Relations between governments and MNCs are generally positive if the investment

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Level 50 Level 52

Level 51

Political Environment: a Critical Concern

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the seizing of a company's assets without payment

where the government seizes an investment but makes some reimbursement for the assets

when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees

Stem from shortages of foreign exchange (US$ or Euros or Pounds) held by a country, controls are levied over all movements of capital, or against the most politically vulnerable companies to conserve the suppl…

Countries often require a portion of any product sold within the country to have local content

Nongovernmental organizations

Increasingly affecting policy decisions made by governments (protests, lobbying, and collaborations with governmental organizations)

Political and Social Activists

Not usually government sanctioned, Can interrupt the normal flow of trade, Range from those who seek to bring about peaceful change to those who resort to violence and terrorism to effect change. The Internet has become an effective tool

Political risk assessment

An attempt to forecast political instability, To help management identify and evaluate political events, and To predict their potential influence on current and future international business decisions

Lessening Political Vulnerability

Relations between governments and MNCs are generally positive if the investment and Political parties often focus public opinion on the negative aspects of MNCs whether true or false

Strategies that MNCs use to minimize political vulnerability and risk

Joint ventures, Expanding the investment base, Licensing, Planned domestication, Political bargaining, and Political payoffs

Tax controls, Unreasonable taxation of foreign companies appeal to some government officials as the handiest and quickest means of finding operating funds, Price controls (Essential products that command considerable public interest: pharmaceuticals, food, gas), L…

An intense feeling of national pride and unity- An awakening of a nation's people to pride in their country

it is independent and free from all external control, enjoys full legal equality with other states, governs its own territory, selects its own political, economic and social systems, and has the power to enter into agreements with other nations

changing something from private to state ownership or control

What are the conditions under which relations between governments and MNCs are generally positive?

When an expropriated investment becomes a government run entity it is?

What is the most important reason for a country to encourage foreign investment?

Which of the following best describes the US government's policy toward multinational corporations that are confronted with situations where bribery is an issue?