chapter 10

Question 1

the likelihood that a mncs foreign investment will be constrainted by a host governments policies

Answer 1

political risk

Question 2

risk as a result of political decisions which ar elikely to affect all business operating in a country

Answer 2

macro risks

Question 3

risks as a result of decisions that affect only selected industries or specific foreign companies

Answer 3

micro risk

Question 4

restricting foreign ownership in a particular industry

Answer 4

micro risk

Question 5

freezing the movement of assets out the country

Answer 5

macro risk

Question 6

Expropriation

Answer 6

the government seizure of businesses with little or no compensation to the owners

Question 7

targets of expropriation

Answer 7

foreign business operating int he country

Question 8

laws requiring that nationals/locals hodl majority ownership in a n MNC

Answer 8

indigenization laws

Question 9

MNCS can reduce their exposure by

Answer 9

using local partners
limited the use of hi tech processes
diversifying the operation

Question 10

Categories of political risk

Answer 10

transfer risk
operational risks
ownership control risks

Question 11

government policies that limit the transfer of capital, payments, production, people, and technology

Answer 11

transfer risks

Question 12

tariffs

not granting visas

Answer 12

tranfer risk

Question 13

government policies that constrain the management and performace of local operations

Answer 13

operational risk

Question 14

governmet policies or actions that inhibit the ownership or control of the mncs operations

Answer 14

ownership-contorl risk

Question 15

mncs producing good sin the foreign country that are not similar to those produced in the mncs home

Answer 15

conglomerate investments

Question 16

high-risk investments

Answer 16

conglomerate investments

Question 17

mncs production of raw materials or goods processed into final goods

Answer 17

vertical investments

Question 18

export-oriented investments

Answer 18

vertial inestments

Question 19

mncs production of goods in the host country that are silar to those product at home

Answer 19

horizontal investments

Question 20

how to respond to political risk

Answer 20

relative bargaining power analysis

Integrative, protective, defensive techniques

Question 21

mnc trys to maintain bargaining power stronger than host government

Answer 21

relative bargaining power analysis

Question 22

mnc tries to become integrated in the host country

Answer 22

integrative strategy

Question 23

mncs seek to influence political enviornment so that political decisiions will be in their avor.

Answer 23

pro active political strategy

Question 24

paying bribes is considered

Answer 24

proactive political strategy

Question 25

mnc seeks to discourage integration

mnc tries to make it self less attractive as a takeover target

Answer 25

protective and defensive strategies

Question 26

proactive political strategies can be achieved through

Answer 26

making campaign contribution

format lobbying

Question 27

protectie and defensive strategies can be used when

Answer 27

low-tech stable goods are involved

Question 28

protective and defensive strategies is achieved by

Answer 28

conducting most r&d outside country

Question 29

integrative strategiies are achieved by

Answer 29

hiring locals in management

develop relationships with government and political groups

Question 30

Host government will be less likely to intervene in the mncs operations as long as the mnc maintains its bargaining power

Answer 30

T

Question 31

mncs manage their political risk in two basic ways

Answer 31

developing a comprehensive framework for identifying risks

quantifying the variables that constitute the riske

Question 32

effective alliance management includes

Answer 32

careful selection of partners
ldefining the tasks and scope of the alliance
addressing cross-cultural differences
responsding to host-goernment requirements