Deck 3: Legal, Technological, Accounting, and Political Environments

Question 1

The U.S. Freedom of Information Act is an example of ________.

A) common law
B) civil law
C) statutory law
D) bureaucratic law

Answer 1

C

Question 2

Walton Enterprises, a U.S. firm, has a facility in China. Walton managers in China frequently complain about the arbitrary rules and decisions implemented by Chinese government authorities. Such legal unpredictability suggests that China has a system based on ________ law.

A) civil
B) common
C) theocratic
D) bureaucratic

Answer 2

D

Question 3

________ is based on a codification of what is and is not permissible.

A) Common law
B) Civil law
C) Statutory law
D) Religious law

Answer 3

B

Question 4

________ is the foundation of the legal systems in the United Kingdom and its former colonies.

A) Common law
B) Civil law
C) Religious law
D) Bureaucratic law

Question 5

The foundation of the legal system in India is ________.

A) common law
B) civil law
C) religious law
D) bureaucratic law

Question 6

National legal systems typically vary for all of the following reasons EXCEPT ________.

A) history
B) culture
C) politics
D) markets

Question 7

In which of the following countries are interest-bearing transactions not allowed?

A) India
B) South Korea
C) Iran
D) Mexico

Question 8

Common law is primarily based on ________.

A) actions taken by government legislatures
B) the cumulative wisdom of judges' decisions on individual cases through history
C) a codification of what is and is not permissible
D) the officially established rules governing the faith and practice of a particular religion

Question 9

In Iran, the religious law is based on the teachings of the ________.

A) Bible
B) Koran
C) Buddha
D) Napoleonic Code

Question 10

Civil law originated in biblical times with the ________.

A) French
B) Greeks
C) Jews
D) Romans

Question 11

A legal system that lacks due process, lacks appeals procedures, and prohibits banks from charging interest on loans is most likely based on ________.

A) common law
B) civil law
C) religious law
D) bureaucratic law

Question 12

Under which type of legal system can contracts be broken at the whim of those in power?

A) religious law
B) common law
C) bureaucratic law
D) civil law

Question 13

Statutory law is primarily based on ________.

A) legislative actions
B) historic precedents
C) moral judgments
D) religious beliefs

Question 14

Religious law is primarily based on ________.

A) legislative actions
B) judges' court decisions
C) codifications of permissible acts
D) officially established rules governing a faith

Question 15

________ is law enacted by legislative action.

A) Common law
B) Civil law
C) Statutory law
D) Bureaucratic law

Question 16

Dawson Enterprises, a U.S. firm, conducts business in Saudi Arabia. The MNE recently experienced a business dispute with a local firm and was forced to meet the demands of the local firm without going through due process. Dawson's experience most likely occurred because Saudi Arabia relies on ________.

A) civil law
B) common law
C) religious law
D) bureaucratic law

Question 17

________ is based on the cumulative wisdom of judges' decisions on individual cases through history.

A) Common law
B) Civil law
C) Statutory law
D) Bureaucratic law

Question 18

Civil law is primarily based on ________.

A) actions taken by local governments
B) the cumulative wisdom of judges' decisions on individual cases through history
C) a codification of what is and is not permissible
D) the officially established rules governing the faith and practice of a particular religion

Question 19

The foundation of the legal system in China is ________.

A) common law
B) civil law
C) religious law
D) bureaucratic law

Question 20

Which of the following is not a foundation for legal systems?

A) common law
B) statutory law
C) religious law
D) bureaucratic law

Question 21

Many countries enforced embargoes against ________ during the 1980s to protest its apartheid policies.

A) Cuba
B) South Africa
C) China
D) Afghanistan

Question 22

Cochran Industries, a U.S. firm, has a manufacturing facility in Mexico. Which aspect of Cochran's operations is probably LEAST affected by the Mexican legal system?

A) training its workforce
B) financing its operations
C) marketing its products
D) developing technology

Question 23

The ________ is directed against international firms that traffic in the assets of U.S. companies that were confiscated by the Cuban government in 1959.

A) Bay of Pigs Declaration
B) Anti-Castro Act
C) Helms-Burton Act
D) Freeport McMoRan Doctrine

Question 24

Which of the following best explains why the telecommunications industry has been privatized in many countries?

A) shrinking ability to employ quality workers
B) international regulations regarding social media
C) citizen demands to separate government and business
D) inability of governments to pay for technological upgrades

Question 25

Of the laws that may form the basis for a country's legal system, which one is considered the riskiest for international businesses?

A) common law
B) religious law
C) bureaucratic law
D) statutory law

Question 26

A country that attempts to regulate business activities that are conducted outside its borders is using ________.

A) extraterritoriality
B) embargoes
C) sanctions
D) boycotts

Question 27

Privatization is ________.

A) the transfer of ownership of resources from the public to the private sector
B) a government's regulation of business activities outside its borders
C) nationalization without compensation
D) nationalization with compensation

Question 28

________ refers to the transfer of ownership of resources from the private to the public sector.

A) Nationalization
B) Expropriation
C) Federalization
D) Conversion

Question 29

Extraterritoriality refers to ________.

A) the transfer of ownership of resources from the private to the public sector
B) a government's attempt to regulate business activities outside its borders
C) nationalization of a corporation without fair and appropriate compensation
D) restrictions on the ability of a company to return profits to its headquarters

Question 30

Which of the following is LEAST likely a sanction?

A) boycotts
B) embargoes
C) high-interest loans
D) removal of preferential tariffs

Question 31

In which industry does Mexico restrict foreign ownership?

A) energy
B) broadcasting
C) transportation
D) telecommunications

Question 32

In most cases, legal systems based on bureaucratic law have all of the following characteristics EXCEPT ________.

A) unpredictability
B) discretionary power
C) nonexistent appeals processes
D) lengthy due process procedures

Question 33

A country restricting access to high-technology goods or withdrawing preferential tariff treatments is using ________.

A) embargoes
B) trade limits
C) sanctions
D) extraterritoriality

Question 34

Laws regarding ________ are the primary reason the manufacturers in Germany and France compete on quality rather than price.

A) interest rates
B) worker safety
C) patent liability
D) employee benefits

Question 35

________ operates under bureaucratic law.

A) England
B) Mexico
C) Iran
D) China

Question 36

Randall's Groceries, an international supermarket chain, recently opened a new store in the Taiwanese market. Which of the following will Taiwanese consumers LEAST likely experience?

A) greater selection of products
B) more mom-and-pop stores
C) higher standards of quality
D) creation of more local jobs

Question 37

Dual-use products are those that can be used for both ________ and ________ purposes.

A) civilian; military
B) domestic; business
C) wholesale; retail
D) profit; nonprofit

Question 38

Expropriation is best defined as the ________.

A) transference of ownership of resources from private to public sector with no compensation
B) transference of ownership from private to public sector with compensation to private owners for their losses
C) conversion of state-owned property to privately owned property
D) conversion of state-owned property to privately owned property with no compensation

Question 39

Privatization frequently creates opportunities for international businesses because most state-owned entities are ________.

A) untaxed
B) well funded
C) unprofitable
D) well staffed

Question 40

The United States restricts all trade with Cuba. This is an example of a(n) ________.

A) boycott
B) tariff
C) embargo
D) ban

Question 41

Which law was passed to address perceived public accounting problems?

A) Burton-Helms Act
B) Sarbanes-Oxley Act
C) Berne Convention
D) Hays-Douglas Act

Question 42

All of the following occurred when France's Carrefour entered the Chinese market EXCEPT that ________.

A) product selection significantly increased
B) national brands became available
C) hygiene standards improved
D) tax revenue decreased

Question 43

Which country follows a "first to invent" patent policy?

A) United States
B) Japan
C) Germany
D) Hong Kong

Question 44

When a company seeks to have a dispute heard in the court system most favorable to its own interests, the company is ________.

A) forum shopping
B) adopting the principle of comity
C) rejecting the principle of comity
D) engaging in arbitration

Question 45

Which of the following is not one of the conditions required for the principle of comity to apply?

A) Reciprocity is extended between the countries.
B) The defendant is given proper notice.
C) The foreign court judgment does not violate domestic statutes or treaty obligations.
D) The foreign court has less stringent punitive damages for corporations.

Question 46

The transmittal of technology from one country to another is known as technology ________.

A) repatriation
B) transfer
C) drain
D) piracy

Question 47

Which of the following would LEAST likely help a country change its technological environment?

A) investment in infrastructure
B) investment in human capital
C) minimum wage increase
D) foreign direct investment

Question 48

Which country has the highest rate of software piracy?

A) Georgia
B) Azerbaijan
C) Pakistan
D) Bangladesh

Question 49

Which of the following questions is LEAST relevant when resolving an international business dispute?

A) Which country's law applies?
B) Where should the issue be resolved?
C) How long should litigation occur?
D) How will the settlement be enforced?

Question 50

________ is a systematic analysis of the political risks possible in foreign countries.

A) Environmental scanning
B) SWOT analysis
C) Political risk assessment
D) Operating risk analysis

Question 51

The ________ provides that a country will honor and enforce within its own territory the judgments and decisions of foreign courts with certain limitations.

A) Helms-Burton Act
B) principle of comity
C) arbitration agreement
D) principle of fairness

Question 52

________ is the process by which both parties in a conflict agree to submit their cases to a private individual or body whose decision they will honor.

A) Negotiation
B) Repatriation
C) Arbitration
D) Resolution

Question 53

Which country does NOT require firms to capitalize financial leases?

A) Switzerland
B) United States
C) Great Britain
D) Canada

Question 54

In which country do firms publish a social balance sheet detailing their treatment and compensation of their workforce?

A) France
B) Germany
C) the United Kingdom
D) China

Question 55

Which results in a loss of assets?

A) repatriation
B) confiscation
C) expropriation
D) inflation

Question 56

Hawkins Tire is an international chain of discount tire stores. The firm has recently opened a store in Frankfurt, Germany, where there are already a number of local tire stores. Which of the following is the most likely negative effect of Hawkins Tire on Frankfurt?

A) failure of local tire stores
B) higher prices for tires
C) lower tire selection
D) poor tire quality

Question 57

Accounting reserves ________.

A) are the basis for assessing a firm's income tax burden
B) record deductions and expenses that are relevant for taxes
C) are important in determining how inventory should be valued
D) record foreseeable future expenses that might affect a firm's operations

Question 58

What was the key to the transition from communism to capitalism for Hungary and Poland?

A) technology transfer from FDI
B) investment in infrastructure
C) the adoption of the euro
D) low-cost labor forces

Question 59

________ provides that the actions of foreign governments against U.S. firms are generally beyond the jurisdiction of U.S. courts.

A) Arbitration
B) The Helms-Burton Act
C) The principle of comity
D) The Foreign Sovereign Immunities Act of 1976

Question 60

In which country are monetary awards in legal disputes usually the highest?

A) United States
B) France
C) United Kingdom
D) Canada

Question 61

Political risk that affects all firms in a country is referred to as ________.

A) micropolitical risk
B) macropolitical risk
C) inclusive political risk
D) exclusive political risk

Question 62

Canada's legal system is based on bureaucratic law.

Question 63

The IT department at World Airlines has recently improved the airlines' Website to help facilitate transactions. Now, when repeat customers log on to the Website, their seating preferences and billing addresses are automatically accessed. For World Airlines customers located in the European Union, the company will most likely have to ________.

A) obtain customer permission before using cookies
B) register the domain name of all clients
C) block all pop-ups on the Website
D) provide a secure Web portal

Question 64

________ is the risk associated with the potential for the government to interfere with the firm's ability to move funds in and out of the country.

A) Transfer risk
B) Ownership risk
C) Operating risk
D) Exchange rate risk

Question 65

Which of the following is most likely a true statement about piracy on the high seas?

A) Piracy is a significant problem along the Somali coast and Strait of Malacca.
B) Piracy has primarily been eliminated because of international laws.
C) The primary cause of piracy is environmental warfare.
D) Navy patrols have suppressed pirates near Malaysia.

Question 66

Ellis Electronics is a U.S. firm with operations in Saudi Arabia. Ellis has learned that it may face expropriation. What would be the most likely result of such actions?

A) higher operating costs
B) loss of future profits
C) higher security costs
D) loss of assets

Question 67

Britain's legal system is based on religious law.

Question 68

The United States uses a legal system based on common law.

Question 69

Pimlico Steel operates an aluminum refining plant in Jamaica. The contract between Pimlico and Jamaica requires the corporation to train Jamaican engineers in the latest processes. Jamaica has most likely required Pimlico to agree to a(n) ________.

A) intellectual property contract
B) electronic copyright system
C) technology transfer
D) direct investment

Question 70

Martin, a manager at an international firm located in China, is required to monitor political risks for his employer. Which of the following would LEAST likely provide Martin with useful information?

A) consulting firms
B) embassy officials
C) telecommunication firms
D) home country employees

Question 71

________ is the risk associated with the potential for the employees or operations of the firm to be threatened by changes in laws, environmental standards, tax codes, and terrorism.

A) Transfer risk
B) Ownership risk
C) Operating risk
D) Exchange rate risk

Question 72

Chinese bookstores stopped selling counterfeit copies of the Harry Potter series when Chinese authorities intervened on behalf of the book's British publisher.

Question 73

Wilfred Enterprises has foreign operations in Taiwan, India, and China. The firm pays an annual insurance premium to the Overseas Private Investment Corporation. The firm is most likely protecting itself from ________.

A) privatization
B) natural disasters
C) nationalization
D) financial instability

Question 74

________ is the risk associated with the potential for the firm's property to be confiscated or expropriated.

A) Transfer risk
B) Ownership risk
C) Operating risk
D) Exchange rate risk

Question 75

International businesses prefer the common law system because its laws affect business the same way in every country.

Question 76

APO Manufacturing is a U.S. based firm that manufactures electronic equipment. The firm conducts business with a Japanese electronics firm, and a dispute has arisen between the two firms regarding intellectual property rights. APO management plans to use arbitration to resolve the problem. Which of the following best supports this decision?

A) APO's legal department is knowledgeable in global patent laws.
B) APO's legal department expects the principle of comity to apply.
C) APO needs to settle the dispute quickly and inexpensively.
D) APO expects to have record profits during the next year.

Question 77

________ has one of the highest levels of macropolitical risk.

A) Saudi Arabia
B) Chile
C) Venezuela
D) Afghanistan

Question 78

BGL Enterprises, a global firm, operates a facility in Angola. Managers want to reduce the firm's vulnerability to political risk in Angola. All of the following actions would most likely accomplish this task EXCEPT ________.

A) reducing net investment in the subsidiary
B) purchasing capital equipment outright
C) buying inputs from local suppliers
D) being a good corporate citizen

Question 79

Saudi Arabia's nationalization of the oil industry in the 1970s is an example of ________.

A) macropolitical risk
B) micropolitical risk
C) transfer risk
D) ownership risk

Question 80

________ is political risk that affects only a specific firm or firms within a specific industry.

A) Inclusive political risk
B) Exclusive political risk
C) Micropolitical risk
D) Macropolitical risk