As Russia continues to succeed with a decentralized economy and foreign investors flood in, a Chicago, Illinois- based computer chip manufacturer decides that it may be time to expand operations overseas. The company has a series of patents that provide legal protection and allow it to dominate a small but growing segment of the computer market. Its sales estimates reached $147 million within three years, but it believes that this could rise to $200 million if it was to expand internationally. Adam Smith, CEO of the company, had previously considered China and India for their cheap labor, but decided that their rapid growth and intense international interest would just lead to a higher bidding price. Furthermore, there are far fewer direct competitors expanding in Russia, whereas technological parts and services industries are already pervasive in other emerging countries. Adam recalls a time when Russia experienced high human trafficking, corruption, and general political instability, but he believes that with so much international interest in Russia, these issues must be curbed by this point in time.
Adam is confident that a deal will be accepted by Russia as it continues to welcome foreign investment to maintain economic growth. A state-of-the-art plant could help to reduce unemployment further and provide an inflow of needed capital. However, the banker is concerned that because of the political risks and uncertainty in Eastern Europe in general and Russia in particular, the company may either lose its investment through government expropriation or find itself unable to get profits out of the country. Given that the company will have to invest approximately $20 million, the venture could seriously endanger the company's financial status.
Adam understands these risks but believes that with the help of an international management consultant, he can identify and minimize the problems. "I'm determined to push ahead," he told the banker, "and if there is a good chance of making this project a success, I'm going to Russia."

Questions
1. What are some of the political risks that Adam’s firm will face if he decides to go ahead with this venture? Identify and describe two or three.
2. Using Figure 10–3, what strategy would you recommend that the firm use? Why?

3. In his negotiations with the Russian government, what suggestions or guidelines would you offer to Adam? Identify and describe two or three.

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Integrative techniques High 20 Moderate 10 Low 1 1 Low (11, 14) Low or stable technology (7, 10) Advanced management skill Unified logistic, labor transmission (16, 6) (14, 3) Dynamic high technology 10 Moderate Protective/defensive techniques 20 High