Deck 5: The Political, Legal, and Regulatory Environments

Question 1

After Fidel Castro took power in Cuba in 1959, his government seized control of American property without paying compensation. Coca-Cola, DuPont, Texaco, and dozens of other American companies have filed claims against Cuba seeking financial settlements. Which of the following terms most specifically describes the action Castro took against these companies?

A)nationalization
B)confiscation
C)expropriation
D)internationalization
E)deportation

Answer 1

B

Question 2

As the ruble's value fell through most of 2014, Russian consumers rushed to change rubles to dollars and euros and to buy big-ticket items such as big-screen TVs and luxury cars.

Answer 2

True

Question 3

The high level of political risk currently evident in Russia can be attributed in part to excessively low taxes on business operations.

Answer 3

False

Question 4

If a foreign company is taken over by the host country government, and some form of compensation is paid, "confiscation" has occurred.

Question 5

Categories of political risk listed by EIU (Economist Intelligence Unit)include all of the following except:

A)war.
B)political turmoil.
C)bureaucracy.
D)corruption.
E)crime.

Question 6

What do value added taxes (VAT)encourage in countries such as China?

A)They make trademarks and copyrights more valuable.
B)They result in cross-border shopping and smuggling.
C)They make it harder to bribe officials.
D)They protect companies from antitrust scrutiny.
E)Global companies refrain from offering bribes.

Question 7

British Petroleum, British Airways, and Rolls-Royce were some of the companies that were privatized under so-called Thatcherite economics.

Question 8

In Great Britain, the Wine and Spirit Association estimates that, on average, cars returning from France are loaded with 80 bottles of wine. This is most likely due to

A)trademarks and copyrights violation.
B)cross-border smuggling.
C)bribes accepted by officers.
D)antitrust scrutiny.
E)high excise and VAT taxes.

Question 9

Affluent Russians can now shop at Versace, Burberry, Bulgari, and other exclusive brands.

Question 10

As the ruble's value fell through most of 2014, European firms began to feel the effects.

Question 11

Some observers believe global market integration is enriching national economic sovereignty.

Question 12

The governmental action to dispossess a foreign company or investor is known as:

A)compensation.
B)confiscation.
C)expropriation.
D)internationalization.
E)nationalization.

Question 13

The high level of political risk currently evident in Russia can be attributed in part to:

A)changing of name of the country.
B)changing the national flag.
C)excessive loans from the International Monetary Fund (IMF).
D)participation in the WTO (World Trade Organization).
E)excessively high taxes on business operations.

Question 14

Bureaucracy is listed as a political risk category by:

A)BERI (Business Environment Risk Intelligence).
B)PRS Group.
C)EIU (Economist Intelligence Unit).
D)WTO (World Trade Organization).
E)OPIC (Overseas Private Investment Corporation).

Question 15

Any company doing business outside the home country should first carefully study the ________ in the target country.

A)political culture
B)nationalization
C)political risk
D)jurisdiction
E)sovereignty

Question 16

Terms like crony capitalism and kleptocracy refer to rampant corruption and bribery on the part of Putin loyalists.

Question 17

Despite the positive publicity, the phrases used to describe the arbitrary exercise of state power in Russia include all of the following except:

A)state capitalism.
B)political culture.
C)renationalization.
D)kleptocracy.
E)managed democracy.

Question 18

Which of the following statements does not reflect the changes that have taken place in Russia?

A)Russian shoppers spend billions each year on luxury goods, tourism, and foreign real estate.
B)Affluent Russians can shop at boutiques that offer Versace, Burberry, Bulgari, and other exclusive brands.
C)The Kremlin limits foreign investment in strategic industries such as oil.
D)In March 2014, Putin angered the West by annexing Crimea, a region that had been considered part of Ukraine.
E)Faced with a financial crisis and a test of his political will, Putin responded by blaming the protestors for Russia's problems.

Question 19

Various types of political risk insurance to U.S. companies is provided by:

A)BERI (Business Environment Risk Intelligence).
B)PRS Group.
C)EIU (Economist Intelligence Unit).
D)WTO (World Trade Organization).
E)OPIC (Overseas Private Investment Corporation).

Question 20

A Russian ban on European dairy imports has resulted in excess supplies of milk and falling prices for small-scale Lithuanian dairy producers.

Question 21

What happens if a nation has allowed a case against it to be brought before the ICJ (International Court of Justice)and then refuses to accept a judgment against it?

A)American Arbitration Association can be sought for justice.
B)UN Conference on International Trade Law can be approached.
C)International Chamber of Commerce will be another source for seeking justice.
D)European Court of Justice can be approached if the country is in the European Union.
E)The plaintiff nation can seek recourse through the UN Security Council.

Question 22

Located in The Hague, the International Court of Justice (ICJ)is the judicial arm of the:

A)United States
B)European Union.
C)United Nations.
D)Netherlands.
E)United Kingdom.

Question 23

Nippon Paper Industries was found guilty in a U.S. court of conspiring with other Japanese companies to raise fax paper prices in the United States under the antitrust laws. What are the implications of such a law, and how does it affect international business?

Question 24

The German civil-law tradition prevails in all of the following countries except:

A)Poland.
B)Hungary.
C)Czech Republic.
D)Scandinavia.
E)Germany.

Question 25

The ultimate threat a foreign government can pose toward a company is seizing assets. South Korea nationalized Kia, the nation's number three automaker, in the wake of the Asian currency crisis. How does this nationalization differ from expropriation and confiscation?

Question 26

India, Pakistan, Malaysia, Korea, and Japan have common-law jurisdictions.

Question 27

What type of international disputes would be taken before the International Court of Justice?

A)disputes between two nations
B)disputes between two companies
C)disputes between a company and a nation
D)disputes between a citizen of one country and a company from a different country
E)disputes between profit and non-profit organizations

Question 28

In a recent case, Revlon sued United Overseas Limited (UOL)in the U.S. District Court for the Southern District of New York for breach of contract. UOL countered by asking the court to dismiss the claim since they are not operating in that area. Revlon cited the presence of a UOL sign above the entrance to the offices of a New York company in which UOL had a 50-percent ownership. The court dismissed UOL's claim. This is an issue related to :

A)jurisdiction.
B)antitrust.
C)dilution of equity.
D)bribery and corruption.
E)intellectual property.

Question 29

Islamic law is a comprehensive code based in part on:

A)Anglo-Saxon common law.
B)Roman law and the Napoleonic Code.
C)the Uniform Commercial Code.
D)the Koran.
E)the French Civil Code.

Question 30

What are the differences between a patent, trademark, and a copyright? What is meant by counterfeiting?

Question 31

A "civil-law country" is one in which the legal system reflects the structural concepts and principles of the Roman Empire in the sixth century.

Question 32

In Malaysia and Saudi Arabia, it is common to see that restaurants have signs declaring that all food is "Halal." It is common that courts handle marriages, divorces, distribution of family assets, and business practices by the "Sharia" law. What are these tenets and how do they have an impact on international business?

Question 33

Any western country doing business in Malaysia or the Middle East should have an understanding of:

A)the French Civil Code.
B)Anglo-Saxon common law.
C)Islamic law.
D)the Uniform Commercial Code.
E)Roman law and the Napoleonic Code.

Question 34

The requirement that all restaurants declare that the meat is "halal" is based on Islamic Laws.

Question 35

When a company invents a product or service, it should have a right to defend its creativity with intellectual patents. However, there are some countries like Italy and China where piracy and copyright violations are common. How can a corporation prevent this by having some built-in measures in products and services?

Question 36

Explain giving examples as to why "Jurisdiction" plays an important role in global marketing?

Question 37

"Sharia" and "haram" are important concepts in civil-code laws, which are commonly practiced in Middle Eastern countries.

Question 38

The Uniform Commercial Code (UCC)is fully adopted by all U.S. states except:

A)Virginia.
B)North Dakota
C)Wisconsin.
D)Louisiana.
E)Montana.

Question 39

If a foreign company is taken over by the host country government, and some form of compensation is paid, "expropriation" has occurred.

Question 40

In West Africa, Burkina Faso, the Ivory Coast and Senegal are former French colonies, while Nigeria, Sierra Leone, and Ghana are former British colonies. Based on this information, which of the following would be correct?

A)Burkina Faso, the Ivory Coast and Senegal are civil-code countries, while Nigeria, Sierra Leone, and Ghana are common-law countries.
B)Burkina Faso, the Ivory Coast and Senegal are common-law countries, while Nigeria, Sierra Leone, and Ghana are civil-code countries.
C)West Africa, the Ivory Coast and Senegal are the only common-law countries.
D)All the West African nations mentioned are likely to be civil-code countries.
E)All the West African nations mentioned are likely to be common-law countries.

Question 41

Companies such as Caterpillar have been unable to protect critical innovations in Japan because:.

A)products very similar to those made by U.S. companies can be patented without fear of infringement.
B)the Japanese government enforces strict control over infringement rights for security reasons.
C)inventions that are based on software can be easily downloaded.
D)U.S. patent laws now harmonize with those in the EU as well as Japan.
E)patents in Japan are broader than those in the United States.

Question 42

A proposed merger between two Swiss-based global pharmaceutical companies, Ciba-Geigy AG and Sandoz AG, would be subject to review by regulators from which of the following?

A)European Commission
B)UN Conference on International Trade Law
C)International Chamber of Commerce
D)International Court of Justice
E)none of the above

Question 43

The company receiving the most U.S. patents in 2013 was:

A)Samsung Electronics.
B)IBM.
C)Microsoft.
D)Canon.
E)Panasonic.

Question 44

Research in Motion (RIM), a Canadian company which markets BlackBerry Messenger, is very popular with politicians and business people because it offers advance encryption that provides data security. This can be a disadvantage for some countries because:

A)it is too complex to understand.
B)governments use strict control for security reasons.
C)the software can be easily downloaded.
D)the accessibility is very poor.
E)there is competition from local manufacturers.

Question 45

Counterfeiting is:

A)the use of a formal legal document for illegal purposes.
B)the ownership of a written, recorded, performed or filmed creative work.
C)the unauthorized copying or production of a product.
D)the use of a product name that has different meaning than the original brand.
E)the use of a distinctive mark of a brand that is no longer producing the original brand.

Question 46

The unauthorized publication or reproduction of copyrighted work is referred to as:

A)associative counterfeit.
B)imitation.
C)mistake.
D)trade secrets.
E)piracy.

Question 47

Which of the following statements is correct?

A)The Paris Convention protects patents, the Berne Convention protects copyrights.
B)The Paris Convention protects copyrights, the Berne Convention protects patents.
C)The Berne Convention and Paris Convention are different names for the same thing.
D)Neither the Berne Convention nor the Paris Convention is concerned with intellectual property.
E)The International Union for the Protection of Literary and Artistic Property is different from the Berne Convention.

Question 48

In accordance with GATT, new U.S. patents are granted for a period of ________ years from the filing date.

A)10
B)17
C)20
D)27
E)30

Question 49

All of the following statements are true regarding services provided by Uber except:

A)in Brussels, a court fines drivers who use the service
B)in London and other major cities, drivers have staged demonstrations claiming unfair competition.
C)regulators in Germany succeeded in obtaining a temporary injunction banning the service.
D)Uber was banned in the Delhi region after a driver was accused of sexually assaulting a female passenger.
E)Uber is considered as an "information-society service" in 250 cities where it operates.

Question 50

In many parts of the world, sales of unauthorized videos of Hollywood movies cost the movie studios billions of dollars. When illegal copies of movies are made, what form of intellectual property has been wrongly appropriated?

A)patent
B)copyright
C)trademark
D)trade secrets
E)down loading

Question 51

Which of the following is true about revised U.S. patent laws?

A)Patents are valid for 17 years after the patent is granted.
B)Patents are valid for 17 years after the patent is filed.
C)Patents are valid for 20 years after the patent is granted.
D)Patents are valid for 20 years after the filing date of the application.
E)Patents are valid as long as the product is manufactured.

Question 52

Harley-Davidson has applied for federal protection of an unusual form of intellectual property; the "soul-pleasing rumble" produced by its motorcycles. What type of protection is Harley-Davidson seeking?

A)copyright
B)trademark
C)license
D)patent
E)trade dress

Question 53

Which of the following would constitute a copyright violation?

A)manufacturing and selling illegal videocassette copies of "Spiderman 2"
B)manufacturing and selling illegal copies of Levi "501" jeans
C)printing and selling illegal copies of Harry Potter books
D)A, B, and C are copyright violations.
E)A and B are copyright violations.

Question 54

Engineers at a company in a developing country study an American computer chip design, copy it, and produce identical chips that are then sold to local computer makers. What form of intellectual property has been wrongly appropriated?

A)patent
B)copyright
C)trademark
D)trade secrets
E)technological

Question 55

As part of their alliance relationship, Northwest Airlines and KLM Royal Dutch set air fare prices jointly and coordinate flight schedules. Normally, such behavior would be considered harmful to competition, but the U.S. government has granted the two airlines special exemptions from laws concerning:

A)intellectual property.
B)antitrust.
C)jurisdiction.
D)licensing.
E)arbitration.

Question 56

The European Commission has jurisdiction over European-based companies as well as non-European ones that generate significant revenues in Europe. If Microsoft applies in Europe, the Commission has a right to all of the following except:

A)it can block a proposed merger.
B)it can block a proposed joint venture.
C)it can approve with minor modifications.
D)it can demand substantial concessions before granting approval.
E)it can refer serious matters to the UN Security Council.

Question 57

Which of the following is true about protection of computer software?

A)Copyright laws protect both the actual code and the idea embodied in the code.
B)Patent laws protect both the actual code and the idea embodied in the code.
C)Patent laws protect the actual code, while copyright laws protect the idea.
D)Copyright laws protect the actual code, while patent laws protect the idea.
E)License protects both the actual code and the idea embodied in the code.

Question 58

A formal legal document that gives an inventor the exclusive right to make, use, and sell an invention for a specified period of time is known as a:

A)patent.
B)copyright.
C)trademark.
D)trade secret.
E)trade dress.

Question 59

Uber's rapid growth is an example that the ________ is gaining traction.

A)digital technology
B)collaborative consumption
C)ride sharing
D)transport convenience
E)tourism

Question 60

In 2005, representatives from several wine regions in the United States and the EU signed a Joint Declaration to Protect Wine Place & Origin. In addition, a Wine Accord signed by the United States and EU bans the:

A)use of alcohol in public places.
B)purchase of wine from country of origin.
C)misuse of place names by marketers of wine products that do not originate in those places.
D)misuse of labels which does not include the origin of ingredients.
E)use of word "champagne" on wine made in the United States.

Question 61

Consten, a French company, had exclusive rights to import and distribute German Grundig's electronic products into France. One of the competitors started bringing "parallel imports" into France illegally, importing Grundig product bought from a foreign supplier. Which of the following does not represent an action taken by different legal bodies?

A)Consten's complaint was upheld by two French courts.
B)The Paris Court of Appeals suspended the judgment of the French courts.
C)The Paris Court of Appeal's judgment was based on pending a ruling by the European Commission.
D)The European Commission ruled against Consten on the grounds that territorial protection proved to be damaging to the Common Market.
E)The European Commission ruled that German Grundig was in violation of the laws of the Common Market.

Question 62

According to Transparency International's Corruption Perceptions Index scores for 2014, the country which was listed as most corrupt was:

A)Iraq.
B)Uzbekistan.
C)Chad.
D)Afghanistan.
E)Somalia.

Question 63

A key issue is global patent protection for software. Although copyright law protects the computer code, it does not apply to the idea embodied in the software.

Question 64

According to U.S. laws, there is no restriction on remittances of royalties received abroad based on the commercial negotiation between licensor and licensee.

Question 65

For years, Coca-Cola Corporation did not enter India since the government wanted some kind of disclosure of their trade secrets. Why are trade secrets so important and what happens if a licensee or a government gains access to the licensor's trade secret?

Question 66

OPEC can be considered as a "cartel" which is a group of separate companies that collectively:

A)sets prices, controls output, or takes other actions to maximize profits.
B)dictates how other countries should use their products.
C)produces more products in order to beat the competition.
D)conducts activities that are considered illegal in the United States.
E)works on forming a union against management of other companies.

Question 67

The following criminal penalties may be imposed for violations of the FCPA'S (Foreign Corrupt Practices Act)antibribery provisions except:

A)corporations are subject to a fine of up to $2,000,000.
B)officers, directors, stockholders, employees, and agents are subject to a fine of up to $100,000.
C)fines imposed on individuals can be paid by their employer or principal.
D)the fines may be much higher, up to twice the benefit sought by the defendant.
E)in addition to fines, there may be imprisonment for up to five years.

Question 68

The TRIPs agreement requires signatory countries to protect against acquisition, disclosure, or use of trade secrets "in a manner contrary to honest commercial practices."
TRUE

Question 69

The U.S. Justice Department objected to a recent patent license agreement between S.C. Johnson & Sons and Bayer AG. The antitrust unit at the Justice department objected to:

A)the duration of the license.
B)the amount of royalties Johnson agreed to pay.
C)Bayer's attempts to circumvent FDA policies.
D)the exclusive nature of the license agreement.
E)the hostile arrangement between Bayer and Johnson.

Question 70

Which of the following best describes the legal basis for protection of trade secrets, patents, and copyrights in the United States?

A)Trade secrets, patents, and copyrights are protected by federal statutes.
B)Trade secrets, patents, and copyrights are protected by state law.
C)Trade secrets are protected by state law, while patents and copyrights are protected by federal statutes.
D)Trade secrets are protected by federal statutes, while patents and copyrights are protected by state law.
E)Trade secrets, patents, and copyrights are not protected by any laws.

Question 71

Some legal experts believe that the pressures of global competition have resulted in an increased incidence of price-fixing and collusion among companies.

Question 72

Trade secrets are confidential information or knowledge that has commercial value, is in the public domain and for which steps have been taken to keep it secret.

Question 73

Patents and trademarks that are protected in one country are protected in another, so global marketers must ensure that patents and trademarks are registered.

Question 74

Formation of a cartel like OPEC, consisting of oil-producing companies, would most likely be illegal in the United States.

Question 75

Nippon Paper Industries was found guilty in a U.S. court of conspiring with other Japanese companies to raise fax paper prices in the United States.

Question 76

Which of the following actions were approved both by the Antitrust Review in the EU as well as in the United States?

A)acquisition of Honeywell (U.S.)by GE (U.S.)
B)joint venture between music businesses of EMI group (Great Britain)and Time Warner (U.S.)
C)merger of Sony Music (Japan)and BMG (Germany)
D)merger of WorldCom (U.S.)and MCI (U.S.)
E)British Airways (U.K.)and American Airlines (U.S.)

Question 77

In the United States, the Foreign Corrupt Practices Act (FCPA)is a legacy of the Watergate scandal during Richard Nixon's presidency. Administered by the Department of Justice and the Securities and Exchange Commission, the act is concerned with disclosure and prohibition. What is this law concerned with, and why is it a subject of criticism by many?

Question 78

Antitrust laws in the United States and other countries are designed to combat restrictive business practices and to discourage competition.

Question 79

To establish ownership of a written, recorded, performed, or filmed creative work, it is necessary to apply for and be granted a patent.

Question 80

A recent rash of antitrust actions brought in the United States against foreign companies has raised concerns that the United States is violating international law as well as the sovereignty of other nations.