IB Quiz Ch 3

In which of the following countries would business activity, given its statutes as a "not free" marketplace, be under the greatest government control? a. Vietnam b. Pakistan c. India d. Brazil

a. Vietnam

Which of the following was a notable trend in political systems during the second half of the 20th century and beginning of the 21st century? a. a wave of democratic transformations occurred as countries around the world moved away from totalitarian systems b. a wave of theocratic revolutions occurred as people around the world looked to spirituality to guide them c. socialistic revolutions swept the world as countries aspired toward greater social justice d. a totalitarian revolution swept through the world as people looked to strong state leadership in uncertain times

a. a wave of democratic transformations occurred as countries around the world moved away from totalitarian systems

Countries with a ____ legal system tend to encourage precise, detailed contracts, whereas countries with a ___ legal system tend to encourage shorter and less specific contracts a. theocratic, mixed b. common, civil c. civil, customary d. customary, common

a. common, civil

The vigor of IPR production is highly related to a country's stage of ____ a. economic development b. cultural homogeneity c. natural resource development d. standardization of patent regulations

a. economic development

Although there are different views about the purpose of a political system, most analysts agree that an essential task of a political system is to a. integrate the different elements of a society into a functioning unit b. allocate scarce resources among competing users c. develop reasonable attitudes and outlooks within the population d. protect individuals within the country from foreign threats

a. integrate the different elements of a society into a functioning unit

ION Software is the registered owner of a program designed to help sort and organize incoming and outgoing e-mail. Which of the following legal conventions does ION most likely have? a. intellectual property right b. trademark credential c. patent certificate d. TRIPS permit

a. intellectual property right

Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has recently developed an innovative blender design that Wharton executives anticipate being very profitable. Currently, Wharton has production facilities in the U.S. and China. Wharton executives are trying to determine where the new product should be manufactured. Which of the following best supports a decision to manufacture the new product in the US instead of China? a. intellectual property rights are strongly protected by US patent laws b. a strategic marketing plan can be quickly developed in the US c. contract enforcement is a simple process in the US d. the US is experiencing an economic recession

a. intellectual property rights are strongly protected by US patent laws

Most counterfeit goods are made in markets in which ________ is the basis of the legal system. a. the rule of man b. the rule of law c. religious doctrine d. corporate precedent

a. the rule of man

Which of the following is most likely a true statement regarding the rule of law? The rule of law is a hallmark of ____ a. a totalitarian government b. a democratic government c. societies that place the ultimate power in the hands of one person d. countries that are considered "partly free"

b. a democratic government

Political systems based on the ___ paradigm, such as those of Japan and China, accept the principle that government may intervene to ensure that business practices benefit society a. individualistic b. collectivist c. pluralistic d. laissez-faire

b. collectivist

A ___ law system is based on tradition, judge-made precedent, and usage and assigns a preeminent position to existing case law as a guide to dispute resolution a. theocratic b. common c. customary d. civil

b. common

Which of the following statements referring to intellectual property rights and violations is incorrect? a. richer countries claim looser regulation of intellectual property rights will hinder innovation b. companies can register a global patent, trademark, or copyright through the world trade organization (WTO) c. the international anti-counterfeiting coalition estimates international trade in counterfeit products at $600 billion a year d. developing markets claim tougher regulation of IPRs will slow, if not halt, their economic development

b. companies can register a global patent, trademark, or copyright through the world trade organization (WTO)

A system of ________ law sets the framework for the system of government and defines the authority and procedure of political bodies to establish laws and regulations. a. criminal b. constitutional c. civil d. commercial

b. constitutional

Local content regulations are primarily intended to ___. a. address cultural differences between local employees and expatriates b. encourage MNEs to increase production activities in a country c. address contract negotiation difficulties d. assess local tax rates on MNEs

b. encourage MNEs to increase production activities in a country

____ procedural risks arise from political actions, such as public corruption or a partisan judicial system, that interfere with transactions between sellers and buyers that can significantly raise the costs of getting things done a. systemic b. procedural c. catastrophic d. distributive

b. procedural

The march toward greater political freedoms and more expansive civil liberties, beginning in the 1970s, strongly fueled a sense of ________. a. less predictable operating conditions for companies b. the inevitability of democracy c. different rules for domestic versus international competition d. weaker property rights

b. the inevitability of democracy

In a practical sense, the term political system is meant to signify the ______ a. organization of military power in a country b. working government in a country c. philosophical orientations in a country d. cultural values in a country

b. working government in a country

All of the following countries have a totalitarian political system except ____. a. China b. Russia c. South Korea d. Saudi Arabia

c. Douth Korea

Garnet Footwear suffered significant financial losses and had to close its foreign operations. The dissolution process took six months and cost four percent of the firm's estate. Where was Garnet's foreign operations most likely located? a. Ecuador b. France c. Japan d. China

c. Japan

Elite Manufacturing seeks a foreign location with a highly favorable business environment and a comprehensive legal code. Which of the following countries would be most suitable for Elite? a. Japan b. Canada c. Singapore d. United Kingdom

c. Singapore

Which of the following is a true statement about China? a. The Chinese government's shift from communism to capitalism has led to an increase in FDI b. China attracts FDI because the government has eliminated elaborate bureaucracies c. The Chinese government manipulates market activities for political purposes d. China lacks an educated pool of employees due to slowly developing industrialization

c. The Chinese government manipulates market activities for political purposes

Which of the following types of political risks often are caused by ethnic conflict or civil disorder and include those random political developments that adversely affect the operations of all companies in a country? a. systemic political risk b. procedural political risk c. catastrophic political risk d. distributive political risk

c. catastrophic political risk

A ___ law system is based on a systematic and extensive codification of laws and puts political officials in charge of specifying accessible, detailed, and written law that applies to all citizens a. customary b. common c. civil d. theocratic

c. civil

Which of the following statements best describes a pluralistic society? a. multiple segments of society adhere to the same political philosophy b. two dominant political parties rule local and federal governments c. different ideologies are held by different segments of society d. various ethnic groups belong to the official political party

c. different ideologies are held by different segments of society

The distinguishing feature of political ideologies along the political spectrum is _____, with some emphasizing its primacy and others opposing it a. capitalism b. socialism c. freedom d. liberalism

c. freedom

Which of the following would most likely be used in a totalitarian system to promote unconditional support for the official ideology? a. privately owned media outlets b. a parliamentary system c. state control of the education system d. a representative legislative body

c. state control of the educational system

A(n) _______ ideology is the system of ideas that expresses the goals, theories, and aims of how society should work. a. technological b. economic c. legal d. political

d. political

___ is the chance that political forces may change a country's business environment in ways that lead investors to lose or all of the value of their investment or be forced to accept a lower-than-projected rate of returns a. governmental risk b. operating risk c. transaction risk d. political risk

d. political risk

Barkely Enterprises, a U.S. manufacturer, received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia. Which of the following types of support did Barkely most likely receive from OPIC? a. financial capital b. cultural training c. legal guidance d. political risk insurance

d. political risk insurance

Harmon clothing has a production facility located in Venezuela. Recently, Harmon has been unable to arrange for overseas due to the burdensome regulatory policies of the Venezuelan government. Which type of political risk is Harmon most likely experiencing? a. catastrophic b. distributive c. procedural d. systemic

d. systemic

All of the following are reasons piracy has occurred except ___ a. technology allows copyrighted materials to be reproduced cheaply without much loss of quality b. some countries offer little protection for certain products c. in some countries, people see little morally wrong in buying counterfeit goods d. the production of intellectual property rights varies little from country to country

d. the production of intellectual property rights varies little from country to country

True or false: international companies often must customize products to comply with local standards if they are to do business in a particular country

true

True or false: managers who take an active approach to political risk management are likely to rely on statistical modeling to quantify the precise degree of political risk

true

True or false: political ideology is the collection of ideas that expresses the goals. theories, and aims that constitute a sociopolitical program

true

True or false: research indicates that democracy is declining around the world and that totalitarian regimes are increasing

true

True or false: the rule of law holds that governmental authority is legitimately exercised only in accordance with written, publicly disclosed laws that have been appropriately adopted and which are enforced in keeping with established procedure

true

True or false: totalitarianism is a political ideology that typically involves constant indoctrination of the population by agents of the government to eliminate dissent

true

true or false: multilateral development banks encourage development in risky environments through financial incentives

true

true or false: political risk insurance is more likely to be purchased by MNEs that apply an active approach to political risk management

true

true or false: the rule of man, a practice that has been in play for millennia, presumes that the law is the will of the ruler, whether the king, czar, raj, or emperor

true

Ian, a financial manager, is preparing to transfer to Germany where he will serve as an expatriate manager of his employer's European office. With which type of legal system will Ian most likely have to deal with in Germany? a. mixed b. common c. civil d. theocratic

c. civil

The pushback against democracy has powered a rise in totalitarianism, a situation that is likely to include which of the following? a. increasing adoption of the principles of the rule of law b. growing demands worldwide for greater fairness and justice in legal proceedings c. increasing adoption of the principles of the rule of man d. suppression of state-control in the direction of legal activities

c. increasing adoption of the principles of the rule of man

Which of the following countries has an individualistic orientation? a. Venezuela b. Japan c. Egypt d. Canada

d. Canada

___ refers to a political system in which government is organized and accountable to the people a. totalitarianism b. fascism c. socialism d. democracy

d. democracy

True or false: As exemplified in China, the government in a collectivist society is highly connected to and interdependent with business.

true

True or false: Laws on local business activities directly influence the operations of domestic and foreign companies in areas such as hiring and firing workers

true

True or false: The third wave of democratization was partially triggered by improved communication systems

true

True or false: a common law system is based on tradition, judge-made precedent, and usage in which courts assign a preeminent position to existing case law to guide dispute resolution

true

True or false: civil conflict, tax discrimination, weak legal systems, and terrorist actions are political risks faced by MNEs operating in foreign countries

true

Which of the following statements about approaches to political risk management is not true? a. passive political risk management discourages managers from fully or partially hedging their bets against exposure to political hazards b. passive political risk management assumes that it is difficult, if not impossible, to systematically model political risk c. active political risk management assumes that political events unfold in observable patterns that statistical methods can detect d. active political risk management assumes that positive and negative political events in any country are neither independent nor random events

a. passive political risk management discourages managers from fully or partially hedging their bets against exposure to political hazards

Premium Manufacturing is planning to expand operations overseas. Executives at the firm are considering a number of different countries. Which of the following countries would most likely have the lowest start-up costs? a. India b. China c. Japan d. Guatemala

b. China

Select the correct order, going from low to high total impact on an MNE, of the following types of political risk: (1) procedural political risks, (2) systemic political risks, (3) distributive political risks, (4) catastrophic political risks a. 3, 2, 1, 4 b. 1, 2, 3, 4 c. 2, 3, 4, 1 d. 2, 1, 3, 4

d. 2, 1, 3, 4

Under the ________ form of totalitarianism, the regime confines itself to political control of the state. It does not regulate the economic and social structure of society. a. fascist b. communist c. theocratic d. authoritarian

d. authoritarian

Which of the following is a condition that powered the worldwide spread of democracy from 1970 onward a. totalitarian regimes delivered acceptable economic progress to their population b. economic advances caused contentment among the working class and minimized the need to push for democratic reforms c. many groups were able to successfully challenge the legitimacy of democratic systems d. information and communications technologies broke down the ability of the state to control access to uncensored information, especially that from foreign sources

d. information and communications technologies broke down the ability of the state to control access to uncensored information, especially that from foreign sources

The _____ of a country specifies rules that regulate behavior, the processes by which laws are enforced, and the procedures used to resolve grievances a. political system b. political philosophy c. philosophical orientation d. legal system

d. legal system

A U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a ___ legal system a. civil b. common c. customary d. mixed

d. mixed

True or false: Countries with a theocratic legal system, detailed contracts whereas countries with a common legal system encourage shorter and less specific contracts

false

True or false: International law takes precedence over national laws in determining permissible practices in pricing, distribution, advertising, and promotion of products and services in a particular country

false

True or false: totalitarian countries are favored by MNEs because state governments typically favor foreign investors over local companies

false

True or false:A civil law system anchors itself in the wisdom of daily experience or, more intellectually, great spiritual or philosophical traditions

false