Deck 5: The Political and Legal Environment

Question 1

Corporate governance frameworks ensure the board of directors' accountability to the company and its shareholders.

Answer 1

True

Question 2

Trade sanctions and embargoes can be used interchangeably.

Answer 2

True

Question 3

Economic sanctions that are imposed unilaterally by one country tend to be more effective than those imposed multilaterally by countries.

Answer 3

False

Question 4

Countries with the common law system have much more rigid laws than those with the code law system.

Question 5

Political and legal factors often play critical roles in international marketing activities.

Question 6

Voluntary restraint agreements are self-imposed restrictions aimed at avoiding punitive trade actions from the host.

Question 7

The term "embargo" refers to products that are packaged in one country in a particular way,and then altered to fit the international marketplace in another country.

Question 8

As firms become increasingly multinational,governments respond by increasing global cooperation to achieve the same principles of taxation and corporate ethics laws across nations.

Question 9

If supply chains are complex and multinational,the effects of terrorism can potentially spread across the globe from an initially local focus.

Question 10

Code law is based on tradition and depends less on written statutes than on precedent and custom.

Question 11

Permitting a foreign national from a controlled country to have access to a highly sensitive computer program in the United States is not considered as an export.

Question 12

Bribing foreign officials in order to gain contracts is considered permissible in the United States.

Question 13

Nuclear nonproliferation is a determinant for export control.

Question 14

Expropriation is a term used to describe the U.S.government's investment in foreign technology with the intent to spur development of trade partners.

Question 15

Lobbyists are well-connected individuals and firms that can provide access to policymakers and legislators.

Question 16

In making decisions about a firm's international marketing activities,managers will need to concentrate on the legal circumstances of the host country but not the home country.

Question 17

Boycotts place a tax on imports and raise prices.

Question 18

One key concern with trade sanctions is the fact that governments often consider them as being free of cost.

Question 19

Today's export controls use a "strategic balance" approach affecting specific hotspots rather than the "tactical balance" approach.

Question 20

Political risk can be the result of government action,but it can also be outside the control of government.

Question 21

Which of the following is an example of a dual-use item?

A) Handbags
B) Life jackets
C) Compact cars
D) Artillery

Question 22

Which of the following is NOT considered a political risk?

A) Deflation
B) Tariffs
C) Expropriation of assets
D) Restriction in repatriation of profits

Question 23

Which of the following is true about export controls?

A) The legal basis for export controls is similar across nations.
B) All export control systems make controls the rule rather than exception.
C) The U.S. export control system is based on the Export Administration Act.
D) Services and ideas are not covered under export controls.

Question 24

The seizure of foreign assets by a government with payment of compensation to owners is known as _____.

A) asset forfeiture
B) misappropriation
C) expropriation
D) dissolution

Question 25

The charter of the United Nations allows for sanctions as an enforcement action by regional agencies.Which of the following is NOT an example of a regional agency?

A) The Organization of American Unity
B) The Organization of African Unity
C) The Organization of American States
D) The Arab League

Question 26

Which of the following is true about domestication?

A) It imposes regulations to ensure that no profits are retained by the host country.
B) It results in inefficiencies due to lack of market discipline, and thus affects the international competitiveness of operations abroad.
C) It results in total ownership and total management responsibility being conferred on the host country.
D) It imposes regulations to ensure that all high-end products are locally produced while all low-end products are produced by the host country.

Question 27

When firms refuse to do business with someone,often for political reasons,this is known as _____.

A) image tarnishing
B) expropriation
C) boycotting
D) confiscation

Question 28

_____ occurs when a government demands partial transfer of ownership and management responsibility and imposes regulations to ensure that a large share of the product is locally produced and a larger share of the profit is retained in the country.

A) Injunction
B) Defalcation
C) Domestication
D) Structuring

Question 29

When the United Nations (UN)votes on economic sanctions for a country:

A) it will apply only to nations who are members of the UN.
B) any permanent member of the Security Council can veto the sanctions.
C) the government must consider them as being free of cost.
D) a new set of rules must be written for the specific infractions.

Question 30

Events caused by factors outside the control of government include all of the following EXCEPT:

A) confiscation.
B) strikes.
C) extortion.
D) revolution.

Question 31

In the United States,the _____ excludes from antitrust prosecution those firms that are cooperating to develop foreign markets.

A) Gramm-Leach-Bliley Act
B) Sarbanes-Oxley Act
C) Webb-Pomerene Act
D) Celler-Kefauver Act

Question 32

_____ refer to governmental actions that distort the free flow of trade in goods,services,or ideas for decidedly adversarial and political,rather than strictly economic,purposes.

A) Gray market activities
B) Tariffs and barriers
C) Trade sanctions and embargoes
D) Expropriation and confiscation

Question 33

Which of the following is true about import controls?

A) Nontariff barriers like voluntary restraint agreements are self-imposed restrictions and cutbacks aimed at avoiding punitive trade actions from the host.
B) Import controls generally exact a small price from domestic consumers.
C) The social cost of import controls benefits the economy in all situations.
D) Import controls improve the productivity of an industry, provide it with a level of safety and a cushion of increased income, and lead the drive for technological advancement.

Question 34

Which of the following is true about expropriation?

A) Its use as a policy tool has increased significantly over time.
B) It does not provide compensation to the former owners.
C) It immediately transfers a certain amount of wealth and resources from foreign
Companies to the host country.
D) It provides satisfactory settlements and thus encourages foreign firms to invest in the country.

Question 35

When products and goods enter a market in ways not desired by their manufacturers,this is known as _____ market activities.

A) black
B) white
C) green
D) gray

Question 36

_____ are designed to deny or at least delay the acquisition of strategically important goods by adversaries.

A) Antidumping laws
B) Export control systems
C) Voluntary restraint agreements
D) Domestication activities

Question 37

Which of the following is NOT a method of controlling imports?

A) Confiscation
B) Quota systems
C) Voluntary restraint agreements
D) Tariffs

Question 38

As required by government mandate,anyone wishing to export a product from the United States needs a(n)_____.

A) extended collective license
B) quasi-contract
C) voluntary export restraint agreement
D) export license

Question 39

Confiscation differs from domestication in that confiscation:

A) does not involve transfer of ownership from the foreign firm to the host country.
B) offers compensation in the form of local, nontransferable currency.
C) does not provide compensation to the foreign firm.
D) provides compensation on the book value of the firm.

Question 40

_____ results in a transfer of ownership from the foreign firm to the host country without providing compensation for the firm.

A) Defalcation
B) Injunction
C) Confiscation
D) Structuring

Question 41

Which act passed in 1977 made it a crime for U.S.firms to bribe foreign officials for business purposes?

A) The Organized Crime Control Act
B) The Racketeer Influenced and Corrupt Organizations Act
C) The Foreign Corrupt Practices Act
D) The Foreign Intelligence Surveillance Act

Question 42

Which of the following refers to a legal entitlement of exclusive rights to use an idea,piece of knowledge,or invention?

A) Domestication
B) Embargoes
C) Intellectual property
D) Functional lubrication

Question 43

The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS):

A) includes maximum standards for copyrights, appellations of geographic origin, industrial designs, trademarks, and trade secrets.
B) gives developing countries more time to implement changes related to intellectual property.
C) requirements apply equally to all WTO member states except emerging countries.
D) gives individuals and companies the right to own and sell property as they see fit.

Question 44

Which of the following is true about the legal procedures preferred by businesses?

A) Businesses who opt for conciliation fear discrimination in foreign countries and therefore avoid it.
B) Arbitration often involves extensive delays and is very costly, and hence is not preferred by businesses.
C) Litigation results in much quicker decisions than arbitration, and hence is preferred by businesses.
D) Arbitration results in much quicker decisions, and hence is more preferred by businesses.

Question 45

Explain the different problems encountered by policymakers when trying to administer import controls.

Question 46

Describe political risk and the different types of political risk.

Question 47

Which 2002 law protects investors by improving the accuracy and reliability of corporate disclosures,and also covers issues like corporate responsibility,financial transparency,and accounting oversight?

A) The Glass-Steagall Act
B) The Aldrich-Vreeland Act
C) The Gramm-Leach-Bliley Act
D) The Sarbanes-Oxley Act

Question 48

Which of the following statements about legal differences and restraints is true?

A) All countries conform to the same laws, and they are implemented similarly as well.
B) Many common law countries have adopted commercial codes to govern the conduct of business.
C) Countries with the common law system have much more rigid laws than those with the code law system.
D) The enforcement of laws have the same effect on national and on foreign marketers.

Question 49

Which of the following best describes "ehrbarer Kaufmann"?

A) It refers to a legal entitlement of exclusive rights to use an idea, piece of knowledge, or invention.
B) It refers to governmental actions that distort the free flow of trade in goods, services, or ideas for decidedly adversarial and political, rather than strictly economic, purposes.
C) It is a key legal perspective that has faith and belief as its key focus and is also a mix of societal, legal, and spiritual guidelines.
D) It focuses on maintaining long-term successful international trade efforts with distant and often unfamiliar people.

Question 50

Briefly explain the effects of terrorism on business.

Question 51

The relationships among stakeholders that determine and control the strategic direction and performance of an organization are called _____.

A) investor relations
B) corporate governance
C) ownership risk
D) functional lubrication

Question 52

Many adverse governmental actions are a result of a host country's opposition to _____.

A) domestication
B) colonial remnants
C) independence
D) nationalism

Question 53

Which of the following is true about common law?

A) It depends primarily on written statutes and codes.
B) It is based on Roman law and is found in the majority of the nations of the world.
C) Countries with the common law system have much more rigid laws than those with the code law system.
D) It is based on tradition and depends on precedent and custom.

Question 54

Code law differs from common law in that code law:

A) is based solely on tradition.
B) originated in England.
C) is based on a comprehensive set of written statements.
D) depends on precedent and custom.

Question 55

The phenomenon when buyers become uncertain about the state of their nation's economy,leading to a sharp reduction in demand for both consumer and industrial goods is known as _____.

A) the chill effect
B) functional lubrication
C) domestication
D) expropriation

Question 56

Laws that prohibit below-cost sales of products are known as _____ laws.

A) antidiscrimination
B) antikickback
C) antidumping
D) antideficiency

Question 57

Which of the following is a characteristic of a market-based corporate governance regime?

A) Combined management and ownership
B) Dispersed ownership
C) State ownership of enterprise
D) Family control

Question 58

State ownership of enterprise,lack of transparency,and no minority influence are characteristics of a _____ corporate governance regime.

A) market-based
B) bank-based
C) family-based
D) government affiliated