Chap006Questions.doc

Discussion Questions for Chapter 6 The Political Environment: A Critical Issue Discussion Questions 1. Define: Sovereignty Confiscation Nationalism Domestication Expropriation PSAs Why would a country rather domesticate than expropriate? Expropriation creates problems with other governments and can cause potential investors to shy away from investments in their country. Further, if a country domesticates, they are able to achieve almost all, if not all, the advantages of expropriation without the negative aspects associated with such a drastic move. “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. It is extremely critical for a company to examine, evaluate, and comprehend the present and future policies of the government in a foreign country. To do this, the type of government and the types of political parties and their basic philosophies toward foreign business must be studied in depth. The level of economic development and the accompanying political policies are directly correlated with the attitude of the government toward foreign business. This attitude may or may not change with changes in government, political parties, economic conditions, etc. Also, the importance of products to the country is a deciding factor in restricting or encouraging foreign business. What are the main factors to consider in assessing the dominant political climate within a country? Current form of government. Current political party systems. Stability and permanency of government policy. Risks or encouragements of foreign business resulting from political activity. Why is working knowledge of party philosophy so important in a political assessment of a market? Discuss. A working knowledge of party philosophies is necessary if there is a possibility that a change in government policy toward foreign business could result from a change in government or polit