Tasha Haight

Professor Shapero
International Management
November 3, 2014
Russian Roulette
Russia is a very large country. Some might think to be truly global, one must do business
with or in Russia. While this is not necessarily true, MNCs should evaluate and make a
thorough assessment of its political risk and the costs and benefits of joint ventures with local
partners (The Risks of Doing Business in Russia, 343). Without looking at these political risks,
it is very probable that the company will be constrained by a government policy in the host
country. Even looking at the political risk, one needs to evaluate the costs and benefits to see if it
is even worth venturing into that country or if it will just end up harming the company. Costs and
benefits and political risk are extremely important to examine when wanting to expand into
Russia, yet they are also extremely important when wanting to go into any foreign country as
well.
MNCs may protect themselves from government actions with protective and defensive
techniques designed to discourage the government from interfering. Examples include doing as
little local manufacturing as possible and conducting all research and development outside the
country, limiting the responsibility of local personnel, raising capital from local banks and the
host government, and diversifying production of the product among a number of countries
(Integrative, Protective, and Defensive Techniques, 354). These tactics will certainly help when
governments already have strong control and companies wish to stay on the governments good
side, but changes in this political environment might help protect MNCs with the use of
proactive political strategies such as lobbying, campaign financing, and advocacy. These
strategies may influence and shape the political decisions, making them favor the MNCs in the
future.
No matter what the political risk factor, alliances and joint ventures always have the
potential to be a major help when expanding into foreign territory. They can reduce risk and
help relationships with government actors and other stakeholders (World of International
Management, 362). When creating an alliance or joint venture with a local company or partner,
the MNC is gaining knowledge and expertise in that specific country. The local partner will
know most business laws, rules, and regulations and how to abide by them as well as putting out
a good image with the locals for joining a local, known company instead of just barging into a
country. These good relationships are then formed because of a local company or partner being
included in the expansion into that host country.