Question

Based on your understanding of the differences between U.S. and foreign businesses, which of the following statements is correct? Check all that apply.

a. Among the possible examples of political risk are, on a large scale, threatened or actual wars and coups, acts of terror, and acts of expropriation and eminent domain. On a smaller scale, it could include changes in regulations, such as the imposition of a tax or prohibition on the sale of an item.
b. One argument supporting the use of the closed ownership structure is that it provides greater opportunities for oversight and control by the firm's individual and institutional shareholders (as compared to the more open ownership structures used by U.S. corporations).
c. The success of the Japanese keiretsu (for example, Mitsubishi and Toyota) and Korean chaebol (for example, Hyundai) have led to the creation of a large number of similar organizations in the United States.

Answer 1

Statement (a) regarding political risk is accurate. Statement (b) about closed ownership structure reflects a valid perspective but is not universally applicable. Statement (c) is incorrect as the successes of Japanese keiretsu and Korean chaebol have not led to the creation of a large number of similar organizations in the United States.

Step-by-step explanation:

The given statements highlight realities in the intersection of business operations and international trade. The correctness of these statements can be analyzed as follows:

• Political risk is indeed a serious concern for businesses operating internationally. The examples provided, such as large-scale conflicts, acts of terror, and smaller-scale regulatory changes like new taxes or sales prohibitions, are valid manifestations of political risks that can affect operations significantly.
• The argument surrounding the use of closed ownership structures states that they allow for more oversight and control by a firm's shareholders. This is in contrast to the open ownership structures found in the U.S., where control can be more diffused due to a wider shareholder base.
• The success of Japanese keiretsu and Korean chaebol has not necessarily translated to a proliferation of similar structures within the United States, primarily because the U.S. business landscape and cultural practices differ from those in Japan and Korea. The American system tends to favor more dispersed ownership and control, rather than the tightly knit corporate alliances found in keiretsu and chaebol systems.

In summary, statement (a) is correct, statement (b) discusses a legitimate point of view regarding ownership structures but does not state a universal truth as practices vary widely, and statement (c) is incorrect as keiretsu and chaebol have not led to many similar organizations in the U.S.