Chapter 5: The Political, Legal, & Regulatory Environments

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82) Denmark ranks highest in bribery as listed by the Corruption Perceptions Index (CPI) by Transparency International in 2016.

: FALSE: 1: EasyChapter LO: 5.4: Describe the available alternatives for conflict resolution and dispute settlement when doing business outside the home country.AACSB: Application of knowledge

88) The University of Florence in Italy was sued by a lecturer from Belgium on grounds of discrimination. The case would go on to the European Court of Justice (ECJ), which would make a ruling based on Italian laws.

: FALSE: 1: EasyChapter LO: 5.5: In general terms, outline the regulatory environment in the European Union.AACSB: Application of knowledge

18) If a foreign company is taken over by a host country government, and some form of compensation is paid, "confiscation" has occurred.

: FALSE: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

65) Patents and trademarks that are protected in one country are protected in another, so global marketers must ensure that patents and trademarks are registered.

: FALSE: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

66) To establish ownership of a written, recorded, performed, or filmed creative work, it is necessary to apply for and be granted a patent.

: FALSE: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

69) Antitrust laws in the United States and other countries are designed to combat restrictive business practices and to discourage competition.

: FALSE: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

83) If an American businessperson pays a Russian customs agent a $20 cash "processing fee" to avoid delay in leaving Russia, the businessperson has violated the Foreign Corrupt Practices Act (FCPA).

: FALSE: 2: ModerateChapter LO: 5.4: Describe the available alternatives for conflict resolution and dispute settlement when doing business outside the home country.AACSB: Application of knowledge

21) India, Pakistan, Malaysia, Korea, and Japan have common-law jurisdictions.

: FALSE: 3: ChallengingChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

32) "Sharia" and "haram" are important concepts in civil-code laws, which are commonly practiced in Middle Eastern countries.

: FALSE: 3: ChallengingChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

75) The TRIPs agreement requires signatory countries to protect against acquisition, disclosure, or use of trade secrets "in a manner contrary to honest commercial practices."

: FALSE: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

76) What are some of the criticisms of the Foreign Corrupt Practices Act (FCPA)? Give examples in support of your

.;: One of the criticisms of FCPA is that this law does not let a person do indirectly (e.g., through an agent, joint venture partner, or other third party) what it prohibits directly. For example, Rolls-Royce (the aircraft engine manufacturer, not the luxury car brand) is one well-known company that has run afoul of the anti-bribery laws in the United States and elsewhere. The UK-based firm has businesses in a variety of sectors, including civil aviation. Its energy business was sold to Germany's Siemens in 2014 but prior to the sale there was evidence of multiple offenses that occurred in Brazil, Kazakhstan, Nigeria, and Russia. Rolls-Royce agreed to pay a $919 million fine to the United Kingdom, the United States, and Brazil. In exchange, the company was not prosecuted on criminal charges. However, several former Rolls-Royce employees, charged by the U.S. Department of Justice with conspiring to violate the FCPA, pleaded guilty.: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Analytical thinking

36) What are the differences between a patent, trademark, and a copyright? What is meant by counterfeiting?

: A patent is a formal legal document that gives an inventor the exclusive right to make, use, and sell an invention for a specified period of time. Typically, this invention should be a new, novel, and/or non-obvious creation. On the other hand, a trademark is defined as a distinctive mark, motto, device, or emblem that a manufacturer affixes to a particular product or package to distinguish it from goods produced by other manufacturers. A copyright establishes ownership of a written, recorded, performed, or filmed creative work.Counterfeiting is the unauthorized copying and production of a product. An associative counterfeit, or imitation, uses a product name that differs slightly from a well-known brand but is close enough that consumers will associate it with the genuine product. The worst form of counterfeiting is known as piracy, which is the unauthorized publication or reproduction of copyrighted work. Counterfeiting and piracy are particularly important in industries such as motion pictures, recorded music, computer software, and textbook publishing. The United States in particular has a vested interest in intellectual property protection worldwide since it is home to many companies which have patents, trademarks, and copyrighted materials.: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Reflective thinking

2) Any company doing business outside the home country should first carefully study the ________ in the target country.A) political cultureB) cultural activitiesC) intellectual activitiesD) social activitiesE) sovereignty

: A: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

24) What type of international disputes would be taken before the International Court of Justice?A) disputes between two nationsB) disputes between two companiesC) disputes between a company and a nationD) disputes between a citizen of one country and a company from a different countryE) disputes between profit and non-profit organizations

: A: 1: EasyChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

39) A formal legal document that gives an inventor the exclusive right to make, use, and sell an invention for a specified period of time is known as a:A) patent.B) copyright.C) trademark.D) trade secret.E) trade dress.

: A: 1: EasyChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

40) Engineers at a company in a developing country study an American computer chip design, copy it, and produce identical chips that are then sold to local computer makers. What form of intellectual property has been wrongly appropriated?A) patentB) copyrightC) trademarkD) trade secretsE) technological

: A: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

46) Companies such as Caterpillar have been unable to protect critical innovations in Japan because:A) products very similar to those made by U.S. companies can be patented without fear of infringement.B) the Japanese government enforces strict control over infringement rights for security reasons.C) inventions that are based on software can be easily downloaded.D) U.S. patent laws now harmonize with those in the EU as well as Japan.E) patents in Japan are broader than those in the United States.

: A: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

57) A proposed merger between two Swiss-based global pharmaceutical companies, Ciba-Geigy AG and Sandoz AG, would be subject to review by regulators from which of the following?A) European CommissionB) UN Conference on International Trade LawC) International Chamber of CommerceD) International Court of JusticeE) none of the above

: A: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

60) OPEC is a cartel, a group of separate companies that collectively:A) sets prices, controls output, or takes other actions to maximize profits.B) dictates how other countries should use their products.C) produces more products in order to beat the competition.D) conducts activities that are considered illegal in the United States.E) works on forming a union against management of other companies.

: A: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

87) Italy recently introduced the Reguzzoni-Versace Law, which is intended to regulate trade in textiles, leather, and footwear. All of the following statements pertaining to the law are correct except:A) at least four stages of production should occur in Italy for the product to be labeled as "Made in Italy."B) the countries in which the remaining production stages took place must be identified.C) Brussels objected on grounds that the law conflicts with restrictions provided by the European Union.D) EU regulators view the law as "protectionist."E) the law is more stringent than the existing laws where only one production stage has to occur in the country of origin.

: A: 2: ModerateChapter LO: 5.5: In general terms, outline the regulatory environment in the European Union.AACSB: Application of knowledge

29) In West Africa, Burkina Faso, the Ivory Coast and Senegal are former French colonies, while Nigeria, Sierra Leone, and Ghana are former British colonies. Based on this information, which of the following would be correct?A) Burkina Faso, the Ivory Coast and Senegal are civil-code countries, while Nigeria, Sierra Leone, and Ghana are common-law countries.B) Burkina Faso, the Ivory Coast and Senegal are common-law countries, while Nigeria, Sierra Leone, and Ghana are civil-code countries.C) West Africa, the Ivory Coast and Senegal are the only common-law countries.D) All the West African nations mentioned are likely to be civil-code countries.E) All the West African nations mentioned are likely to be common-law countries.

: A: 3: ChallengingChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

58) Which of the following actions were approved by the Antitrust Ruling in the United States?A) acquisition of Honeywell (U.S.) by GE (U.S.)B) joint venture between music businesses of EMI group (Great Britain) and Washington Post (U.S.)C) merger of Sony Music (Japan) and BMG (Germany)D) merger of WorldCom (U.S.) and MCI (U.S.)E) merger of British Airways (U.K.) and American Airlines (U.S.)

: A: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

38) Nippon Paper Industries was found guilty in a U.S. court of conspiring with other Japanese companies to raise fax paper prices in the United States under the antitrust laws. What are the implications of such a law, and how does it affect international business?

: Antitrust laws in the United States and other countries are designed to combat restrictive business practices and to encourage competition. Agencies such as the U.S. Federal Trade Commission, Japan's Fair Trade Commission, and the European Commission enforce antitrust laws. According to some legal experts, the pressures of global competition have resulted in an increased incidence of price-fixing and collusion among companies. The Sherman Act of 1890 prohibits certain restrictive business practices, including fixing prices, limiting production, allocating markets, or any other scheme designed to limit or avoid competition. The law applies to the activities of U.S. companies outside U.S. boundaries, as well as to foreign companies conducting business in the United States. Nippon Paper Industries was found guilty in a U.S. court of conspiring with other Japanese companies to raise fax paper prices in the United States. The Japanese government denounced the U.S. indictment as a violation of international law and Japan's sovereignty. A U.S. federal judge struck down the indictment, ruling that the Sherman Act does not apply to foreign conduct. However, a federal appeals court reversed the decision.: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Reflective thinking

3) Categories of political risk listed by EIU (Economist Intelligence Unit) include all of the following except:A) war.B) social injustice.C) politically motivated violence.D) international disputes.E) corruption.

: B: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

7) What do value added taxes (VAT) encourage in countries such as China?A) They make trademarks and copyrights more valuable.B) They result in cross-border shopping.C) They make it harder to bribe officials.D) They protect companies from antitrust scrutiny.E) Global companies refrain from offering bribes.

: B: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

48) Uber's rapid growth is an example that ________ is gaining traction.A) digital technologyB) collaborative consumptionC) ride sharingD) transport convenienceE) tourism

: B: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

55) As part of their alliance relationship, Northwest Airlines and KLM Royal Dutch set air fare prices jointly and coordinate flight schedules. Normally, such behavior would be considered harmful to competition, but the U.S. government has granted the two airlines special exemptions from laws concerning:A) intellectual property.B) antitrust.C) jurisdiction.D) licensing.E) arbitration.

: B: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

80) The United States has more lawyers than any other country in the world and is arguably the most litigious nation on earth. This is a reflection of:A) the lack of class action lawsuits.B) the low-context nature of the American culture.C) the lack of spirit of confrontational competitiveness.D) the fact that lawyers cannot undertake cases on contingency fee basis.E) the fact that conflicts arise more in the United States.

: B: 2: ModerateChapter LO: 5.4: Describe the available alternatives for conflict resolution and dispute settlement when doing business outside the home country.AACSB: Application of knowledge

4) Bureaucracy is listed as a political risk category by:A) BERI.B) PRS.C) EIU.D) WTO.E) OPIC.

: C: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

23) The International Court of Justice (ICJ) is located in:A) New York.B) London.C) Hague.D) Geneva.E) Tokyo.

: C: 1: EasyChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

45) In accordance with GATT, new U.S. patents are granted for a period of ________ years from the filing date.A) 10B) 17C) 20D) 27E) 30

: C: 1: EasyChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

10) The governmental action to dispossess a foreign company or investor is known as:A) compensation.B) confiscation.C) expropriation.D) internationalization.E) nationalization.

: C: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

9) ________ refers to governmental action to dispossess a foreign company or investor. Compensation is generally provided, often not in the "prompt, effective, and adequate" manner provided for by international standards.A) NationalizationB) ConfiscationC) ExpropriationD) InternationalizationE) Deportation

: C: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

31) Any Western country doing business in Malaysia or the Middle East should have an understanding of:A) the French Civil Code.B) Anglo-Saxon common law.C) Islamic law.D) the Uniform Commercial Code.E) Roman law and the Napoleonic Code.

: C: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

41) Counterfeiting is:A) the use of a formal legal document for illegal purposes.B) the ownership of a written, recorded, performed or filmed creative work.C) the unauthorized copying or production of a product.D) the use of a product name that has different meaning than the original brand.E) the use of a distinctive mark of a brand that is no longer producing the original brand.

: C: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

50) In 2005, representatives from several wine regions in the United States and the EU signed a Joint Declaration to Protect Wine Place & Origin. In addition, a Wine Accord signed by the United States and EU bans the:A) use of alcohol in public places.B) purchase of wine from country of origin.C) misuse of place names by marketers of wine products that do not originate in those places.D) misuse of labels which do not include the origin of ingredients.E) use of the word "champagne" on wine made in the United States.

: C: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

64) The following criminal penalties may be imposed for violations of the FCPA'S (Foreign Corrupt Practices Act) antibribery provisions except:A) corporations are subject to a fine of up to $2,000,000.B) officers, directors, stockholders, employees, and agents are subject to a fine of up to $100,000.C) fines imposed on individuals can be paid by their employer or principal.D) the fines may be much higher, up to twice the benefit sought by the defendant.E) in addition to fines, there may be imprisonment for up to five years.

: C: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

86) A company stands a better chance of having an international arbitration decision upheld if its home-country government has signed:A) the Paris Convention.B) the Prague Convention.C) the New York Convention.D) the Vienna Convention.E) the Geneva Convention.

: C: 2: ModerateChapter LO: 5.5: In general terms, outline the regulatory environment in the European Union.AACSB: Application of knowledge

61) Which of the following best describes the legal basis for protection of trade secrets, patents, and copyrights in the United States?A) Trade secrets, patents, and copyrights are protected by federal statutes.B) Trade secrets, patents, and copyrights are protected by state law.C) Trade secrets are protected by state law, while patents and copyrights are protected by federal statutes.D) Trade secrets are protected by federal statutes, while patents and copyrights are protected by state law.E) Trade secrets, patents, and copyrights are not protected by any laws.

: C: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

26) The Uniform Commercial Code (UCC) is fully adopted by all U.S. states except:A) Virginia.B) North Dakota.C) Wisconsin.D) Louisiana.E) Montana.

: D: 1: EasyChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

27) The German civil-law tradition prevails in all of the following countries except:A) Poland.B) Hungary.C) Czech Republic.D) Scandinavia.E) Germany.

: D: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

30) Islamic law is a comprehensive code based in part on:A) Anglo-Saxon common law.B) Roman law and the Napoleonic Code.C) the Uniform Commercial Code.D) the Koran.E) the French Civil Code.

: D: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

53) Which of the following is true about protection of computer software?A) Copyright laws protect both the actual code and the idea embodied in the code.B) Patent laws protect both the actual code and the idea embodied in the code.C) Patent laws protect the actual code, while copyright laws protect the idea.D) Copyright laws protect the actual code, while patent laws protect the idea.E) License protects both the actual code and the idea embodied in the code.

: D: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

54) Which of the following is true about revised U.S. patent laws?A) Patents are valid for 17 years after the patent is granted.B) Patents are valid for 17 years after the patent is filed.C) Patents are valid for 20 years after the patent is granted.D) Patents are valid for 20 years after the filing date of the application.E) Patents are valid as long as the product is manufactured.

: D: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

79) When companies operate abroad in the absence of home-country legal constraints, the best choice for ethical conduct would be:A) to ignore bribery and act as if it does not exist.B) to maintain home-country ethics worldwide with no adaptations.C) to abandon any attempt to maintain company ethics.D) to have a product that is clearly superior to that of the competition.E) to adapt in varying degrees to local customs and practices.

: D: 2: ModerateChapter LO: 5.4: Describe the available alternatives for conflict resolution and dispute settlement when doing business outside the home country.AACSB: Application of knowledge

44) Which of the following would constitute a copyright violation?A) manufacturing and selling illegal videocassette copies of "Spiderman"B) manufacturing and selling illegal copies of Levi jeansC) printing and selling illegal copies of Harry Potter booksD) A, B, and C are copyright violations.E) A and B are copyright violations.

: D: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

62) The U.S. Justice Department objected to a recent patent license agreement between S.C. Johnson & Sons and Bayer AG. The antitrust unit at the Justice department objected to:A) the duration of the license.B) the amount of royalties Johnson agreed to pay.C) Bayer's attempts to circumvent FDA policies.D) the exclusive nature of the license agreement.E) the hostile arrangement between Bayer and Johnson.

: D: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

5) Various types of political risk insurance to U.S. companies is provided by:A) BERI (Business Environment Risk Intelligence).B) PRS Group.C) EIU (Economist Intelligence Unit).D) WTO (World Trade Organization).E) OPIC (Overseas Private Investment Corporation).

: E: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

63) According to Transparency International's Corruption Perceptions Index scores for 2016, the country which was listed as most corrupt was:A) Iraq.B) Uzbekistan.C) Chad.D) Afghanistan.E) Somalia.

: E: 1: EasyChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

6) The high level of political risk currently evident in Russia can be attributed in part to:A) changing of name of the country.B) changing the national flag.C) excessive loans from the International Monetary Fund (IMF).D) participation in the WTO (World Trade Organization).E) environment of uncertainty for foreign companies.

: E: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

1) Which of the following statements does not reflect performance and service provided by Uber nationally and internationally?A) Industry observers hailed the company as a prime example of digital technology disrupting an established industry.B) Uber's rapid growth was another example that the "sharing economy," also known as "collaborative consumption," was gaining traction.C) Uber has encountered resistance as its popularity has grown.D) In Brussels, a court fines drivers who use Uber service.E) The European Commission conducted an inquiry and found Uber to be different than taxi services.

: E: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Reflective thinking

25) What happens if a nation has allowed a case against it to be brought before the ICJ (International Court of Justice) and then refuses to accept a judgment against it?A) American Arbitration Association can be sought for justice.B) UN Conference on International Trade Law can be approached.C) International Chamber of Commerce will be another source for seeking justice.D) European Court of Justice can be approached if the country is in the European Union.E) The plaintiff nation can seek recourse through the United Nations Security Council.

: E: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Application of knowledge

42) The unauthorized publication or reproduction of copyrighted work is referred to as:A) associative counterfeit.B) imitation.C) mistake.D) trade secrets.E) piracy.

: E: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

49) All of the following statements are true regarding services provided by Uber except:A) in Brussels, a court fines drivers who use the service.B) in London and other major cities, drivers have staged demonstrations claiming unfair competition.C) regulators in Germany succeeded in obtaining a temporary injunction banning the service.D) Uber was banned in the Delhi region after a driver was accused of sexually assaulting a female passenger.E) Uber is considered as an "information-society service" in 250 cities where it operates.

: E: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

81) Which of the following is true of the arbitration framework created by the New York Convention?A) Signatory countries can require parties to an arbitration agreement to actually use arbitration.B) Signatory countries recognize and can enforce arbitration judgments.C) There are limited grounds for appealing arbitration decisions.D) The grounds that are recognized are different than the typical appeals that are permitted in a court of law.E) all of the above

: E: 2: ModerateChapter LO: 5.4: Describe the available alternatives for conflict resolution and dispute settlement when doing business outside the home country.AACSB: Application of knowledge

8) In Great Britain, the Wine and Spirit Association estimates that, on average, cars returning from France are loaded with 80 bottles of wine. This is most likely due to:A) trademarks and copyrights violation.B) cross-border smuggling.C) bribes accepted by officers.D) antitrust scrutiny.E) high excise and VAT taxes.

: E: 3: ChallengingChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

56) The European Commission has jurisdiction over European-based companies as well as non-European ones that generate significant revenues in Europe. If Microsoft applies in Europe, the Commission has a right to all of the following except:A) it can block a proposed merger.B) it can block a proposed joint venture.C) it can approve with minor modifications.D) it can demand substantial concessions before granting approval.E) it can refer serious matters to the UN Security Council.

: E: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

59) Consten, a French company, had exclusive rights to import and distribute German Grundig's electronic products into France. One of the competitors started bringing "parallel imports" into France illegally, importing Grundig products bought from a foreign supplier. Which of the following does not represent an action taken by different legal bodies?A) Consten's complaint was upheld by two French courts.B) The Paris Court of Appeals suspended the judgment of the French courts.C) The Paris Court of Appeal's judgment was based on a ruling by the European Commission.D) The European Commission ruled against Consten on the grounds that territorial protection proved to be damaging to the Common Market.E) The European Commission ruled that Grundig was in violation of the laws of the Common Market.

: E: 3: ChallengingChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Application of knowledge

91) In most of the European Union countries, the influence of regulatory agencies is pervasive. What steps will be necessary of a corporation to protect business interest and advance new programs?

: Executives of companies who would like to go global should realize that the influence of regulatory agencies worldwide is getting very pervasive. One way to understand the operation and legal aspects related to business environment is to have permanent representation of the company in the country. International companies such as McDonald's, Nike, and Toyota have several people representing their interests to the European Commission. Companies hire several lobbyists to represent their interests as well as to influence the direction of the regulatory process. U.S. law firms and consulting firms also have sharply increased in number and can be seen having offices in Brussels. This way they can gain insight into EU politics and have access to its policymakers. It may also be possible to hire local people as official representatives of the companies. It is estimated that currently there are 15,000 lobbyists in Brussels representing about 1,400 companies and nonprofit organizations from around the world.: 2: ModerateChapter LO: 5.5: In general terms, outline the regulatory environment in the European Union.AACSB: Analytical thinking

11) The roots of modern international law can be traced to the twentieth-century Peace of Westphalia.

: FALSE: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

13) Russian consumers have little choice but to "buy local" since farmed salmon has expanded to keep up with booming demand.

: FALSE: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

14) Terms like crony capitalism and kleptocracy refer to rampant corruption and bribery within capitalism.

: FALSE: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

15) A current global phenomenon in both nonmarket and market structures is the trend toward capitalism.

: FALSE: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

47) What is the reason behind the formation of the American Innovation Act? What does this Act address?

: In 2011, the U.S. government overhauled the patent system once again with the passage of the American Innovation Act. This Act addressed the problem of so-called patent trolls who file multiple patent applications with the intent of getting large tech companies such as Facebook, Apple, and Google to pay large sums to settle patent claims. A new entity, the Patent Trial and Appeal Board, was created to expedite the process of resolving patent infringement cases. Some observers have noted that the push-back on patent protection has led to a decline of U.S. investment in life sciences and software.: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Reflective thinking

22) What will happen if a European Union's competition commission ruled against a company? Give examples to illustrate your point.

: In fall 2017, the EU's competition commissioner, announced that Amazon would have to pay €250 million in back taxes after the European Commission ruled that the online giant's Luxembourg operations had benefited from illegal state aid over a ten-year period. In 2004, Amazon had shifted certain intellectual property (IP) into a non-taxable holding company in Luxembourg that collected IP royalties from operations in Europe and then paid the parent company. The Brussels-based Commission alleged that the arrangement allowed Amazon to shift as much as three-fourths of its European profits into the holding company, thereby reducing its tax bill. Under EU law, individual EU states cannot selectively grant tax benefits to some global companies but not others. Not surprisingly, Amazon denied any wrongdoing. The previous year, in 2016, the Commission ruled that Ireland had granted Apple illegal tax advantages, and ordered the country to recover €13 billion in back taxes. Both Apple and Ireland disagreed with the Commission's findings; Apple CEO Tim Cook called the investigation and the resulting ruling "total political crap." After Apple refused to pay, the Commission referred the case to the European Court of Justice.: 3: ChallengingChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Reflective thinking

37) When a company invents a product or service, it should have a right to defend its creativity with intellectual patents. However, there are some countries like Italy and China where piracy and copyright violations are common. How can a corporation prevent this by having some built-in measures in products and services?

: Individuals or companies sometimes find ways to exploit loopholes or other unique opportunities in patent, trademark, and copyrights. A company should take measures to protect itself from such piracy situations. For many of the technological products, certain codes can be built into the software program such that it is self-destructive or becomes inaccessible for those who would like to use piracy. One of the sure safe methods is to make the product or service of such a quality that it becomes very difficult or expensive for anyone to copy. One such example can be seen in the formulas of Coke and Pepsi beverages. The product has special features and it is distributed so cheaply such that there is no money left for the counterfeiters. Similarly, packages and containers can be made in such a way that it will become expensive or otherwise technologically impossible to copy. For example, in China, Budweiser cans have fluted edges that are difficult to manufacture. Thus, there can be some inherent qualities or manufactured processes which can make it difficult, if not impossible, to duplicate.: 3: ChallengingChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Reflective thinking

35) Explain, giving examples, as to why "jurisdiction" plays an important role in global marketing?

: Jurisdiction plays an important role in trade-related disputes. Two examples illustrate the importance jurisdiction plays in addressing trade-related disputes. One pitted Volkswagen AG against General Motors. After GM's worldwide head of purchasing, José Ignacio López de Arriortúa, was hired by Volkswagen in 1992, his former employer accused him of taking trade secrets. Volkswagen accepted U.S. court jurisdiction in the dispute, although the company's lawyers requested that the U.S. District Court in Detroit transfer the case to Germany. Jurisdiction was also an issue in a trade dispute that pitted Eastman Kodak against Fuji Photo Film. Kodak alleged that the Japanese government had helped Fuji in Japan by blocking the distribution of Kodak film. The U.S. government turned the case over to the WTO despite the opinion expressed by many experts that the WTO lacks jurisdiction in complaints over trade and competition policy.: 2: ModerateChapter LO: 5.2: Define international law and describe the main types of legal systems found in different parts of the world.AACSB: Reflective thinking

78) What should a U.S. company do if competitors are willing to offer a bribe for business in a foreign country?

: Managers have to realize the fact that bribery is a fact of life in world markets. It is not going to change overnight or based on how ethical the U.S. companies feel about their business. In fact, bribery payments are considered a deductible business expense in many European countries. Two alternative courses of action are possible. One is to ignore bribery and act as if it does not exist. This may be a very hard option. The other is to recognize the existence of bribery and evaluate its effect on the customer's purchase decision, in other words, treating it as just another element of the marketing mix. The overall value of a company's offer must be as good as, or better than, the competitor's overall offering, including bribe. If possible, a lower price, a better product, a better distribution system, or better advertisement/promotion can be undertaken to beat the competition. The best line of defense is to have a product or service that is superior to that of the competition, whether a bribe is included or not. Thus, a bribe should not be a factor that will sway the purchase decision.: 2: ModerateChapter LO: 5.3: Understand the most important business issues that can lead to legal problems for global marketers.AACSB: Analytical thinking

12) As the ruble's value fell through most of 2014, European firms began to feel the effects.

: TRUE: 1: EasyChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

16) British Petroleum, British Airways, and Rolls-Royce were privatized under Margaret Thatcher's administration.

: TRUE: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

17) In Europe, individual EU countries gave up the right to have their own currencies, ceded the right to set their own product standards, and have made other sacrifices in exchange for improved market access.

: TRUE: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

19) If a foreign company is taken over by the host country government, and some form of compensation is paid, "expropriation" has occurred.

: TRUE: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

20) The Brexit issue can be viewed as a mandate by Britons to regain some of what their nation lost to the "collective sovereignty" of the EU28.

: TRUE: 2: ModerateChapter LO: 5.1: Understand the elements of a country's political environment that can impact global marketing activities.AACSB: Application of knowledge

67) Some legal experts believe that the pressures of global competition have resulted in an increased incidence of price-fixing and collusion among companies.