Case Answer P58

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1. In what way does the political environment in Vietnam pose both an opportunity and a threat for American MNCs seeking to do business there? The political environment poses an opportunity for American firms because the Vietnamese government is now working hard to attract U.S. investment. Now American companies have the chance to gain a strong position by investing while the political opportunities are good. Becoming the 150th member of the World Trade Organization shows the country has the willingness to open its trade doors and a strong political move to prove that the country is willing to abide by outside rules and regulations. This would impress investors and would likely consider doing business with Vietnam. Being a communist nation, the government still closely controls the economy and U.S. firms may find that their opportunities will be limited and a number of unforeseen possible legal problems may exist. Typically a communist government does not care for a multinational business, as they only want what’s best for their country. An example of this type of action would be that the government will try to pawn one multinational off against another in order to gain a better position for itself. This would sour relationships between those multinational investors while only making minimal or short-term gains for them.

2.Why are U.S. multinationals so interested in going into Vietnam? How much potential dose the country offer? How might Vietnam compare to China as a place to do business?
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