Chapter 16, Problem 21QA

1. The Suez shipping route is one of the most active routes used by commercial ships. Yet, these dangerous waters pose a major threat (of theft and kidnapping) to commercial sailors and the goods they transport. For the purpose of the question, assume that ships have to go through the Suez route and may not avoid it. What should shipping companies do to adapt to this threat? Present at least two things that could be done to reduce the piracy and kidnapping risk?.

The complexity posed by differences in the cultural, political, legal, and economic environments creates a so-called “liability of foreignness.” This idea holds that foreign companies, because of their poorer familiarity with local conditions, incur additional costs. In theory, the liability of foreignness makes IB activity too expensive. In practice, companies offset this liability by capitalizing on their unique advantages as well as selecting the mode of international business that best reflects their resource profile and risk tolerance--Always in the effort toward minimizing the intrinsic higher costs of international operations. The higher costs of international operations, executives point out, are driven by things as varied as the cost of legally establishing businesses, real estate costs, customs duties, and translation costs. Managing these costs is complicated by the report that    _53_______%___ of global CEOs are concerned about the impact of    __bribery and…

Do you think that a U.S. firm can experience political risk problems in its overseas projects because of the U.S. government?