the firm's own choices, such as location within a country, partners and contracts, change its exposure. Before finalizing, check whether any trade agreement or tariff you mention has changed recently, because trade policy can shift within months.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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BUS 495 Module 3 questions, answered
What does BUS 495 Module 3 usually ask for?
Aspen's BUS 495 covers political, economic and legal environments in this module, so a paper assessing the risks of doing business in one or more countries is typical. Check your classroom prompt for specifics.
What is country risk?
The chance that political, economic or legal conditions in a country will reduce the value of a firm's investment or operations there.
What are the Worldwide Governance Indicators?
World Bank measures of six aspects of governance for over 200 countries: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption.
Where can I find a free BUS 495 Module 3 sample paper?
The full analysis appears above: Morocco and Mexico compared for a wire harness plant, with institutions, governance measures, trade agreements, a scored risk table and safeguards.
What is political risk insurance?
Insurance that protects foreign investments against losses from events such as expropriation, political violence or the inability to convert or transfer currency.