Chapter 06 – The Political Environment: A Critical Concern
Discussion Questions
1. Define:
Sovereignty Confiscation
2. Why would a country rather domesticate than expropriate?
3. “A crucial fact when doing business in a foreign country is that permission to conduct business is
controlled by the government of the host country.” Comment.
4. What are the main factors to consider in assessing the dominant political climate within a country?
a. Current form of government.
5. Why is working knowledge of party philosophy so important in a political assessment of a market?
Discuss.
6. How can a change in the political party in power affect an investor? Discuss and give examples.
6-1
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
Chapter 06 – The Political Environment: A Critical Concern
7. What are the most common causes of instability in governments? Discuss.
The most common causes of instability in governments are:
8. Discuss how governmental instability can affect marketing.
9. What are the most frequently encountered political risks in foreign business? Discuss.
10. Expropriation is considered a major risk of foreign business. Discuss ways in which this particular
type of risk has been minimized somewhat as a result of company activities. Explain how these risks
have been minimized by the activities of the U.S. government.
The risk of expropriation has been minimized by:
6-2
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
Chapter 06 – The Political Environment: A Critical Concern
11. How do exchange controls impede foreign business? Discuss.
12. How do foreign governments encourage investment? Discuss.
13. How does the U.S. government encourage foreign investment? Spell out the implications in foreign
marketing.
14. What are the motives behind U.S. government encouragement for foreign investment? Explain.
15. Discuss measures a company might take to lessen its political vulnerability.
Companies investing in foreign countries can minimize the political and economic risks by:
6-3
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
Chapter 06 – The Political Environment: A Critical Concern
16. Select a country and analyze it politically from a marketing viewpoint.
A library project.
17. The text suggests that violence is a politically motivated risk of international business. Comment.
18. There is evidence that expropriation and confiscation are less frequently encountered today than just a
few years ago. Why? What other types of political risks have replaced expropriation and confiscation
importance?
19. You are an executive in a large domestic company with only minor interests in international markets;
however, corporate plans call for major global expansion. Visit the homepage of Control Risks Group
www.crg.com. After thoroughly familiarizing yourself with the services offered by CRG, write a brief
report to management describing how its services could possibly help with your global expansion.
6-4
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
Chapter 06 – The Political Environment: A Critical Concern
20. Visit the homepage of Agora http://www.politicalresources.net . Select the Political Site
of the Week and write a brief political analysis highlighting potential problem areas for a company
interested in investing in that country.
21. Search the Web for information on activities of PSAs outside the United States and write
a briefing paper for international management on potential problems.
22. Discuss ways the companies discussed in the Global Perspective could have minimized their losses in
the Banana Wars.
23. Discuss any ethical and socially responsible issues that may be implied in the Global Perspective.
6-5
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.