12 Questions
What are the characteristics of a sovereign state?
Independent, exercises supreme powers over its territory, and enters into agreements with other nations
Which form of government involves rule by few individuals?
Aristocracy
What is the risk where a government seizes an investment but provides some reimbursement for the assets?
Expropriation
Which action might a country take to restrict spending in foreign currency?
Exchange Controls
What does nationalism involve?
Intense national pride and unity directed at all foreign countries
Which characteristic is ideal for a multinational firm in terms of the political environment?
Stable and friendly government
What is the purpose of political risk assessment in international business?
To forecast political instability and evaluate its influence on international business decisions
Which of the following is NOT a strategy mentioned in the text to reduce political vulnerability?
Tariff imposition
Why are multinational companies often targeted in the context of political dangers?
To generate funds through kidnapping executives
What potential impact do political sanctions have on trade between nations?
Decrease in trade volume
How do labor unions potentially influence international business operations?
By advocating for fair wages and safer working conditions
What makes cyberterrorism and cybercrime particularly challenging to combat according to the text?
They spread harm and damage quickly
Study Notes
Characteristics of a Sovereign State
- A sovereign state has a defined territory, permanent population, and a government that exercises sovereignty over its territory and population.
Forms of Government
- Oligarchy: a form of government involving rule by a few individuals.
Risks in International Business
- Expropriation risk: the risk where a government seizes an investment but provides some reimbursement for the assets.
Currency Restrictions
- To restrict spending in foreign currency, a country might impose capital controls, limiting the amount of currency that can be exchanged or transferred.
Nationalism
- Nationalism involves the promotion of a nation's interests and identity, often at the expense of international cooperation.
Ideal Political Environment
- For a multinational firm, an ideal political environment is characterized by stability, transparency, and minimal government intervention.
Political Risk Assessment
- The purpose of political risk assessment is to identify and evaluate the potential risks and opportunities arising from a country's political environment.
Strategies to Reduce Political Vulnerability
- Avoidance is NOT a strategy mentioned in the text to reduce political vulnerability.
Multinational Companies and Political Dangers
- Multinational companies are often targeted in the context of political dangers due to their high profile, significant financial resources, and perceived foreign influence.
Political Sanctions
- Political sanctions can have a significant impact on trade between nations, restricting the flow of goods and services.
Labor Unions and International Business
- Labor unions can potentially influence international business operations by negotiating better wages, benefits, and working conditions.
Cyberterrorism and Cybercrime
- Cyberterrorism and cybercrime are particularly challenging to combat due to their anonymity, cross-border nature, and rapid evolution.
Explore the concept of sovereignty, which refers to the powers exercised by a state in relation to other countries and the supreme authority held over its own members. Learn about the key characteristics of a sovereign state, such as legal equality with other states, independence from external control, and the ability to govern its own territory and select its own systems.
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