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* In addition to corporate activities focused on the social and economic goals of the host country and good corporate citizenship, MNCs can use other strategies to minimize political vulnerability and risk. Typically less susceptible to political harassment, joint ventures can be with locals or other third-country multinational companies; in both cases, a company’s financial exposure is limited. A joint venture with locals helps minimize anti-MNC feelings, and a joint venture with another MNC adds the additional bargaining power of a third country. Expanding the investment base and including several investors and banks in financing an investment in the host country is another strategy. This has the advantage of engaging the power of the banks whenever any kind of government takeover or harassment is threatened. Licensing is a strategy that can be effective in situations where the technology is unique and the risk is high. Of course, there is some risk assumed because the licensee can refuse to pay the required fees while continuing to use the technology Planned domestication is the most effective long-range solution in cases in which the host country is demanding local participation. While this is not the preferred business practice, the alternative of government-initiated domestication can be as disastrous as confiscation. Political bargaining by multinational companies through lobbying may be used to avoid potential political risks. Political payoffs are one approach to dealing with political vulnerability. This is not an approach we recommend in any way. However, your competitors may use such a tactic, so beware. Political payoffs, or bribery, have been used to lessen the negative effects of a variety of problems. * Governments, both foreign and U.S., encourage foreign investment as well as discourage it. The most important reason to encourage foreign investment is to accelerate the development of an economy. The U.S. government is motivated for economic as
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