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CASE 4-1: Host-Country Politics The premier of the Canadian province of Quebec announced that he was not ruling out the option of calling another referendum on whether Quebec should remain a part of Canada or become an independent country. Over the past 10 years, two such referenda have been held. In the last one, the pro-independence supporters lost by only 50,000 votes. Although these referenda have failed, the issues that led to them have not gone away. Unlike the rest of Canada, the overwhelming majority of the residents of Quebec are of French ancestry. They fear that their cultural and linguistic identity is being swamped by the majority of Canadians, who are English-speaking. Many people in Quebec also feel more culturally tied to France than they do to the rest of Canada or the United States. The French speakers in Canada feel like a cultural and linguistic minority. Independence would allow them to protect and advance their culture and society. White Goods, Inc., an American firm that has a microwave oven manufacturing factory outside Montreal, was nervous when it heard the statement from the Quebec premier. The talk of separation created a great deal of uncertainty. Many foreign firms were passing over Montreal and establishing offices in another major Canadian city, Toronto. Many Canadian firms, too, were moving out of Quebec or postponing new investments in their Quebec operations. White Goods wondered whether the NAFTA agreement would remain in effect in Quebec if it became a separate country. There was also concern about other issues, such as being able to sell goods made in Quebec in other parts of Canada, whether there would be a new currency, and what the exchange rates would be, if the political relationship with the United States would change, and many other matters. The White Goods firm is doing well, with sales growing rapidly. It has to decide soon whether to expand the Montreal plant or build a new one elsewhere in the United States or Canada.

THINK CRITICALLY 1. What should White Goods do? Why? 2. If Quebec became an independent country, how might this event affect White Goods’s operations in that country? 3. If White Goods decides not to expand its factory in Montreal, how will that affect the company’s relations with the Quebec provincial government? 4. Why would the political uncertainty in Quebec hinder White Goods’s ability to plan for the future? 5. Should White Goods get involved in Quebec politics and try to influence the outcome of the next referendum?


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