IB Ch. 6
Applying home-country laws to people and situations abroad is a practice known as ________.
extraterritoriality
Which of the following represents a method of negotiation in which the objective is to settle any disagreements in a pleasant manner?
Conciliation
________ refers to the possibility of loss or adverse effects on company operations and profitability as a result of changes in a country's political and/or legal environment.
Country risk
Which of the following characterizes extraterritoriality?
Applying home-country laws to persons outside national borders
________ is a process in which an unbiased third party listens to both sides of a case and makes a decision in favor of one party or the other, based on an impartial analysis of facts.
Arbitration
What is the benefit of environmental scanning?
Assessing potential threats to the firm
________ is a governmental system that attempts to control most aspects of its citizens' conduct both publicly and privately, including their values and beliefs.
Authoritarianism
An American company that does business overseas has to be concerned about local events. Why should a company be concerned about political events and the legal environment in the country in which it does business?
Changes in the political climate might influence government interference in business practices, putting the safety of the company's employees in jeopardy.
Which legal system is based on a comprehensive structure where laws are clearly written, accessible, and divided into three categories: commercial, civil, and criminal?
Civil law
What is the basis of civil law?
Codified rules
Which of the following statements BEST describes socialism?
Collective welfare outweighs individual welfare.
Which type of economic system is associated with authoritarianism?
Command economy
An agricultural firm is considering doing business in a foreign country with environmental laws, foreign investment laws, e-commerce laws, an underdeveloped legal system, and a socialistic government. Which of the following would MOST prevent the company from maximizing its profits?
Environmental law would cause the greatest hindrance because firms must pay for pollution.
Which of the following is a regional trade organization?
European Union (EU)
What kind of government seizure compensates foreign-owned businesses?
Expropriation
________ is the seizure of company assets with compensation.
Expropriation
Which of the following describes the Foreign Corrupt Practices Act (FCPA)?
Firms are prohibited from offering bribes to foreign firms to obtain business.
Which of the following BEST describes a political system?
It ensures stability based on laws.
A huge MNE was the victim of creeping expropriation from a foreign government. Why is creeping expropriation ethically wrong?
It occurs after an MNE makes large investments in a country's property and facilities.
Which term refers to understanding and administering laws, regulations, and rules that are used to establish standards for conduct?
Legal system
________ occurs when one party files a lawsuit against another.
Litigation
Which of the following is a strategy managers can employ to manage country risk?
Maintaining a strict adherence to ethical behavior
Which of the following participants is LEAST likely to transform a nation's political and legal system?
Private MNEs such as Unilever and Coca Cola
Which of the following BEST characterizes a democracy?
Private property rights
Which of the following includes organizations like NAFTA, the EU, and ASEAN?
Regional trade organizations
Which of the following describes a legal system with clear rules that are publicly disclosed, enforced fairly, and respected by individuals, organizations, and the government?
Rule of law
________ refers to a legal system where rules are clarified, publicly revealed, justly applied, and valued by all.
Rule of law
It has recently been found that special interest groups (SIGs) have unprecedented access to politicians through social events. Why should companies be concerned with the SIGs' access to government officials?
SIGs influence elected officials who can change policy.
The United States has implemented trade sanctions on Iran and Syria. What is the purpose of sanctions?
Sanctions punish unwanted activities by foreign countries.
________ include establishments such as OPEC and OECD that work to improve the development of specific communities.
Special interest groups
Which type of country risk produced by a governmental system involves threats or use of force or violence in order to attain some kind of political goal?
Terrorism
Which of the following does NOT describe Islamic law, also known as shariah law?
The origins of Islamic law date back to Roman law and the Napoleonic Code.
________ is the degree to which organizations disclose substantial information about their financial position and accounting measures.
Transparency
Activists organized a(n) ________ of petroleum company BP following the oil spill in the Gulf of Mexico.
boycott
A ________ depends on the interactions of supply and demand in order to determine prices for products and services.
market economy
A(n) ________ is a group of official organizations that create a government.
political system
Asterix, a French theme park, spoke out against the French government's support for the creation of Disneyland Paris because Disney is an American company. This example shows that ________.
rival domestic firms complain to their government when foreign firms receive governmental support
China has added democratic approaches such as land reforms and open markets to increase commercial activity. This example shows that ________.
some totalitarian regimes are evolving toward democracy and capitalism
What is the basis of common law?
Tradition, previous cases, and legal precedents
