ch 6

Country risk is present in select nations.

False

Expropriation is the term used to describe a host-country government seizing the assets of a foreign corporation and providing no compensation in return.

False

The protection of intellectual property rights is guaranteed and enforceable in every country in the world.

False

Totalitarianism's fundamental tenet is that capital and wealth should be vested in the state and used primarily as a means of production rather than for profit.

False

Trade unions are part of a country's legal system.

False

Manufacturers face legal penalties and lawsuits under product safety and liability laws if they are responsible for damage, injury, or death caused by defective products.

True

Market forces and free trade are encouraged in democracies.

True

A foreign firm's entry strategy, operations, and performance are often dictated by foreign investment laws.

True

An embargo is an official ban on exports to or imports from a particular country.

True

Civil law is primarily legislative in origin and based on laws passed by national and local legislatures.

True

Common law is more flexible than the other legal systems.

True

Common law is primarily judicial in origin and based on court decisions.

True

Democracy is characterized by limited governmental interference.

True

Democracy is closely associated with openness.

True

Government agencies, institutions, and public officials influence the manner in which foreign firms conduct business.

True

In a market economy, the government may intervene to address the inequalities that market economies sometimes produce.

True

Most democracies include elements of socialism.

True

Nationalization describes government seizure of an entire industry, with or without compensation.

True

Of the five types of participants that are active in transforming political and legal systems, the public sector is the most important.

True

One of the best sources of intelligence in the scanning process is employees working in foreign countries targeted for market entry

True

Socialism is based on a collectivist ideology which assumes that the collective welfare of people outweighs the welfare of the individual.

True

Special interest groups serve the interests of particular countries, industries, or causes.

True

The European Union impacts international trade and business because of its ability to enact and enforce laws and regulations.

True

The immediate cause of country risk is a legal or political factor.

True

Unlike other legal systems, Islamic law evolves very little over time .

True

A democratic government seeks to control not only all economic and political matters but also the attitudes, values, and beliefs of the citizenry.

False

A market economy is also called a centrally planned economy.

False

Common law is also known as code law.

False

Common law originated in the United States.

False

Confiscation is the seizure of assets with compensation.

False

Which of the following types of organizations would wield the greatest power over a firm attempting to do business in Canada? A) Canada's Ministry of Foreign Affairs B) World Trade Organization C) North American Free Trade Agreement D) Public Works and Government Services Canada

A) Canada's Ministry of Foreign Affairs

________ is the seizure of corporate assets without compensation. A) Confiscation B) Expropriation C) Embargo D) Sanction

A) Confiscation

Which of the following countries is considered a mixed economy? A) Norway B) Russia C) Vietnam D) China

A) Norway

What has been the impact of social democracy on international business relations in some European countries? A) Regulations have forced foreign firms to invest elsewhere. B) Politically conscious foreign firms have begun investing in socialist nations. C) Low income tax rates have encouraged an influx of FDI. D) Political stability has decreased the country risk of socialist nations.

A) Regulations have forced foreign firms to invest elsewhere.

Which of the following statements is true about managing country risk? A) Scanning allows a firm to assess the potential country risk. B) Firms can reduce country risk by entering markets in collaboration with a foreign partner. C) Country risk can seldom be anticipated by advance research. D) Home-country employees are the best source for anticipating country risk in host-countries.

A) Scanning allows a firm to assess the potential country risk.

________ fundamental tenet is that capital and wealth should be vested in the state and used primarily as a means of production rather than for profit. A) Socialism's B) Democracy's C) Totalitarianism's D) Theocracy's

A) Socialism's

Which of the following legal systems is based on legal precedents and past practices set by the nation's courts through interpretation of statutes, legislation, and past rulings? A) common B) religious C) socialist D) civil

A) common

A(n) ________ is an official ban on exports to or imports from a particular country, in order to isolate it and punish its government. A) embargo B) confiscation C) expropriation D) sanction

A) embargo

The World Bank is classified as a(n) ________. A) international organization B) regional economic bloc C) special interest group D) competing firm

A) international organization

Country risk is considered similar to ________. A) political risk B) commercial risk C) currency risk D) cross-cultural risk

A) political risk

Which of the following legal systems is largely practiced in the Middle East? A) religious B) socialist C) civil D) common

A) religious

Religion-based totalitarian states are called ________. A) theocratic B) secular C) socialistic D) atheistic

A) theocratic

The three major types of current political systems are ________. A) totalitarianism, socialism, and democracy B) socialism, democracy, and monarchy C) totalitarianism, liberalism, and fascism D) democracy, republicanism, and oligarchy

A) totalitarianism, socialism, and democracy

An individual from a country with a low degree of political risk would most likely be from ________. A) Venezuela B) Canada C) Zimbabwe D) Iraq

B) Canada

Which of the following is the underlying principle of socialism? A) The welfare of individuals far outweighs the welfare of society. B) Collective welfare of people outweighs the welfare of the individual. C) Capital and wealth should be vested in the hands of few and used primarily as a means of profit. D) The state should protect itself from individual and group interests.

B) Collective welfare of people outweighs the welfare of the individual.

________ is seizure of corporate assets with compensation. A) Confiscation B) Expropriation C) Embargo D) Sanction

B) Expropriation

Which form of government is characterized by private property rights and limited government? A) autocratic B) democratic C) socialist D) totalitarian

B) democratic

Which of the following would be the best way for a manager to learn about country risks in a host country? A) analysis of records of competitor firms B) employees working in the host country C) host country nationals working abroad D) employees working in the home country

B) employees working in the host country

Which of the following terms refer to the application of home-country laws to persons or conduct outside national borders? A) anti-boycott regulations B) extraterritoriality C) transparency D) anti-dumping policies

B) extraterritoriality

Income repatriation laws affect MNEs that earn profits in foreign countries by ________. A) enforcing strict stipulations on cross-border transactions and joint ventures B) limiting the amount of net income or dividends that can be transferred to the home-country headquarters C) restricting the amount of earned income being re-invested in the foreign facility D) imposing restrictions on the distribution of products from the foreign facility

B) limiting the amount of net income or dividends that can be transferred to the home-country headquarters

Boycotts and protests have the potential to harm businesses by ________. A) preventing businesses from shipping their products to foreign markets B) lost sales and increased costs for public relations activities C) destroying the ability of all local firms to carry on normal business operations D) raising concerns about a firm's foreign operations by initiating lawsuits

B) lost sales and increased costs for public relations activities

The European Union is classified as a(n) ________. A) international organization B) regional trade organization C) special interest group D) competing firm

B) regional trade organization

Which of the following is characteristic of an effective legal system? A) a stable and rigid framework of rules and norms across nations B) systematically enforced laws and regulations C) political involvement in business transactions D) universal emphasis on religious law over common and civil law

B) systematically enforced laws and regulations

Both common law and civil law systems originated in ________. A) eastern Europe B) western Europe C) western Asia D) eastern Asia

B) western Europe

________ are the people and organizations that support the political system and receive government resources. A) Subsidiaries B) Regional trade blocs C) Constituents D) Shell corporations

C) Constituents

Which of the following is a typical complaint of host-country competitors against foreign firms? A) Foreign firms burden the host-country with infrastructure requirements. B) Foreign firms do not have to obey host-country laws and regulations. C) Foreign firms receive financial support from host-country governments. D) Foreign firms lure host-country workers to the home-country businesses.

C) Foreign firms receive financial support from host-country governments.

Which of the following countries is considered primarily socialist? A) Germany B) Canada C) India D) Libya

C) India

An individual from a country with a high degree of political risk would most likely be from ________. A) Canada B) Singapore C) Iraq D) Japan

C) Iraq

The most widespread form of religious law is ________ law. A) Hindu B) Jewish C) Islamic D) Catholic

C) Islamic

A(n) ________ is a voluntary refusal to engage in commercial dealings with a nation or a company. A) expropriation B) sanction C) boycott D) confiscation

C) boycott

Which of the following is an element of socialism often found in democratic societies? A) government subsidies for foreign firms B) government sponsored businesses C) government intervention in the affairs of individuals and firms D) government control of information technology

C) government intervention in the affairs of individuals and firms

The United States restricts foreign investments that might affect ________. A) immigration reforms B) labor negotiations C) national security D) manufacturing technologies

C) national security

Which of the following best explains why India was once characterized by high country risk? A) taxes and financial incentives benefited Indian businesses over foreign firms B) Indian business leaders distrusted most European corporations C) political leaders enacted laws that targeted foreign firms for harassment D) Indian leaders feared the modern influences of American firms

C) political leaders enacted laws that targeted foreign firms for harassment

The U.S. Securities and Exchange Act encourages confidence in business transactions by ________. A) protecting public companies from government scrutiny B) evaluating the inner workings of privately owned firms C) requiring public companies to frequently disclose their financial indicators to investors D) shielding investors from bankruptcy and excessive taxation

C) requiring public companies to frequently disclose their financial indicators to investors

The Organisation for Economic Co-operation and Development (OECD) is classified as a(n) ________. A) international organization B) regional trade organization C) special interest group D) competing firm

C) special interest group

Which of the following characterizes country risk? A) The political and legal systems of adjacent nations greatly impact the country risk of nations that host foreign firms. B) Country risk will change only after the creation of laws and regulations that affect foreign firms. C) A nation's country risk level remains fairly constant until the election and installation of a new political leader. D) Country risk is always present, but its nature and intensity vary over time and from country to country.

D) Country risk is always present, but its nature and intensity vary over time and from country to country.

Which of the following pairs of nations are on opposite ends of the political freedom scale? A) New Zealand and Chile B) China and Vietnam C) Japan and South Korea D) Cuba and Sweden

D) Cuba and Sweden

Which of the following statements is true of country risk? A) Its nature remains constant over time and across nations. B) Its intensity seldom varies over time and across nations. C) It is present only in poor nations. D) It is always present.

D) It is always present.

Islamic law is based on the ________. A) Bible B) Bhagavad Gita C) Tanakh D) Qur'an

D) Qur'an

Common law can best be described as a system ________. A) designed from political and legislative regulations B) derived from religious beliefs and moral values C) based on an all-inclusive system of laws that have been codified D) based on legal precedents set by the nation's courts

D) based on legal precedents set by the nation's courts

Which of the following is the LEAST adversarial method of resolving a contractual dispute? A) trial B) arbitration C) litigation D) conciliation

D) conciliation

Which of the following terms indicates potential loss or adverse effects on company operations and profitability caused by developments in a country's political and/or legal environments. A) commercial risk B) currency risk C) cross-cultural risk D) country risk

D) country risk

Which of the following laws is responsible for the ban on cigarette advertisements in France? A) environmental laws B) product and liability laws C) foreign investment laws D) marketing and distribution laws

D) marketing and distribution laws

Which of the following terms refers to the existence of a legal system based on clear rules and fair enforcement? A) conciliation B) arbitration C) culture of law D) rule of law

D) rule of law

A(n) ________ is a type of trade penalty imposed on one or more countries by one or more other countries. A) confiscation B) expropriation C) subsidy D) sanction

D) sanction

A ________ government seeks to control not only all economic and political matters but also the attitudes, values, and beliefs of the citizenry. A) democratic B) socialistic C) mixed D) totalitarian

D) totalitarian