Deck 8: The International Legal Environment of Business

Question 1

law is derived from the Shari'a.

A) Common
B) Civil
C) Islamic
D) Hindu

Answer 1

C

Question 2

Which of the following statements is true of civil law systems?

A) They make decisions that rely heavily on case precedents.
B) They have a superior public law.
C) They tend to put great emphasis on private law.
D) They are organized around cases and regulations.

Answer 2

C

Question 3

Culture may be defined as learned norms of a society that are based on values, beliefs, and attitudes.

Answer 3

True

Question 4

Which of the following statements is true about the relationship between civil law systems and common law systems?

A) They are polar opposites which have not yet been reconciled by legal scholars.
B) They are most evident in Islamic nations.
C) They are tending to merge, as judges in civil law countries take greater note of case law in their decisions.
D) Hindu law makes use of common law, but it chooses to ignore cases that would be considered precedents under a civil-law system.

Question 5

Countries that follow law organize their legal systems around legal codes rather than around cases, regulations, and precedents.

A) Hindu
B) socialist
C) common
D) Romano-Germanic civil

Question 6

law is based on the teachings of Karl Marx.

A) Common
B) Romano-Germanic
C) Civil
D) Socialist

Question 7

The law that governs the relationships between nation-states is known as law.

A) private international
B) public international
C) international business
D) international trade

Question 8

Hindu law is primarily concerned with .

A) maintaining national security
B) preserving the authority of the state over agricultural land
C) family matters and property succession
D) ensuring that citizens obey the Shari'a

Question 9

The five major families of law include all but which of the following?

A) common
B) Romano-Germanic
C) Islamic
D) Asian-Pacific

Question 10

The major goals of the legal system of a certain country are to encourage collectivization of the economy and to maintain national security. In addition, most property belongs to the state, particularly industrial and agricultural property. This country has a(n) law system.

A) common
B) Hindu
C) socialist
D) Islamic

Question 11

Countries that follow law organize their legal systems around legal codes rather than around cases, regulations, and precedents.

A) Romano-Germanic
B) common
C) civil
D) criminal

Question 12

Socialist law systems are based on the .

A) teachings of Karl Marx
B) Romano-Germanic civil law
C) rules governing personal and religious behavior set out in texts known as Sastras
D) British common-law tradition

Question 13

Which of the following statements is true about Hindu law?

A) It is based on writings of the Positivist School that date from the Thirteenth Century.
B) It is based on a belief in the collectivization of agricultural property.
C) It is linked to the revelation of the Vedas, a collection of religious songs and prayers.
D) It is essentially nonreligious and impersonal, basing its fundamental teaching on objective reasoning and logic.

Question 14

law is one of the five major families of law.

A) Capitalist
B) Socialist
C) Criminal
D) Sectarian

Question 15

Companies doing business in follow common law.

A) Germany
B) France
C) England
D) Sweden

Question 16

Which of the following statements is true of a socialist law system?

A) It is designed to preserve the authority of the state over agricultural land.
B) It is designed to enable private ownership of all means of production.
C) It prohibits earning interest on money.
D) It tends to put great emphasis on private law.

Question 17

Mediterranean and Latin American cultures base their group affiliation on .

A) age
B) gender
C) family
D) profession

Question 18

Which of the following is true of the cultural dimensions in different countries?

A) Gender- and family-based affiliations are important in Saudi Arabia, where a strict interpretation of Islam prevents women from playing a major role in business.
B) The hourly wage is higher in the United States than it is in Germany, meaning that the workforce is able to acquire more consumer goods in Germany.
C) The Iranian government supports the selling of satellite communications in Iran, even though they present decadent Western values.
D) Spanish is the national language of Brazil, but is not widely spoken in the rest of Latin America.

Question 19

One of the major goals of the Soviet legal system was to .

A) govern relationships between individuals and corporations
B) regulate family matters and property succession
C) promote private ownership of property
D) encourage collectivization of the economy

Question 20

law is derived from the Sastras.

A) Common
B) Romano-Germanic
C) Islamic
D) Hindu

Question 21

Which of the following scenarios best illustrates a franchise?

A) The owner of a coffee plantation agrees to export coffee beans to stores in Italy.
B) An automobile manufacturer imports materials required for car manufacture from a distributor in Canada.
C) An online merchandising company builds a warehouse in Great Britain.
D) A fast food restaurant permits a business owner in Belgium to operate a restaurant that uses its trademark.

Question 22

The primary concerns of Hindu law are national security and collectivization of the economy.

Question 23

In many countries, Islamic law, as encoded in the Shari'a, exists alongside the secular law.

Question 24

A market economy limits the price that can be charged for goods inside the country.

Question 25

Which of the following statements is true of foreign distributors?

A) They have little involvement with buyers or sellers outside the parent country.
B) They purchase imported goods at a discount and resell them in the foreign or host country.
C) They maintain a principal-agent relationship with the exporter.
D) They do not take title to the goods being exported.

Question 26

Which of the following is not a reason for a multinational corporation to create a foreign subsidiary?

A) expand its foreign market(s)
B) acquire foreign resources
C) improve production efficiency
D) avoid expropriation

Question 27

The absolute advantage theory of international trade states that _.

A) companies should franchise their trademarks to avoid a nation-state's restrictions on foreign direct investment
B) all licensing agreements should be subject to restrictions of the host country
C) a country would contribute to global efficiency if it produced specialized products more efficiently than others did
D) an individual nation should concentrate on exporting the goods that it can produce most efficiently

Question 28

One source of international law can be found in decisions of national and regional courts.

Question 29

is generally considered to be the least risky means of doing international business.

A) Licensing
B) Trade
C) Franchising
D) Direct investment

Question 30

The U.S. Constitution prohibits a state from entering into "any Treaty, Alliance or Confederation."

Question 31

refers to contractual agreement by which a company makes its trade secrets, trademarks, patents, or copyrights available to a foreign individual or company in return either for royalties or for other compensation based on the volume of goods sold or a lump sum.

A) International licensing
B) Expropriation
C) International franchising
D) Foreign direct investment

Question 32

Which of the following statements is true of foreign direct investment?

A) The multinational either creates a wholly or partially owned and controlled foreign subsidiary in the host country.
B) It involves permitting a licensee of a trademark to market the licensor's goods or services in a particular nation.
C) It is less risky than international trade and international franchising and licensing.
D) The capital invested is not subject to government restrictions and domestic law of the host country.

Question 33

Discuss the difference between public and private international law, and list the sources of international law.

Question 34

In the Marxist form of government, economic decisions are centralized.

Question 35

Gender- and family-based affiliations are examples of acquired group membership.

Question 36

The theory of refers to a theory of trade relationship that encourages nations to concentrate on exporting the goods they can produce most efficiently.

A) contributory advantage
B) new trade
C) absolute advantage
D) traded intermediate goods

Question 37

Discuss the five major "families" of law.

Question 38

Compare and contrast the common law system and the civil law system.

Question 39

Discuss the cultural dimensions of the international environment of business.

Question 40

Countries that follow the Romano-Germanic civil law organize their legal systems around cases, regulations, and precedents rather than around legal codes.

Question 41

Unilateral investment treaties (UITs) obligate the host government to extend fair and nondiscriminatory treatment to investors from the other country.

Question 42

are negotiated between two governments and obligate the host government to extend fair and nondiscriminatory treatment to investors from the other country.

A) Joint ventures
B) Bilateral investment treaties
C) Act-of-state doctrines
D) Sovereign immunity doctrines

Question 43

International franchising can reduce the likelihood of political instability being a threat.

Question 44

Which of the following is subject to export controls?

A) goods related to a licensing agreement
B) militarily sensitive goods
C) goods related to a franchising agreement
D) intellectual property

Question 45

Which of the following is a reason why nations set up import controls?

A) to prevent the imposition of antidumping duties
B) to prevent foreign companies from destroying home industries
C) to reduce the flow of foreign currency coming into the home country
D) to prevent unfriendly nations from obtaining sensitive goods

Question 46

The theory of comparative advantage states that an individual nation should concentrate on exporting the goods that it can produce most efficiently.

Question 47

Joint ventures are used in host countries with fewer restrictions on foreign investment.

Question 48

Which of the following terms refers to the taking of private property by a host-country government for either political or economic reasons?

A) licensing
B) franchising
C) expropriation
D) appropriation

Question 49

How are the licensing and franchising methods of engaging in international trade different from one another?

Question 50

A obligates the host government to extend fair and nondiscriminatory treatment to investors from the other country.

A) BIT
B) REIT
C) CF
D) CIF

Question 51

Which of the following is not a reason for a multinational corporation to create a foreign subsidiary?

A) acquire knowledge
B) be closer to its customers
C) be closer to its competitors
D) minimize foreign direct investment risk

Question 52

In order to stimulate its local textile economy and promote the production of cotton, something that has traditionally been imported, a country decides to charge the importing agency a certain percentage of the value of the item being imported. By doing this, the government seeks to make such imported products more expensive and thus unattractive. This is an example of a(n) .

A) export control system
B) quota
C) tariff
D) expropriation system

Question 53

Which of the following is a form of foreign direct investment?

A) An investor enters into a licensing agreement with a foreign government.
B) A company purchases a warehouse outside the sovereign borders of its parent country.
C) A company enters into an international franchise agreement.
D) A company enters into a joint venture with a government agency in the host country.

Question 54

The holds that each nation is bound to respect the independence of every other sovereign state and that the courts of one nation will not sit in judgment on the acts of the courts of another nation.

A) Single European Act
B) sovereign immunity doctrine
C) act-of-state doctrine
D) Maastricht Treaty

Question 55

Which of the following is true of the sovereign immunity doctrine?

A) A host government expropriates the property of a foreign corporation.
B) A host government refuses to permit a company to use the court system of the owner's country to sue the host government.
C) A host government insists that it must own more than 50 percent of a multinational joint venture.
D) Courts in the host country pass a judgment against the company that cannot be contested by courts in any other nation.

Question 56

Expropriation .

A) is granting permits to a licensee of a trademark to market the licensor's goods or services in a particular nation
B) is the taking of private property by a host-country government for either political or economic reasons
C) is a contractual agreement by which a company makes its trade secrets, trademarks, patents, or copyrights available to a foreign individual or company
D) is the ownership and use of private property for profit, which is in violation of socialist law

Question 57

Which of the following statements is true of the Foreign Sovereign Immunities Act (FSIA)?

A) It protects U.S. citizens doing business in foreign nations.
B) It protects foreign companies doing business in the United States.
C) It protects joint ventures from liability for toxic accidents.
D) It protects foreign governments from U.S. judicial review of their public acts.

Question 58

Expropriation is one of the greatest risks companies take when they engage in international business.

Question 59

A large automobile manufacturer wants to expand its market for mid-size cars to a country with a large population and sizeable working class. In addition, this country is also known to be a source for cheap labor. This is something that could help the auto company significantly improve its production efficiency. Which of the following methods of engaging in international business will help the company best achieve these goals?

A) international licensing
B) joint venture
C) international franchising
D) foreign subsidiary

Question 60

Which of the following allows a government expropriating foreign-owned private property to claim that the jurisdiction of courts in the owner's country do not apply to it because it is a government rather than a private-sector entity?

A) bilateral investment treaty
B) act-of-state doctrine
C) sovereign immunity doctrine
D) joint venture

Question 61

Tariffs and quotas are examples of export controls.

Question 62

Which of the following statements is true of the World Trade Organization?

A) Member states have a common tariff barrier against nonmembers.
B) It is intended to create a common market.
C) All members are obligated to harmonize their trade laws or face sanctions.
D) It establishes guidelines for multinational corporations when operating in developed and developing countries.

Question 63

The expropriation doctrine holds that each sovereign nation is bound to respect the independence of every other sovereign state and that the courts of one nation will not sit in judgment on the acts of the courts of another nation done within that nation's own sovereign territory.

Question 64

Explain export and import controls.

Question 65

Which of the following nations is not a member of the Andean Common Market?

A) Venezuela
B) Colombia
C) Peru
D) Argentina

Question 66

Which of the following nations is not an original member of the European Free Trade Association (EFTA)?

A) Finland
B) Sweden
C) Norway
D) Scotland

Question 67

The is in the process of forming a Western European political and economic community with a single currency and a common external tariff barrier toward nonmembers.

A) Statute of Europe
B) European Union
C) North American Free Trade Agreement
D) Association of Southeast Asian Nations

Question 68

The planned to create a "common market" of 400 million people and $4 trillion worth of goods.

A) World Trade Organization
B) North American Free Trade Agreement
C) European Union
D) Mercado Commun del Ser Mercosul

Question 69

One of the goals of the was to create a uniform external tariff to be applied to all nonmembers.

A) World Trade Organization
B) European Union
C) North American Free Trade Agreement
D) Organization for Economic Cooperation and Development

Question 70

Under the sovereign immunity doctrine, a company whose property has been expropriated cannot press its claims in its own country's courts.

Question 71

Explain how the expropriation of property is a risk for companies engaged in international business.

Question 72

Which of the following organizations has the power to enforce the new trade accord that evolved out of seven rounds of General Agreement on Tariffs and Trade (GATT) negotiations, with more than 140 nations participating?

A) the European Union
B) the North American Free Trade Agreement
C) the World Trade Organization
D) the South American Common Market

Question 73

Which of the following statements is true of the accord that will be supervised by the World Trade Organization (WTO)?

A) It promotes the practice of requiring high local content of materials for manufactured products, such as cars.
B) It addresses a "social dimension" through the establishment of uniform labor and Social Security regulations.
C) It does not allow any internal tariffs among the member states.
D) It prohibits member countries from placing limits on the quantity of imports.

Question 74

Explain how the sovereign immunity doctrine is a risk for companies engaged in international business.

Question 75

Which of the following statements is true of the European Union's Parliament?

A) It can assent to trade agreements with countries outside the European Union.
B) It performs the function of final decision maker in conflicts between European Union law and individual member states.
C) It maintains price stability by lowering or raising interest rates.
D) It coordinates the economic policies of member states.

Question 76

The is administered by a three-member Trade Commission, which oversees a Secretariat and arbitral panels.

A) North American Free Trade Agreement
B) World Trade Organization
C) European Union
D) Andean Common Market

Question 77

The EU Commission consists of members who represent .

A) 12; the EU, not national concerns
B) 12; national concerns, not the EU
C) 20; the EU, not national concerns
D) 20; national concerns, not the EU

Question 78

Environmentalists and consumer groups feared that the would overrule U.S. environmental laws and in other ways infringe on the sovereignty of the nation.

A) World Trade Organization
B) European Union
C) North American Free Trade Agreement
D) South American Common Market

Question 79

In 1976, the U.S. congress enacted the Foreign Sovereign Immunities Act (FSIA), which shields foreign governments from U.S. judicial review of their private, but not public, acts.

Question 80

Which of the following nations is not a member of the Mercado Commun del Ser Mercosul (Mercosul)?

A) Argentina
B) Brazil
C) Paraguay
D) Ecuador