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(BQ) Part 2 book "International management" has contents: Managing political risk, government relations, and alliance; management decision and control; motivation across cultures, leadership across cultures, human resource selection and development across cultures. | www.downloadslide.com Chapter 10 OBJECTIVES OF THE CHAPTER MANAGING POLITICAL RISK, GOVERNMENT RELATIONS, AND ALLIANCES Firms go international to become more competitive and profitable. Unfortunately, many risks accompany internationalization. One of the biggest risks emerges from the political situation of the countries in which the MNC does business. Terrorism is also a worldwide concern which can create a large barrier to MNC entry or survival in a country. MNCs must be able to assess political risk and conduct skillful negotiations. An overview of the political environment in selected areas of the world was provided in Chapter 2. This chapter specifically examines the impact of political risk on MNCs and their subsequent decisions in managing it. One major way is through effective evaluation and risk reduction. This process extends from risk identification and quantification to the formulation of appropriate responses, such as integration and protective and defensive techniques. This chapter also describes the process for developing productive relationships with governments and for managing alliances with foreign partners, many of which are influenced by home- and host-government relations. The specific objectives of this chapter are: 1. EXAMINE how MNCs evaluate political risk. 2. PRESENT some common methods used for managing and reducing political risk. 3. DISCUSS strategies to mitigate political risk and develop productive relations with governments. 4. DESCRIBE challenges to and strategies for effectively managing alliances. 342 The World of International Management Shell’s Russian Roulette n early 2006, investors in Royal Dutch Shell had reason to be excited. With a 55 percent stake in the Sakhalin-II energy project, Shell owned the majority share of the world’s largest oil and gas project. The $22 billion project, centered off the coast of mainland Russia, promised production of billions of barrels of oil and gas.1 Within a few months, however, .
