Question 1

Select the correct order,going from low to high total impact on an MNE,of the following types of political risk: (1)procedural political risks,(2)systemic political risks,(3)distributive political risks,(4)catastrophic political risks.

Accepted Answer

The answer of Select the correct order,going from low to...

Question 2

Which of the following is NOT a component of modern legal systems?

Accepted Answer

Private law is actually a component of modern legal systems, focusing on relationships between individuals, such as contracts and property law, rather than being something outside of these systems. The question asks for what is NOT a component, and since private law is a component, it does not fit as the correct answer to the question as phrased. However, all options listed (constitutional law, criminal law, commercial law, and private law) are indeed components of modern legal systems, making the premise of the question misleading.

Question 3

Which of the following was a notable trend in political systems during the second half of the 20th century and beginning of the 21st century?

Accepted Answer

The second half of the 20th century and the beginning of the 21st century saw a notable trend towards democratization, as many countries transformed from totalitarian systems to more democratic forms of government. This can be seen in events such as the fall of the Soviet Union and the end of apartheid in South Africa.

Question 4

The march toward greater political freedoms and more expansive civil liberties,beginning in the 1970s,strongly fueled a sense of ________.

Accepted Answer

The march toward greater political freedoms and more expansive civil liberties implies a movement towards democracy, making the inevitability of democracy a suitable choice. A, C, and D are not relevant or supported by the given information.

Question 5

Recently,the Economist Intelligence Unit investigated the status of democracies around the globe.Relying on 60 indicators that focus on the performance of free elections,civil liberties,government functioning,political participation,and political culture in a country,the study found that ________.

Accepted Answer

The study found that nearly half of the world's democracies qualify as "full" or "flawed" democracies, indicating that there are still significant areas of improvement needed in terms of free elections, civil liberties, government functioning, political participation, and political culture in these countries. This suggests that democracy is not a perfect system and requires ongoing efforts to strengthen and maintain it.

Question 6

Which of the following types of political risks often is caused by ethnic conflict or civil disorder and includes those random political developments that adversely affect the operations of all companies in a country?

Accepted Answer

Catastrophic political risk refers to extreme political events such as ethnic conflict or civil disorder that can disrupt the operations of all companies within a country.

Question 7

________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return.

Accepted Answer

Political risk is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return. Governmental risk refers to the risk of changes in laws, regulations, or policies that may negatively impact a business. Operating risk pertains to the risk of losses arising from the day-to-day operations of a business. Transaction risk is the risk of loss from a change in exchange rates. Therefore, political risk is the best choice for this definition.

Question 8

The pushback against democracy has powered a rise in totalitarianism,a situation that is likely to include which of the following?

Accepted Answer

The pushback against democracy often leads to the increasing adoption of the principles of the rule of man, where one person or group has unchecked power and authority instead of the rule of law. This can lead to a rise in totalitarianism and the suppression of state-control in the direction of legal activities. The other options are less likely outcomes of the pushback against democracy.

Question 9

A U.S.firm with manufacturing facilities in Nigeria will most likely be faced with a ________ legal system.

Accepted Answer

Nigeria has a mixed legal system influenced by both English common law and Islamic law, as well as traditional customary law. Therefore, a U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a mixed legal system.

Question 10

A system of ________ law sets the framework for the system of government and defines the authority and procedure of political bodies to establish laws and regulations.

Accepted Answer

Constitutional law sets the framework for the system of government and defines the authority and procedure of political bodies to establish laws and regulations. Criminal law relates to the punishment of crimes, civil law deals with disputes between individuals and organizations, and commercial law deals with business and commerce.

Question 11

Ian,a financial manager,is preparing to transfer to Germany where he will serve as an expatriate manager of his employer's European office.With which type of legal system will Ian most likely have to deal with in Germany?

Accepted Answer

Germany uses a civil law legal system which is based on written laws and codes, as opposed to common law systems which rely on judicial precedent.

Question 12

The ________ of a country specifies the rules that regulate behavior,the processes by which laws are enforced,and the procedures used to resolve grievances.

Accepted Answer

The legal system of a country is responsible for regulating behavior, enforcing laws, and resolving grievances through established procedures. The political system specifies how power is distributed within the government and how policies are made, while political philosophy refers to the set of beliefs about the nature of government and society that guide a political system or individual leaders. Philosophical orientation is a broader term that encompasses a person's overall worldview and beliefs about the nature of reality, morality, and existence.

Question 13

A ________ law system is based on a systematic and extensive codification of laws and puts political officials in charge of specifying accessible,detailed,and written law that applies to all citizens.

Accepted Answer

A civil law system is based on a written set of laws developed by political officials. The laws are codified and accessible to all citizens, making the legal system more transparent and predictable. The system is used in many countries around the world, including France and Germany. In contrast, a customary law system is based on unwritten traditions and practices, while a common law system relies on precedent and judicial decisions. A theocratic law system is based on religious laws and principles.

Question 14

Which of the following is most likely a characteristic of a "partly free" country,such as Guatemala,Kenya,or Malaysia?

Accepted Answer

A "partly free" country, according to Freedom House, has some democratic qualities, but also exhibits significant shortcomings in regards to political rights and civil liberties. Weak rule of law often characterizes such countries, as corruption, lack of transparency, and government interference in the judiciary system can all contribute to an uneven application of the law. While fair election procedures and respect for civil liberties may exist to some extent, they are often limited or undermined by the weak rule of law. Strict religious constraints, on the other hand, are not necessarily a defining characteristic of a "partly free" country.

Question 15

Which of the following is a condition that powered the worldwide spread of democracy from 1970 onward?

Accepted Answer

The spread of information and communications technologies, such as the internet and satellite television, allowed citizens in non-democratic countries to access uncensored information, including information from foreign sources. This broke down the government's ability to control the flow of information and made it harder to maintain authoritarian control, leading to a greater push for democratic reforms.

Question 16

A ________ law system is based on tradition,judge-made precedent,and usage and assigns a preeminent position to existing case law as a guide to dispute resolution.

Accepted Answer

A common law system is based on tradition, judge-made precedent, and usage. It assigns a preeminent position to existing case law as a guide to dispute resolution. The other options (A) theocratic, (C) customary, and (D) civil law systems have their own unique characteristics and are not based solely on common law principles.

Question 17

________ political risks arise from political actions,such as public corruption or a partisan judicial system,that interfere with transactions between sellers and buyers and that can significantly raise the costs of getting things done.

Accepted Answer

Procedural political risks are specifically related to political actions that can interfere with the normal procedures of transactions, such as corruption or issues within the judicial system, making processes more cumbersome and expensive.

Question 18

In which of the following countries would business activity,given its status as a "not free" marketplace,be under the greatest government control?

Accepted Answer

Vietnam has a socialist-oriented market economy where the government controls the majority of key sectors such as banking, finance, and energy. The state owns many major companies, and restrictions on foreign investment and private enterprise are significant. Therefore, business activity in Vietnam is under the greatest government control compared to the other options.

Question 19

Which of the following statements about approaches to political risk management is NOT true?

Accepted Answer

Passive political risk management actually encourages managers to fully or partially hedge their bets against exposure to political hazards.

Question 20

Barkely Enterprises,a U.S.manufacturer,received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia.Which of the following types of support did Barkely most likely receive from OPIC?

Accepted Answer

Overseas Private Investment Corporation (OPIC) primarily provides political risk insurance to US companies doing business in foreign countries. Therefore, Barkley Enterprises most likely received political risk insurance from OPIC to mitigate risks associated with expanding operations into Saudi Arabia.

Quiz 3: The Political and Legal Environments Facing Business

Select the correct order,going from low to high total impact on an MNE,of the following types of political risk: (1) procedural political risks,(2) systemic political risks,(3) distributive political risks,(4) catastrophic political risks.