- What are two main concerns that MNCs should evaluate when doing business in Russia.
According to Transparency international corruption perception index 2016, Russia is at 131 position among 173 countries (e.V., 2017). Therefore, multinational corporations must evaluate their strategies to counter corruption in Russia as they might be asked for bribes when they want to go through registrations processed in Russia. Russia is a country that is run by centralized government system meaning most of the decisions concerning international relations and multinational corporations are made in Moscow, the Russian capital. This has resulted in a complex legal system which would be a great concern for companies doing business in Russia. Companies forming alliances and contracts in Russia would need to be vigilant. Assistance from competent corporate lawyers must be sought.
- How can MNCs protect themselves from government action?
It is tricky for an MNC to protect itself from government actions when doing business abroad. MNC’s might want to align with local organizations who know the ways to deal with government pressures and actions. These domestic organizations would protects the interests of the MNCs as it would directly affect the profitability of these local organizations. Another way could be utilizing the services of local suppliers and subcontractors. This would help make a better perception for the MNCs as they would be viewed contributing to the local communities and economies. Hiring as much local people as possible could also help MNCs to avoid government pressure as these locals would know the ways around government actions. Developing Corporate Social Responsibility (CSR) programs could also be an effective way to be sustainable in a given situation (Loew, Ankele, Braun & Clausen, 2004). This would not only help the local communities and develop a positive perception amongst them, but also make a trustworthy relationship with the government.
- What proactive political strategies might help protect MNCs from future changes in the political environment?
Formal public relationship is a key to protect MNCs from the effects of changes in the political environment. An MNC must not be partisan and does not support a specific religious or political party in a foreign country but should have good relationship with all the stakeholders across the board. Formal lobbying can also be useful. Lobbying firms could be hired for this reason. Embassies of the countries of origin of MNCs could also provide legal and political help if needed.
- How might alliances and joint ventures reduce risk and help relationships with government actors and other stakeholders?
Alliances would help MNCs share their costs. These costs could include financial, legal and political alike. Local organizations have experience in the local settings. MNCs could benefit from these experiences and save marketing and other logistic costs in the short and long term. MNCs may not have the same knowledge of the local corporate legal system as the company they go in joint venture might have. Therefore, this knowledge may be helpful in dealing with governmental departments and other legal institutions.