An Analysis of the Strategies used by Multi-National Companies (MNCS) to manage country risk in Zimbabwe.

Abstract

This research focused on analysing strategies used by Multinational Companies to manage country risk in Zimbabwe. The main objective of the research was to investigate the strategies used by Multi-National Corporations to manage country risk in Zimbabwe. Questionnaires and interviews were used to gather this information. The research found out that, country risk does exist in Zimbabwe. Results showed that political risk remained one of the main obstacles to FD1 in Zimbabwe. MNCs were concerned with breach of contracts, non -honouring of government guarantees and adverse regulatory changes. Government interventions in the operations of multinationals were found to be one of the reasons why the country is not an attractive investment destination, especially to western countries. Multinationals use a number of strategies such as compliance to government regulations, repatriation of profits, and going into joint ventures with locals as the main tools to curb political risk in the country. In addition, it was found that multinational companies operating in high risk countries prefer to use local finance in order to minimise their losses due to nationalisation of assets. There is need for multinationals to assess country risk frequently in order to minimise their losses.