Macro or Micro Analysis of Political Risk
What is Political Risk?
The unanticipated likelihood that a business's foreign investment will be constrained by a host government's policy.
Define conglomerate investment
Goods or services produced are not similar to those produced at home.
What does transfer risks limit the transfer of? (Provide one correct answer)
Capital, payments, productions, people, technology.
What are integrative techniques?
Techniques that help the overseas operation become a part of the host country’s infrastructure.
What is Macro Political Risk?
Analysis that reviews major political decisions likely to affect all enterprises in the country.
Define Vertical Investment
Production of raw materials or intermediate goods that are to be processed into final products.
Give one example of an operational risk.
Price controls, taxes, financing restrictions.
What is relative bargaining power analysis?
The MNC works to maintain a bargaining power position stronger than that of the host country.
What is micro political risk analysis?
Analysis directed toward government policies and actions that influence selected sectors of the economy or specific foreign businesses in the country.
Define Horizontal investment
Produce the same goods or services as those produced at home.
What type is the highest risk venture on the scale of 1-5.
Give an example of a proactive political strategy?
Lobbying, campaign financing, and advocacy.
In 1992, what industry filed more than 80 complaints against 20 nations in a single day about dumping their products in the U.S market at artificially low prices.
Steel Industry.
Define Terrorism
The use of force of violence against others to promote political or social views.
What are the two types of way MNC's manage political risk.
Developing a comprehensive framework, and quantitative analysis.
What is the objective of an integrative strategy?
To be seen as “less foreign”
From the textbook, what countries give the best example of countries facing major MACRO Political risk? (At least two to be correct)
India, Russia, China, Vietnam,
Define Protective and defensive techniques.
Techniques that discourage the host government from interfering in operations.
Who has the higher risk when it pertains to the special nature of FDI? Wholly owned subsidiaries or partially owned subsidiaries.
Wholly owned.
When should a company use a mixed strategy?
When they do not have advanced management/marketing skills or use little technology.