Deck 3: Strategies for International Business

Question 1

The various forms of doing business in the United States are organized and controlled by federal law.

Answer 1

False

Question 2

A foreign corporation doing business in the United States through a branch office is liable for the debts incurred by that branch office.

Answer 2

True

Question 3

In a general partnership, only certain partners have unlimited liability, the rest have limited liability up to their capital contributions.

Answer 3

False

Question 4

In a limited partnership, the limited partners may not take part in the day-to-day management of the venture if they do not want to forfeit their limited liability.

Question 5

Most U.S. states differentiate between corporations controlled by a U.S. resident and those controlled by a foreign entity.

Question 6

Setting up a foreign representative office usually requires a deeper business and legal involvement in a foreign country than establishing a branch office.

Question 7

In general, a branch office may not negotiate or enter into contracts in the host country.

Question 8

20% ownership of the voting securities of a business enterprise is generally considered the minimum amount necessary for 'control' of that enterprise.

Question 9

Currently, there is no European Union Directive that requires member nations to follow a particular corporate form.

Question 10

The German corporate structure places a larger emphasis on shareholder interests and a secondary emphasis on interests of the employees.

Question 11

The Japanese corporate form consists of a two-tiered board of directors, the supervisory board and the management board.

Question 12

In Indonesia, only Indonesians or Indonesian companies are allowed to act as agents for foreign exporters.

Question 13

In the United States, domestic and foreign merchandise may enter into a free trade zone without a formal customs entry.

Question 14

Foreign free trade zones are found exclusively in the United States.

Question 15

There is a strong public policy in U.S. corporate law for holding corporate officers personally liable for actions committed on behalf of the corporation.

Question 16

The theory of enterprise liability is not widely accepted by U.S. courts.

Question 17

A type of joint venture known as the business alliance joint venture is generally undertaken when a fluid, long-term relationship is envisioned by parties to the agreement.

Question 18

Most foreign countries do not actively regulate joint venture transactions.

Question 19

In a franchise agreement, the franchisee pays royalties fees in exchange for the right to use and/or manufacture copyrighted, patented or service-marked materials identifying the enterprise.

Question 20

Under U.S. common law, a franchisor has a fiduciary responsibility to its franchisees.

Question 21

In the U.S., a franchisor generally has the ability to terminate the franchise agreement at will.

Question 22

Although franchising is allowed in most countries, many countries do not have laws that specifically recognize the franchise form of doing business.

Question 23

In a master franchise arrangement, the contractual relationship always runs between the sub-franchisee and the sub-franchisor.

Question 24

In order to obtain purchase a company in a European Union country, a foreign investors must obtain clearance from Directorate IV of the European Commission.

Question 25

The international sales price for a good or service is the transfer price.

Question 26

A _________ can be defined as an association between two or more parties with an agreement to share the profits and often the management of a project.

A) Joint venture
B) Corporation
C) Branch office
D) Limited liability partnership

Question 27

One of the main advantages of a general partnership over the corporate form is:

A) General partners have less liability than shareholders
B) The problem of double taxation is avoided because profits pass through to the partners
C) Both A & B
D) None of the above

Question 28

A form of business that provides the flexibility of a partnership and the limited liability of the corporation is:

A) Limited partnership
B) General partnership
C) Limited liability company
D) None of the above

Question 29

In the United States, the most common form of doing business for the foreign investor is:

A) Joint venture
B) Corporation
C) Limited partnership
D) Branch office

Question 30

A business form in which two or more parties agree to perform certain tasks without creating a separate third entity is:

A) Limited liability company
B) Limited partnership
C) Contractual joint venture
D) General partnership

Question 31

A form of business that generally allows a company to establish a foreign presence without subjecting itself to foreign regulations or taxation is:

A) Branch office
B) Representative office
C) Joint venture
D) Subsidiary

Question 32

The Chinese Law on Joint Ventures Using Chinese and Foreign Investment requires:

A) Establishment of a Chinese corporation
B) Foreign participant must provide a minimum of 25% of the capital
C) Ownership rights of the foreign investor cannot be transferred
D) A & B only
E) All of the above

Question 33

The main advantage in establishing a foreign subsidiary as opposed to a branch office is:

A) Parent company has limited liability
B) Transfer pricing allows for the reduction of tax burden
C) Reduced disclosure of confidential information to third parties
D) Reduction in host country regulations affecting the business

Question 34

Corporation law in the United States is most similar to corporation law in:

A) China
B) Germany
C) France
D) Japan

Question 35

The fundamental vehicle for financing corporate expansions in Japan is:

A) Stock offerings
B) Bond offerings
C) Bank financing
D) Internal reserves

Question 36

The German practice in which employees select half of the corporate board of directors is known as:

A) Shareholder maximization
B) Codetermination
C) Blended model of corporate governance
D) Shareholder's council

Question 37

Shareholder power is the dominant vehicle for corporate decision-making in:

A) Japan
B) United States
C) Germany
D) China

Question 38

The view that a corporation's primary objective should be corporate profit and shareholder gain is most closely identified with which country:

A) United States
B) Japan
C) France
D) Germany

Question 39

Typically, the board of directors in large, Japanese firms is characterized by:

A) Small size
B) Its independent and separate nature
C) Its two-tiered structure
D) The mixing of management and director roles

Question 40

Directorate IV of the European Commission considers which of the following factor/s when determining whether a merger or acquisition will create a dominant position (monopoly) in the market:

A) The geographic scope of the market
B) The market shares of the companies
C) Whether the acquisition/merger has a community dimension
D) A & B only
E) All of the above

Question 41

Although American corporate law generally protects shareholders from being personally liable for the actions of the corporation, American law does allow the courts to disregard the corporate form through the doctrine of:

A) Enterprise liability
B) Piercing the corporate veil
C) Holder in due course
D) None of the above

Question 42

In a joint venture agreement, a/an ________ clause is one in which the partners agree to be responsible on multiparty guarantees only to the proportion of their shareholdings.

A) Extraordinary decisions clause
B) Purposes clause
C) Counter-indemnity clause
D) Exceptions clause
E) None of the above

Question 43

A clause in a franchise agreement that specifies a geographic area in which a franchisor may not compete with a franchisee is known as:

A) Renewal clause
B) Territorial clause
C) Operational standards clause
D) Site selection clause

Question 44

A clause in a franchise agreement that requires the franchisee to defend the franchisor against any liability claims arising from or related to its operation of the franchise is:

A) Hold harmless clause
B) Insurance clause
C) Franchisee review clause
D) None of the above

Question 45

The problem of exclusive franchise territories violating European anti-trust laws was alleviated by the passage of an EU:

A) Block exemption
B) Grant-back provision
C) Franchise Federation Act
D) Both B & C
E) None of the above

Question 46

The Russian form of corporation is known as:

A) Municipal enterprise
B) Association of enterprises
C) State enterprise
D) Joint-stock company
E) None of the above

Question 47

In Raymond Dayan v. McDonald's Corporation, the court ruled that:

A) McDonald's did not terminate the franchise agreement in good faith
B) McDonald's did not have just cause to terminate the franchise agreement
C) McDonald's fulfilled its responsibilities to Dayan under U.S. law
D) Dayan did not have standing to bring suit under U.S. law

Question 48

A franchise arrangement entered into with a sub-franchisor in order to develop large territories is:

A) Operational license agreement
B) Master franchise agreement
C) Joint franchise agreement
D) Territorial franchise agreement

Question 49

The Guide to International Master Franchise Arrangements is published by:

A) International Institute for the Unification of Private Law (UNIDROIT)
B) International Chamber of Commerce (ICC)
C) World Trade Organization (WTO)
D) EU Commission on Franchise Agreements

Question 50

Describe the various alternatives for conducting business available to foreign corporations operating in the United States. Discuss the advantages and disadvantages of each.

Question 51

Discuss the activities of a representative office, joint venture, branch office, and foreign subsidiary.

Question 52

Describe how a company increases the depth of its business and legal involvement in a country as it moves from a representative office to a full-scale foreign subsidiary.

Question 53

Describe how a foreign trade zone works. When might one want to utilize a foreign trade zone and what are some of the advantages?