Matata, a Japanese firm that manufactures automobile parts, was running at a loss in its offshore outlet in Mexico due to the governmental and civil disruptions in the country. Thus, it withdrew its business outlets from Mexico. At this opportunity, another Japanese firm, Lui Corporation, entered into business in Mexico. With this decision, Lui Corporation has made itself liable to ___.

A) a licensing agreement
B) a regional economic alliance
C) political risk
D) insourcing
E) joint venture

Question

Zybrea Knight · Accepted Answer

Final Answer : C, Explanation :  By entering into business in Mexico, Lui Corporation has exposed itself to political risk, which is the risk associated with the political and civil disruptions in a foreign country that could result in financial losses for the business.

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