In the context of political risks, unlike cooperation, an avoidance strategy:
A) can limit the risk associated with foreign ownership of a business.
B) involves the use of joint ventures and collaborative contracts.
C) does not minimize the political uncertainty of doing business in a country.
D) is used when the political risks associated with a country are too great.

Question

Quizplus · Accepted Answer

An avoidance strategy involves avoiding doing business in a country altogether when the political risks associated with that country are deemed too great. This may involve not investing in the country, not exporting to the country, or withdrawing from the country if already in operation there. It does not involve cooperation such as joint ventures or collaborative contracts, and it does not necessarily limit the risk associated with foreign ownership of a business as simply not being present in the country may not protect against risks such as expropriation. The political uncertainty of doing business in the country is not minimized through an avoidance strategy, but rather accepted as too great to pursue operations there.

In the Context of Political Risks, Unlike Cooperation, an Avoidance