International Management 7e (Deresky) - Ch.1 : Discussion and Analytical Questions

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1- How has the economic downturn impacted trends in protectionism and nationalization? Answer: As the fallout from the financial meltdown spread around the world in 2009, nationalist impulses gathered a storm as government maneuvers to take stakes in ailing industries were verging on partial or full nationalization though, for the most part, not forcing it. Japan, for example, took a cue from the United States in taking majority stakes in major banks; while in Russia, the Kremlin was exploiting the economic crisis to establish more control over industries that it had long coveted, such as energy. 2- Discuss examples of recent macro political risk events and the effect they have or might have on a foreign subsidiary. What are micro…show more content…
Answer: Yes, it can be managed because they could suspend their firm’s dealings, or in the other hand, they may choose to start operations there and to accommodate that risk through adaptation to political regulatory environment. There are some methods that can be used to manage such risk; equity sharing, participative management, localization of the operation and development assistance. Although, Multinational corporations also could manage political risk through their global strategic choices another way to minimize the risk of negative outcomes due to political events is by involving local people. Finally, the returns I would expect to gain the successful and development of my business. 5- Explain what is meant by the economic risk of a nation. Use a specific country as an example. Can economic risk in this country be anticipated? How? How does economic instability affect other nations? Answer: The definition of economic risk of this chapter defines economic risk as the level of uncertainty about the ability of a country to meet its financial obligations, there is an inverse correlation between economic stability and risk because economic risk is greatest in lesser development countries, such as those in Africa and Latin America. A good example of a country with economic risk is Argentina, this country experienced extreme economic growth but then the economy crashed. This was due to poor fiscal policies; high inflation and debts. Economic risks can be

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