Deck 4: The political and legal environment

Question 1

The Copenhagen Summit held in 2009 was seen a major success.

Answer 1

False

Question 2

An embargo and a trade sanction are two terms used interchangeably to mean a governmental action that distorts the free flow of trade in goods, services or ideas for decidedly adversarial and political, rather than strictly economic, purposes.

Answer 2

True

Question 3

Since the US economy is so much larger than that of any other country, sanctions provide a way of inflicting great damage, especially on small countries such as Cuba, Iraq and North Korea, without the USA itself suffering commensurate pain or danger of retaliation.

Answer 3

True

Question 4

Companies are automatically restricted from trading in items under the Wassenaar Arrangement because this is the responsibility of participating states, which must proscribe prohibited items under their national laws.

Question 5

Trade sanctions have been used quite frequently and successfully in times of war or to address specific grievances.

Question 6

Three major types of political risk can be encountered: ownership risk, tax risk and transfer risk.

Question 7

Expropriation is the seizure of foreign assets by a government with payment of compensation to the owners.

Question 8

One reason that no systematic (trade)sanctioning policy developed in the United Nations was because 'peace' and 'breach of peace' are seldom perceived in the same way by all members.

Question 9

According to the Transparency International Corruption perception index, Australia is the most transparent country in the world.

Question 10

'Grey market' is another term meaning 'parallel exporting'.

Question 11

Intellectual property rights (IPR)is not properly regulated by international laws.

Question 12

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

Question 13

Export control systems are designed to at least delay the acquisition of strategically important goods by enemies.

Question 14

A boycott is the same as an anti-trust measure.

Question 15

Violations of intellectual property rights do not occur in developed economies.

Question 16

When the United Nations approves trade sanctions for a particular country, all countries must abide by this decision although permanent members of the Security Council can veto efforts to impose sanctions.

Question 17

Sanctions remain contentious both in terms of efficacy and equity because they seldom achieve the stated objectives, and they hurt the powerless and vulnerable rather than the elite.

Question 18

There is no enforceable body of international law in existence.

Question 19

Export controls are primarily a US foreign policy instrument.

Question 20

Economic sanctions can be used by the USA to extend political control over foreign companies operating abroad, with or without the support of their local government.

Question 21

Goods that one country exports to another country and that can have military and civilian uses are called:

A)mi-ci products.
B)strategic concerns.
C)conflict enhancement products.
D)dual-use items.

Question 22

Which of the following is not a type of political risk?

A)Ownership risk
B)Operating risk
C)Transfer risk
D)Currency risk

Question 23

The seizure of foreign assets by a government with payment of compensation to the owners is referred to as:

A)expropriation.
B)confiscation.
C)transfer risk.
D)domestication.

Question 24

Home countries may implement special laws and regulations to ensure that the international business behaviour of their firms is conducted within the:

A)legal, moral and ethical boundaries considered appropriate.
B)city, county and state boundaries as defined by local governments.
C)social and cultural boundaries of the local government.
D)safety of the home nation's federal laws.

Question 25

All of the following statements are correct, except:

A)A key legal perspective that survives today is that of theocracy, which has faith and belief as its key focus and is a mix of societal, legal and spiritual guidelines.
B)Common law is based on tradition and depends less on written statutes and codes than on precedent and custom.
C)Code law is based on a comprehensive set of written statutes.Countries with code law try to spell out all possible legal rules explicitly.
D)Sanitary and phytosanitary regulations can be used as a non-technical trade barrier.

Question 26

Three major types of political risk can be encountered: ________ risk, which exposes property and life; _________ risk, which refers to interference with the ongoing operations of a firm; and _______ risk, which is mainly encountered when attempts are made to shift funds between countries.

A)ownership; operating; transfer
B)transfer; operating; ownership
C)ownership; transfer; operating
D)operating; ownership; transfer

Question 27

Which of the following statements about climate change is correct?

A)There is not much controversy about the causes and effects of climate change.
B)Greenwash is a strategy used by company that truly cares for the environment.
C)Locavores are people who only eat local food.
D)The effect of this environment is obvious and predictable.

Question 28

Government actions that distort the free flow of trade in goods, services and ideas for decidedly adversarial and political, rather than strictly economic, purposes are:

A)punitive and discriminatory.
B)controlled and erratic.
C)embargoes and trade sanctions.
D)unionised and secular.

Question 29

The effect of politics on international marketing is determined by both the ________ political relations between ________ and home countries and the _________ agreements governing the relations among groups of countries.

A)unilateral; host; unilateral
B)bilateral; host; unilateral
C)bilateral; domestic economy; unilateral;
D)bilateral; host; multilateral

Question 30

Which of the following governmental activities are not of major concern to the international marketer?

A)National infrastructure programs
B)Embargoes or trade sanctions
C)Export and import controls
D)The regulation of international business behaviour

Question 31

Dual-use products pose a problematic scenario for countries because:

A)most nations are not in the defence business.
B)it is hard for nations to agree on what is a military use and what is a civilian use.
C)all products cannot be screened by the United Nations.
D)trade embargoes disallow certain products to be used by major suppliers.

Question 32

For the international marketer, which of the following restrictions may mean that the most efficient sources of supply are not available because government restrictions restrict importation from those sources?

A)Import licences
B)Grey market activities
C)Export controls
D)Import controls

Question 33

Political risks are best described as any governmental actions or politically motivated events that:

A)suggest the firm is legally responsible for specific wrongdoings.
B)negatively affect the firm's long-run profitability or value.
C)interfere with the personal safety of the firm's employees.
D)harm the firm's capacity to meet consumer demands.

Question 34

Which of the following is not a determinant for the US export control system?

A)National security
B)Long-term demand
C)Foreign policy
D)Nuclear proliferation

Question 35

Where do violations of intellectual property rights occur?

A)Anywhere someone infringes upon the rights of companies and individuals
B)In developing economies
C)In Asia, South America and Africa
D)Both B and C

Question 36

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

A)only nations who are members of the UN can embrace it.
B)any permanent member of the Security Council can veto the sanctions.
C)all nations must comply.
D)a new set of rules must be written for the specific infractions.

Question 37

Which of the following is not a difference between functional lubrication and individual greed?

A)The amount for individual greed is usually a substantial amount in US dollars.
B)The express fee is small and standardised.
C)The express service is available to everyone, with few exceptions.
D)The express fee does not stay in the hands of the official who receives it but is passed on to others involved in the processing of the documents.

Question 38

Which of the following is not a problem with the unilateral imposition of sanctions?

A)Typically they are unsuccessful in producing the desired result.
B)Sanctions make it more difficult or expensive for the sanctioned country to obtain goods, yet the purported objective is almost never achieved.
C)The USA can apply diplomatic or commercial pressure to produce compliance by foreign countries and companies.
D)In order to work, sanctions need to be imposed multilaterally.

Question 39

A key legal perspective that has faith and belief as its key focus and is a mix of societal, legal and spiritual guidelines is:

A)theocracy.
B)common law.
C)code law.
D)anti-dumping law.

Question 40

When goods enter a market in ways not desired by their manufacturers, this is known as:

A)embezzlement.
B)soft goods solicitation.
C)fortressing.
D)grey market.

Question 41

Which of the following statements is correct?

A)Germany is at the top of the Transparency International Corruption Perceptions index.
B)Brazil and India are near the bottom of the Transparency International Corruption Perceptions index.
C)New Zealand is one of the most transparent countries in the world.
D)None of the above

Question 42

Which of the following is not a major area in which nations attempt to govern the international marketing activities of its firms?

A)Boycotts
B)Ethics
C)Corruption
D)Distribution systems

Question 43

__________ is based on tradition and depends less on written __________ than on precedent and custom.On the other hand, __________ is based on a ______________ set of written _________.

A)Code law; statutes and codes; common law; non-comprehensive; statutes
B)Common law; statutes and codes; code law; non-comprehensive; statutes
C)Common law; statutes and codes; code law; comprehensive; statutes
D)Civil law; statutes and codes; common law; comprehensive; statutes

Question 44

Which of the following is not considered a political risk?

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

Question 45

One thorny issue that can cause difficulties for companies seeking to utilise FTAs is ___________.These are a crucial aspect of FTAs, because they determine what products are covered.

A)Rules of imports
B)Rules of origin
C)Rules of destination
D)Rules of law

Question 46

Bribery can be seen as:

A)a reasonable way of doing business internationally.
B)corruption.
C)a crucial business pledge.
D)a reasonable way of doing business internationally and a crucial business pledge.

Question 47

Which of the following was not mentioned in the text as a critical issue for international marketers in the areas of general standards of behaviour and ethics?

A)Global warming
B)Saving whales
C)Pollution
D)Moral behaviour

Question 48

When firms refuse to do business with someone, often for political reasons, this is called:

A)image tarnishing (anti-trust action).
B)speculation.
C)boycotting.
D)substantiation.

Question 49

On occasion, the international marketer may be caught between clashing home and host country laws.How should the marketer handle such a situation?

Question 50

Firms that engage in questionable practices may be subject to all but which of the following?

A)Outward economic compromise
B)Public scorn
C)Consumer boycotts
D)Investor scrutiny

Question 51

Which of the following is incorrect?

A)The USA has developed into an increasingly litigious society in which institutions and individuals are quick to take a case to court.
B)Japan, for example, has particularly strict health standards that affect the import of pharmaceuticals.
C)Sanitary and Phytosanitary (SPS)regulations are of particular concern to exporters of foodstuffs, such as Australia and New Zealand.
D)The enforcement of laws may not have a different effect on national and on foreign marketers.

Question 52

In which legal systems do courts adopt precedents and customs to fit the cases, allowing the marketer a better idea of the basic judgment likely to be rendered in new situations?

A)Theocracy
B)Common law
C)Code law
D)Anti-dumping law

Question 53

Explain the implications of climate change to international marketers.

Question 54

Why are the political and legal environments in foreign countries important to the international marketer?

Question 55

Coups have occurred in all of the following countries except:

A)Armenia
B)Ghana
C)Ethiopia
D)Venezuela

Question 56

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, this is called:

A)bribery.
B)generalisation.
C)domestication.
D)pinpointing.

Question 57

When a country transfers the ownership of the foreign firm from the firm to itself (the country), this is known as:

A)obfuscation.
B)fraternalism.
C)confiscation.
D)asset seizure.