Explain the Integrative, Protective, and Defensive Techniques MNCs Use to Respond

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The Answer is Once political risk has been analyzed by a framework, quantitative analysis, or both, the MNC then will attempt to manage the risk further through a carefully developed response. The MNC can also proactively improve its relationship with governments by means of preemptive political strategies to mitigate risk before it appears. A way by which MNCs attempt to protect themselves from expropriation or minimize government interference in their operations is to use integration and the implementation of protective and defensive techniques. Integrative techniques are designed to help the overseas operation become part of the host country's infrastructure. The objective is to be perceived as "less foreign" and thus unlikely to be the target of government action. Some of the most integrative techniques include (1) developing good relations with the host government and other local political groups; (2) producing as much of the product locally as possible with the use of in-country suppliers and subcontractors, thus making it a "domestic" product; (3) creating joint ventures and hiring local people to manage and run the operation; (4) doing as much local research and development as possible; and (5) developing effective labor management relations. Protective and defensive techniques are designed to discourage the host government from interfering in operations, mainly by avoiding complex ties to the host country's economy. In contrast to the integrative techniques, these actually encourage nonintegration of the enterprise in the local environment.

Explain the Integrative, Protective, and Defensive Techniques MNCs Use to Respond

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Explain the Integrative, Protective, and Defensive Techniques MNCs Use to Respond

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