The Risks of Multinational Corporations Essay

After reviewing the article, TED Talk, and our reading, I feel there is limited chance of reprieve for many of these companies. When conducting business in foreign countries in any capacity one must understand you are at the hands of that nation, their laws, and any political, economical, military, environmental issues that may occur there. Climate change will have significant impacts internationally as Zolkos states in his article Multinational Corporations Face Growing Natural Hazard Risks Analysis, due to the way that corporate strategies and structures have evolved. Relying more and more on natural resources from other regions, they are exposing themselves to the increase in natural disasters, weather disturbances, fires, etc. These increased vulnerabilities must be taken into account. As already proven historically in Cuba, political risk will always be a factor to consider. There are two types of political risk to consider, macro risk and micro-risk. Macro risk refers to adverse actions that will affect all foreign firms, such as expropriation or insurrection, whereas micro risk refers to adverse actions that will only affect a certain industrial sector or business, such as corruption and prejudicial actions against companies from foreign countries(Phung, 2006). So, how do these MNCs move forward as U.S.-Cuba relations improve? I say very cautiously. A corporation must have a very strong understanding of the Cuban laws and what rights as an investor or business holder in their country their company may or may not have. A risk stated by Phung is legal systems in host countries may not be as advanced as ours, or if it is politically unstable and a regime falls, the next regime may not honor what was previously agreed upon. MNCs that choose to invest in high risk countries are playing a very high risk game. Much like high stakes poker, sometimes you have to risk a lot to win...