FVC1 - Global Business (Module 4 - 6)
Unintentional errors
Discrepancies
Which intellectual property right describes a chemical company's filing on their innovative industrial process invention?
Patent
Which action is used by companies wishing to avoid working with vendors who use sweatshops?
Developing and imposing a company internal code of conduct for vendor labor practices
Which agreement was formalized in 1993 to create a political and economic union to help a large group of countries cooperate and coordinate key aspects of their economic policy?
EU
Stage of Regional Economic Integration All barriers are removed between countries and they agree to adopt a common economic policy. e.g. EUROPEAN UNION
Economic Union
What is the result of the existence of multinational businesses?
Economic integration among countries
Which governmental entity was created to provide regulatory authority regarding pollution by industry?
Environmental Protection Agency
Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located.
Multinational Corporations
Which agreement was implemented in 1994 and helped form a free-trade zone between Canada, the United States, and Mexico by decreasing tariffs and trade barriers?
NAFTA
Which issue was the main purpose of the creation of the European Union?
Natural resources
Contract Law Top Down Common Law and the Uniform Commercial Code in the United States Enforced conditionality causes harm to developing countries Privatization of Healthcare
Vertical Structure Law
Which economic actor benefits as the U.S. dollar weakens?
A U.S. investor abroad invests money in another country by first converting U.S. dollars to a foreign currency, making the investment, then later converting+ it back to U.S. dollars. As the U.S. dollar becomes weaker, the rate of return on the investment is larger as the investor gets more U.S. dollars from converting back from the foreign currency.
Which condition is part of a contract between international companies that are based in different nations?
A choice of law clause
Which economic actor benefits as the U.S. dollar strengthens?
A foreign firm exporting to the U.S.
When multinational corporations enter into host countries by purchasing or leasing existing facilities.
Brownfield FDI
Are aimed at protecting the market from anticompetitive practices, particularly from large companies that may hold a monopoly.
Antitrust Laws.
Common Market 1967 Accelerate economic growth, social progress, and cultural development in the region. Promote regional peace & stability through the rule of law in relationship among countries in the region. Most important trading partner is China Signed free-trade agreements with AUS - NZ - INDIA
Association of South East Asian Nations (ASEAN)
When a firm brings the goods or components back to its home country (i.e. acting as a supplier)
Backward Vertical FDI
Which laws must a U.S. company follow when engaging in business with other countries?
Both the United States and the host country's laws
How does the Sarbanes-Oxley Act (SOX) attempt to increase the public's trust in American companies?
By requiring public companies to have and reveal a code of business conduct and ethics (SOX requires public companies to have and reveal a code of business conduct and ethics and to include these codes on their websites.)
Stage of Regional Economic Integration Labor, technology, and capital can easily move throughout the member countries. e.g. COMESA ( South Eastern Africa)
Common Market
Which level of economic integration permits the formation of economically integrated exchanges of goods and services between parties from member countries?
Common market
Legally enforced promises. Verba or Written 1) Vertical Structure Law 2) Horizontal Structure Law
Contract Law
Environmental Regulation UN Framework Convention on Climate Change, enacted in 1992, aimed to limit greenhouse gas (e.g. carbon dioxide) emissions at or below 1990 levels.
Conventions
Business ethics and ethical consumerism Corporate social responsibility (CSR) is the ethical role of a corpporation. Stakeholders
Corporate Social Responsibility
Which strategy is used by governments to limit the foreign direct investment in a country?
Creating foreign ownership restrictions in the country
The sum of attitudes, values, goals, and practices shared by individuals in a group.
Culture
Stage of Regional Economic Integration Barriers to trade are removed between member countries and there is a common policy towards trade with non-members. e.g. MERCOSUR (Argentina, Brazil, Paraguay, Uruguay & Venezuela)
Customs Union
Which economic integration stage offers economic collaboration by removing trade barriers between member countries and establishing a mutual trading policy with nonmembers?
Customs union
Headquartered in Belgium 1951 Standardized product & labeling Eliminate border controls Established unified policies of energy EUROZONE: EU members adopt euro as their official currency European Central Bank: sets monetary policy
European Union (EU)
Exchange Rate Policy Currency's value is tied to the value of another single currency, a basked of other currencies, or to another measure of value (gold). (+) stabilizes currency value to pegged currency so that trade and investments between the two countries is easier and more predictable. Reduces forex risk. (-) Not always stable, leads to speculation, less flexibility.
Fixed (Pegged) Exchanged Regime
What is an advantage of regional economic integration?
Flexibility on labor movement develops job opportunities.
Which exchange rate regime allows a currency's value to fluctuate according to the foreign exchange market?
Floating
Exchange Policy Currency freely fluctuates according to market forces. (+) Automatically adjust to economic circumstances, allows country to dampen the impact of shocks and foreign business cycles and preempt the possibility of having a balance of payments crisis. (-) Unpredictability, leading to forex fluctuation risks.
Floating Exchange Regime
Is primarily a long-term strategy, which involves investment in or the acquisition of foreign assets with intent to control and manage.
Foreign Direct Investment (FDI)
Company A is located outside the home country of Company B. Company B has acquired Company A with the intent of controlling and managing Company A's assets. Which practice is being used by Company B?
Foreign direct investment
Which economic actors are suppliers of U.S. dollars?
Foreign firms exporting to the U.S.
When a firm sells the goods and components in the local or regional market (i.e. acting as distributor)
Forward Vertical FDI
Stage of Regional Economic Integration Barriers to trade are removed between member countries: e.g. NAFTA (US, CAN and MEX)
Free Trade Area
Which level of economic integration is formed when trade barriers are removed between member countries but there is no mutual policy on trading with nonmember countries?
Free trade area
Which agreement was created in 1981 among Arab states, to expand trade, economic growth, and development and to promote social welfare, peace, and stability?
GCC is made up of six Arab states in the Gulf region as a trade bloc.
When multinational corporations enter into host countries to build new facilities where none previously existed.
Greenfield FDI
How is contract law structured as it applies to global business among nations?
Horizontal
When a company is trying to open a new market - a retailer for example, that builds a store in a new country to sell to the local market.
Horizontal FDI
Contract Law Equal Agreements Laws between sovereign states - treaty based. e.g. The UN Convention on Contracts for the International Sale of Goods (CISG)
Horizontal Structure Law
Western cultures are primarily rule-based, while most of the world's cultures are relationship-based. Westerners tend to trust the system, whereas non-westerners are cemented by personal honor, familial duty and friendship. In much of the world, cronyismis a foundation of trust, and may therefore present no conflict of interest.
Impact of cultural differences
What is a benefit of creating a regional economic integration agreement?
Improved financial growth
What is a potential influence of the existence of multinational corporation (MNC) on international relations?
Improves relations between countries where the MNC operates
Patents, trademarks, copyright The World Intellectual Property Organization (WIPO)
Intellectual Property Protections
Which type of laws deals with the rules for securing and enforcing legal rights to inventions, designs, and artistic works?
Intellectual property
The redundancies added to a system to make certain that it functions properly.
Internal Controls
Environmental Regulation UN enacted Antarctica Treaty, in 1991, to prohibit mining, limited environmental pollution, and protected animal species in that continent.
International Treaties
Intentional fraudulent misrepresentation.
Irregularities
When a company invests internationally to provide input to its core operations-usually in its home country.
Vertical FDI
How does the existence of a multinational corporation (MNC) affect a country's engagement in political conflict?
It would make countries less likely to go to war.
Exist to protect workers from potential workplace dangers and abuses.
Labor Laws and Conventions
Environmental Regulation US National Environmental Policy Act (1970). Created checks for corporate environmental practices in the United States.
Laws
Which agreement was established in 1988 and now has both political and economic goals to keep peace and stimulates economic growth in South American countries?
MERCOSUR
Which convention protects decent working hours for a cruise ship director who travels in international waters?
Maritime Labor Convention, 2006
Which drawback is involved when regional agreements are created?
Member countries will trade less with nonmember countries.
Customs Union: members share common external tariff with non-members 1991 BRAZIL - PARAGUAY - URUGUAY - ARGENTINA - VALENZUELA
Mercado Comun del Sur (MERCOSUR)
Free Trade: Abolition of tariffs and quotas among members Members pursue independent trade policies with non-members 1-1-1994 CAN - US - MEX Expand trade through the elimination of barriers Protect Intellectual property rights Create institutions to address potential problems to protect labor rights and environmental quality
North America Free Trade Area (NAFTA)
Which law allows organizations damaged by an oil spill to ask for compensation and file a civil lawsuit?
Oil Pollution Act
Which of these agreements or treaties was to combat increased temperatures of global climate change?
Paris (This agreement was completed in 2016 to stop or at least slow global warming. Not all countries agreed to these goals.)
Exchange Rate Policy Hybrid of floating and fixed exchange regimes, pegged to some band or value, which is either fixed or periodically adjusted. Crawling bands Crawling pegs Pegged with horizontal bands
Pegged Floating Exchange Regime
Stage of Regional Economic Integration Unification of all policies by a common organization. e.g. US and United Arab Emirates
Political Union
Which country characteristic is most important to foreign direct investors according to a study by the World Bank?
Political stability and security
Which level of economic integration presents an alliance of all policies by a common organization?
Political union
A farmers market has many vendors and consumers who all sell and buy the same produce at the same price. Which type of market is represented?
Pure competition
A sole, national telephone company was found violating antitrust laws and was forced to separate into regional companies. What caused the violation of the antitrust laws?
Reduced competition
An agreement among nations to reduce or eliminate trade barriers among the nations at a minimum and to have a single political, economic, and trade policy identity at its maximum.
Regional Economic Integration
A major footwear brand company is contracting the manufacturing of its products to a contractor's manufacturing plant overseas. The footwear company has been accused of turning a blind eye to sweatshop practices at other overseas contract locations before. How should the footwear company ensure that the contractor will comply with the standards set forth in the code of conduct that explicitly prohibit this practice?
Require that the factories be available for inspections
Which act affects the global business landscape by clarifying auditor independence issues, accountability of senior executives, disclosure of insider trading, and intellectual property rights?
Sarbanes-Oxley Act (This act clarifies auditor independence issues, puts greater accountability on senior executives, enforces disclosure of insider trading, and prohibits loans to executives.)
Which activity is considered a foreign direct investment (FDI) by a multinational corporation?
Setting up manufacturing plants in the host country
Which type of duty is required to take care of the collective environment across the nation?
Shared
What makes the enforcement of United Nations Environmental Program regulations difficult?
Sovereign rights of nations
What did the Worst Forms of Child Labor Convention, 1999 define?
The age at which a person becomes an adult
Which two primary sources of law govern contracts in the United States?
The common law and the Uniform Commercial Code (Common law comes from custom and from precedents set by other court decisions. The Uniform Commercial Code provides some a standardized laws and regulations for commercial transactions such as sales.)
Why does a company engage in foreign direct investment?
The company wants to control organizational assets in another country.
What is a disadvantage of regional economic integration?
The exclusion of external countries reduces global free trade.
What is a potential disadvantage of foreign direct investment from a host government's perspective?
The host country's natural resources may be depleted.
What is a benefit of foreign direct investment?
The inflow of capital benefits global and local economies
Which result occurs when a legally enforceable contract between two businesses from different countries is broken?
The party who has been affected can seek damages.
What is an accurate characterization of the relationships between multinational corporations (MNCs) and the host country governments in which they operate?
The relationships are mixed because MNCs can cause, but also solve, problems for the host country.
What is a reason for companies to engage in foreign direct investments?
To take advantage of tax exemptions offered by the host country
Which type of intellectual property law protects a company's brand?
Trademark
Which organization aims to develop a global intellectual property infrastructure?
WIPO (This stands for World Intellectual Property Organization. Its goal is to develop a global IP infrastructure, build international respect for IP, and implement global policy related to IP.)
Many countries from several geographic regions are accused of dumping steel into the U.S. market at unfairly low prices. Which entity can the United States appeal to in order to correct this apparent market manipulation?
World Trade Organization
