If a producer agrees to enter into a management contracting arrangement with a zinc mining operation in Chile,
A) the company should be prepared to invest large amounts in mining facilities.
B) the company should be prepared to send people to Chile.
C) success will depend on how well the Chilean managers know what needs to be done.
D) the company must assume no political problems will arise, otherwise the risk is very high.
E) None of these alternatives is true.

Question

Quizplus · Accepted Answer

In order to enter into a management contracting arrangement, the company will need to send people to Chile to manage the operations. While investing in mining facilities may be necessary, it is not necessarily a requirement for this type of arrangement. The success of the arrangement will depend on both the knowledge and experience of the Chilean managers and the company's ability to effectively manage the operation from a distance. Political risks are always present when operating in a foreign country, but cannot be assumed or ignored.

If a Producer Agrees to Enter into a Management Contracting