Q. 1
Totalitarianism refers to a political system in which only one representative party exhibits control over political and human life facets.
Q. 2
Socialism is a moderate form of Collectivism and teaches people how to socialize in a variety of setting s so that no one person becomes too egotistical.
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Q. 3
Civil or Code law is a law derived from Roman law and is found in non-Islamic and non-socialist countries.
Q. 4
Social democracy is achieved through a special referendum voting procedure.
Q. 5
Individualism is the political philosophy that people should be free to pursue economic and political endeavors without constraint.
Q. 6
Operational risks include Government policies and procedures that directly constrain the management and performance of local operations.
Q. 7
Expropriation laws are laws that prompt a nation to hold a majority interest in an operation.
Q. 8
Micro Political Risk Analysis involves analyzing government policies and actions that influence selected sectors of the country's economy or specific foreign businesses.
Q. 9
Terrorism is the use of force or violence against others to promote political or social views.
Q. 10
Conglomerate investments are a type of low-risk investment where goods and services are produced in the host country.
Q. 11
There are several steps that the high tech firm might take to ensure that the subsidiary is not expropriated. The first step to minimize the risks of expropriation is to limit the number of assets it intends to establish in the host country. The company can also limit the number of business activities under the host country's control and jurisdictions or the ones that are under the subsidiary company's direct or indirect ownership. In some instances, the company may have a low level of confidence with the host country. Therefore, it would be wise for the company to trade with the country but not invest in it. The company can also diversify its activities by incorporating them into non-subsidiary companies. The non-subsidiary companies can be a source of protection since the host government may not monitor their operational responsibilities. Proactive political strategies such as purchasing political insurance can significantly help protect firms from future political environment changes. In purchasing political risks, several organizations specialize in selling political risks that a multinational agency can consider. The policy would compensate them in case of an occurrence of an adverse event.
Q. 12
Ideologies and political systems significantly influence the environment in which the MNCs operate in various ways.
Ideologies
Individualism, a political philosophy that advocates for people to feel free to pursue both their economic and political endeavors, encourages a free market society. A free-market society is marked by diversity and high competition levels, and private ownership to boost the overall production. This idea argues that working in a group needs less human power to achieve a particular goal. However, a person is likely to work extremely hard so that his survivability in the competitive environment can be a guarantee. In this case, competition is expected to increase the level of creativity. Collectivism and Socialism are quite similar ideologies that can potentially influence the operational environment for MNC’s. In Collectivism, the goals and the needs of society get much priority than individual desires. Therefore, both Collectivism and Socialism can potentially forge a unity based on cultural and racial attributes.
Political systems
The political systems present in a particular country influence how various multinational corporations manage and conduct their operations. They give the government the chance to regulate multiple business practices of the MNCs. Running businesses in numerous countries require a proper understanding of their governance practices and their regulatory frameworks.
The problems associated with the ideologies and political systems in a business environment are limited to the EU countries and China and Russia. The communist nations have poorly established approaches to economic and political changes resulting in neglect and confusion in making changes in their economic policies. However, China has resorted to disengage with communism after realizing its failures as a financial system that stagnates individual creativity.
