IBA Exam 2
Which one of the following legal systems is based on traditions, former cases, and legal models set by courts through the clarification of statutes, legislation, and previous rulings?
common law
Which one of the following involves reducing or removing barriers to trade, establishing shared external barriers, and permitting the unrestricted movement of goods, services, and factors of production within participating countries?
common market
_______ imposes limitations on the expenditure or outflow of tangible currency from a certain nation or on the influx of foreign currencies.
currency control
A(n) ______ is a group of official organizations that create a government
political system
Which one of the following is a collection of official organizations that create a government, including legislative groups, political parties, lobbying groups, and trade unions?
political system
A corporate customer in the United States wants to hire a South African web design firm. The U.S. executive talks to other executives within the corporation who have hired foreign firms in order to find out typical fees. Which strategy for managing country risk is the American executive following?
proactive environmental scanning
Which one of the following is a global economic principle created to limit unrestricted trade while guarding home-country businesses from overseas competition?
protectionism
________ are measurable limits set on the import of certain goods for a designated period of time.
quotas
Which one of the following is a major factor in the growth of global commerce and in rising incomes worldwide?
reducing trade barriers
As a way to anticipate risk, management participates in ________, which is used to evaluate possible risks and threats to the company.
scanning
South Korea faced a quota on the export of non-rubber footwear exported to the United States. By shifting manufacturing to rubber-soled shoes, South Korean firms greatly increased their footwear exports. Which one of the following strategies for responding to government intervention did the South Korean firms choose?
seeking favorable customs classifications
The Organization of Petroleum Exporting Countries (OPEC) is a dominant alliance that influences and dictates global oil prices, which in turn moves consumer prices and the overall cost of business. OPEC is an example of a ________.
special interest group
The national oil company of Mexico wants to build a pipeline to Guatemala. A U.S. environmental advocacy organization, Big Green, organizes protests against the pipeline due to fears that leaks might damage rain forests. Big Green is best described as a ________.
special interest group
________ include establishments such as OPEC and OECD that work to improve the development of specific communities.
special interest groups
____ are monetary or other resources granted to a company by a government to assist in the manufacturing and promotion of products at decreased prices to improve the company's success.
subsidies
________ are taxes placed on imported goods that increase the final purchase price for consumers.
tariffs
________ is the degree to which organizations disclose substantial information about their financial position and accounting measures.
transparency
If ABC International establishes export assembly locations in order to create mechanisms and completed goods that are destined for other countries, it is countering government-imposed regulations on trade by ________.
utilizing a foreign trade zone
Gaining political power in world affairs has enabled the EU to compete more effectively with the U.S. by ________.
developing a stronger defensive posture
Which term refers to exported goods being priced lower than their typical value whether in home-country markets or foreign markets?
dumping
Melissa Chitembo wants to internationalize her Canadian syrup business. Rather than expanding too far too fast, Melissa decides to market her syrup to new customers in the northern part of the U.S. Which one of the following BEST describes Melissa's actions?
Internationalization inside the economic blc
A ______ depends on the interactions of supply and demand in order to determine prices for products and services
Market economy
Which one of the following characteristics is related to economic freedoms?
Market forces and ability to easily implement commercial activities
Many Middle Eastern countries practice both civil law and Islamic law. In this case, under which legal system are these countries ultimately categorized?
Mixed system
________ is the seizure of company assets with compensation.
Expropriation
________ represent locations at the ports of entry in each country where government authorities inspect imported products and levy tariffs.
customs
________ is made up of two critical features: (1) limited government and (2) the ability for citizens to own property and assets, and attain individual wealth.
A democracy
________ involves 21 nations, from both sides of the Pacific, and aims for increased, unrestricted trade and economic alliances among member and potential member countries.
APEC
________ 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
Yukiko Fujiwara's company operates stores all over the world, including in the nation of Tinhorn. But after recent unrest in Tinhorn, a dictator took over. The new president-for-life declared that all foreign-owned businesses must be taken over by government officials. The state began to regulate most aspects of public and private behavior. Which one of the following describes the political system in Tinhorn?
Authoritarianism
________ is a governmental system that attempts to control most aspects of its citizens' conduct both publicly and privately, including their values and beliefs.
Authoritarianism
Which one of the following has occurred if consumers voluntarily refuse to patronize a certain business because consumers believe the business has acted inappropriately?
Boycott
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
Which of the following represents a method of negotiation in which the objective is to settle any disagreements in a pleasant manner?
Conciliation
Which type of government seizure involves acquiring company possessions without any form of payment?
Confiscation
________ assign rights, duties, and obligations to all parties involved in an agreement and include stipulations on the sale of goods, distribution of products, licensing, franchising, and joint ventures.
Contract laws
In the European Union, which one of the following makes decisions regarding economic policy, budgets, foreign policy, and the admission of new member countries?
Council of the European Union
Which one of the following officially bans imports from and exports to a specific country in an attempt to impose a political punishment?
Embargo
Which of the following is the world's most advanced and largest regional economic bloc?
European Union
Navrin Kumar wants to expand his Paris-based company into China. Through the French embassy in Beijing, Navrin finds a Shanghai-based company to act as part of a joint venture. Navrin hopes that the Chinese company will guide him through the complex legal and political environments in China. Which strategy for managing country risk is Navrin following?
Forming alliances with qualified local partners
Which one of the following was the first major effort to systematically reduce trade barriers worldwide?
GATT
Which of the following primarily focuses on ensuring the reduction of tariffs among certain countries and settling trade disagreements?
General Agreement on Tariffs and Trade
________ involves government seizure of a whole industry, which may or may not include any form of payment.
Nationalization
The passage of which economic bloc was smoothed by the existence of the maquiladora program?
North American Free Trade Agreement (NAFTA)
Which of the following was formed by three countries to increase market entrance, remove barriers to trade, establish investment standards, and encourage bidding on government contracts within the three countries participating in it?
North American Free Trade Agreement (NAFTA)
Which one of the following is true of political and legal environments in international business?
Political and legal systems are interdependent
____ is a function of a legal system
Providing security for intellectual property
Which of the following includes organizations like NAFTA, the EU, and ASEAN?
Regional trade organizations
In Iran, systems are based on spiritual beliefs, ethical codes, and moral standards that are directed by a supreme being. Iran operates under ________.
Religious Law
The people of the new island nation of Lagoonia need to decide how to set up their legal system in terms of how it applies to international business and how it applies to the entirety of life on the island. After much debate and research, the Lagoonian people chose to emphasize transparency. A legislative committee wrote an extensive set of laws, which was then posted to the Internet so the people could read them and comment on them. The laws established an independent court system and police force. A few changes were made based on public comment. The result was the people were committed to living by and enforcing their laws. The nation of Lagoonia's legal system is founded upon which of the following?
Rule of Law
Which one of the following BEST explains why an American firm would establish a factory in the EU?
To obtain free trade access to the EU market
The ________ is a multinational organization of more than 160 member countries dedicated to reducing barriers to international business worldwide.
WTO
Which one of the following is a tariff imposed on goods brought into a country to offset subsidies awarded to manufacturers or exporters in the exporting country?
a countervailing duty
Due to the larger market size of an economic bloc, member country firms are able to reduce their product prices because they can ________.
attain economies of scale
In a(n) ________, which is the second level of regional integration, participating countries harmonize their external trade policies and adopt the same tariff and nontariff barriers on imports from nonparticipating countries.
customs union
In which stage of regional integration do member countries strive to have common fiscal and monetary policies?
economic union
Government intervention and trade barriers imposed by developed countries raise ______ for developing economies that supply them because tariffs are often disproportionately high.
ethical concerns
Which one of the following terms defines a government strategy aimed at handling or preventing the shipment of specific goods or trade with particular nations?
export control
Which of the following BEST defines maquiladoras?
export-assembly plants
Applying home-country laws to people and situations abroad is a practice known as ________.
extraterritorality
The Foreign Corrupt Practices Act forbids a U.S. businessperson from bribing or giving anything of value to a foreign government official for the purpose of influencing an official decision, such as granting a license to operate in a host country. This is an example of a U.S. law restricting U.S. behavior in foreign countries. The principle at work here is ________.
extraterritoriality
Japan's daitenhoo (large retail store law) restricts foreigners from opening warehouse-style stores. The law protects smaller shops by requiring large-scale retailers to obtain the approval of local retailers, a painstaking and time-consuming process. Which source of country risk arising from the host-country legal environment are foreign retailers facing in Japan?
foreign investment laws
A specific region that is located within a nation is treated as if it were outside the nation's borders. This region is designated to receive imported products that are not subject to tariffs and that are intended for assembly and subsequent re-export. Which term best describes this region?
foreign trade zone
The government of Nobula has created a specific region that is within Nobula but is treated as if it were outside the nation's borders. Firms use the region to receive imported parts for assembly and then to re-export the finished products. This region in Nobula can be described as a(n) ________.
foreign trade zone
In a(n) ________, barriers to trade within a participating country are reduced or eliminated, shared external barriers are established, and unrestricted movement of goods, services, and factors of production is permitted.
free trade area
Which of the following is a stage of regional integration in which member countries decide to remove tariffs and other barriers to trade within the bloc, but maintain trade barriers with nonmember countries?
free trade area
Although Belgium has a population of only 10 million, EU membership gives Belgian firms access to nearly 500 million EU buyers. Based on this information, a Belgian firm primarily benefits from EU membership by ________.
having access to a larger market
Which one of the following represents government approval given to a company that allows it to bring in certain products from foreign countries?
import license
The World Bank, the World Trade Organization, and the United Nations Conference on Trade and Development are examples of ________.
international organizations
Which term refers to understanding and administering laws, regulations, and rules that are used to establish standards for conduct?
legal system
