Chapter 3 Legal, Technological, Accounting, and Political Environments PDF

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International Business, Global Edition, 8e (Griffin/Pustay) Chapter 3 Legal, Technological, Accounting, and Political Environments1) Statutory law is primarily based on ____. A) legislative actions B) historic precedents C) moral judgments D) religious beliefs Answer: A Diff: 2 Skill: Concept Object...

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International Business, Global Edition, 8e (Griffin/Pustay) Chapter 3 Legal, Technological, Accounting, and Political Environments 1) Statutory law is primarily based on ________. A) legislative actions B) historic precedents C) moral judgments D) religious beliefs Answer: A Diff: 2 Skill: Concept Objective: 1 2) Common law is primarily based on ________. A) actions taken by government legislatures B) the cumulative wisdom of judges' decisions on individual cases through history C) a codification of what is and is not permissible D) the officially established rules governing the faith and practice of a particular religion Answer: B Diff: 2 Skill: Concept Objective: 1 3) Civil law is primarily based on ________. A) actions taken by local governments B) the cumulative wisdom of judges' decisions on individual cases through history C) a codification of what is and is not permissible D) the officially established rules governing the faith and practice of a particular religion Answer: C Diff: 2 Skill: Concept Objective: 1 4) Religious law is primarily based on ________. A) legislative actions B) judges' court decisions C) codifications of permissible acts D) officially established rules governing a faith Answer: D Diff: 2 Skill: Concept Objective: 1

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5) Walton Enterprises, a U.S. firm, has a facility in China. Walton managers in China frequently complain about the arbitrary rules and decisions implemented by Chinese government authorities. Such legal unpredictability suggests that China has a system based on ________ law. A) civil B) common C) theocratic D) bureaucratic Answer: D Diff: 2 Skill: Application Objective: 1 6) Which of the following is a foundation for legal systems? A) common law B) the principles of comity C) administrative law D) regulatory law Answer: A Diff: 3 Skill: Concept Objective: 1 7) ________ is the foundation of the legal systems in the United Kingdom and its former colonies. A) Common law B) Civil law C) Religious law D) Bureaucratic law Answer: A Diff: 2 Skill: Concept Objective: 1 8) ________ is based on the cumulative wisdom of judges' decisions on individual cases through history. A) Common law B) Civil law C) Statutory law D) Bureaucratic law Answer: A Diff: 2 Skill: Concept Objective: 1

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9) The foundation of the legal system in India is ________. A) common law B) civil law C) religious law D) bureaucratic law Answer: A Diff: 2 Skill: Concept Objective: 1 10) The foundation of the legal system in China is ________. A) common law B) civil law C) religious law D) bureaucratic law Answer: D Diff: 2 Skill: Concept Objective: 1 11) ________ is based on a codification of what is and is not permissible. A) Common law B) Civil law C) Statutory law D) Religious law Answer: B Diff: 2 Skill: Concept Objective: 1 12) ________ is law enacted by legislative action. A) Common law B) Civil law C) Statutory law D) Bureaucratic law Answer: C Diff: 1 Skill: Concept Objective: 1

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13) The U.S. Freedom of Information Act is an example of ________. A) common law B) civil law C) statutory law D) bureaucratic law Answer: C Diff: 2 Skill: Concept Objective: 1 14) Civil law originated in biblical times with the ________. A) French B) Greeks C) Jews D) Romans Answer: D Diff: 1 Skill: Concept Objective: 1 15) Dawson Enterprises, a U.S. firm, conducts business in Saudi Arabia. The MNE recently experienced a business dispute with a local firm and was forced to meet the demands of the local firm without going through due process. Dawson's experience most likely occurred because Saudi Arabia relies on ________. A) civil law B) common law C) religious law D) bureaucratic law Answer: C Diff: 2 Skill: Application Objective: 1 Learning Outcome: Define the fundamental concepts of international business 16) In which of the following countries are interest-bearing transactions not allowed? A) India B) South Korea C) Iran D) Mexico Answer: C Diff: 2 Skill: Concept Objective: 1

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17) A legal system that lacks due process, lacks appeals procedures, and prohibits banks from charging interest on loans is most likely based on ________. A) common law B) civil law C) religious law D) bureaucratic law Answer: C Diff: 1 Skill: Concept Objective: 1 18) In Iran, the religious law is based on the teachings of the ________. A) Bible B) Koran C) Buddha D) Napoleonic Code Answer: B Diff: 1 Skill: Concept Objective: 1 19) Under which type of legal system can contracts be broken at the whim of those in power? A) religious law B) common law C) bureaucratic law D) civil law Answer: C Diff: 2 Skill: Concept Objective: 1 20) ________ operates under bureaucratic law. A) England B) Mexico C) Iran D) China Answer: D Diff: 2 Skill: Concept Objective: 1

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21) Of the laws that may form the basis for a country's legal system, which one is considered the riskiest for international businesses? A) common law B) religious law C) bureaucratic law D) statutory law Answer: C Diff: 2 Skill: Concept Objective: 1 Learning Outcome: Explain how differences in culture affect the international business environment 22) One country in which a lack of the rule of law appears to be affecting FDI is ________. A) Russia B) Canada C) Singapore D) New Zealand Answer: A Diff: 2 Skill: Concept Objective: 2 23) Laws regarding ________ are the primary reason the manufacturers in Germany and France compete on quality rather than price. A) interest rates B) worker safety C) patent liability D) employee benefits Answer: D Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Describe how differences in political economy influence economic development 24) A country restricting access to high-technology goods or withdrawing preferential tariff treatments is using ________. A) embargoes B) trade limits C) sanctions D) extraterritoriality Answer: C Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Define the fundamental concepts of international business 6 Copyright © 2015 Pearson Education

25) Which of the following is not a sanction? A) boycotts B) embargoes C) high-interest loans D) removal of preferential tariffs Answer: C Diff: 2 Skill: Concept Objective: 2 26) The United States restricts all trade with Cuba. This is an example of a(n) ________. A) boycott B) tariff C) embargo D) ban Answer: C Diff: 1 Skill: Application Objective: 2 27) Dual-use products are those that can be used for both ________ and ________ purposes. A) civilian; military B) domestic; business C) wholesale; retail D) profit; nonprofit Answer: A Diff: 1 Skill: Concept Objective: 2 28) Many countries enforced embargoes against ________ during the 1980s to protest its apartheid policies. A) Cuba B) South Africa C) China D) Afghanistan Answer: B Diff: 1 Skill: Concept Objective: 2

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29) A country that attempts to regulate business activities that are conducted outside its borders is using ________. A) extraterritoriality B) embargoes C) sanctions D) boycotts Answer: A Diff: 2 Skill: Concept Objective: 2 30) The ________ is directed against international firms that traffic in the assets of U.S. companies that were confiscated by the Cuban government in 1959. A) Bay of Pigs Declaration B) Anti-Castro Act C) Helms-Burton Act D) Freeport McMoRan Doctrine Answer: C Diff: 1 Skill: Concept Objective: 2 31) Extraterritoriality refers to ________. A) the transfer of ownership of resources from the private to the public sector B) a government's attempt to regulate business activities outside its borders C) nationalization of a corporation without fair and appropriate compensation D) restrictions on the ability of a company to return profits to its headquarters Answer: B Diff: 2 Skill: Concept Objective: 2 32) ________ refers to the transfer of ownership of resources from the private to the public sector. A) Nationalization B) Expropriation C) Federalization D) Conversion Answer: A Diff: 1 Skill: Concept Objective: 2

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33) Expropriation is best defined as the ________. A) transference of ownership of resources from private to public sector with no compensation B) transference of ownership from private to public sector with compensation to private owners for their losses C) conversion of state-owned property to privately owned property D) conversion of state-owned property to privately owned property with no compensation Answer: B Diff: 2 Skill: Concept Objective: 2 34) Privatization is ________. A) the transfer of ownership of resources from the public to the private sector B) a government's regulation of business activities outside its borders C) nationalization without compensation D) nationalization with compensation Answer: A Diff: 2 Skill: Concept Objective: 2 35) Privatization frequently creates opportunities for international businesses because most stateowned entities are ________. A) untaxed B) well funded C) unprofitable D) well staffed Answer: C Diff: 2 Skill: Concept Objective: 2 Learning Outcome: Discuss arguments for and against government intervention in international business 36) In which industry does Mexico restrict foreign ownership? A) energy B) broadcasting C) transportation D) telecommunications Answer: A Diff: 3 Skill: Concept Objective: 2 Learning Outcome: Discuss arguments for and against government intervention in international business

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37) Which of the following best explains why the telecommunications industry has been privatized in many countries? A) shrinking ability to employ quality workers B) international regulations regarding social media C) citizen demands to separate government and business D) inability of governments to pay for technological upgrades Answer: D Diff: 3 Skill: Concept Objective: 2 Learning Outcome: Discuss arguments for and against government intervention in international business 38) Randall's Groceries, an international supermarket chain, recently opened a new store in the Taiwanese market. Which of the following will Taiwanese consumers most likely experience? A) a decrease in the selection of products B) more mom-and-pop stores C) higher standards of quality D) the loss of local jobs Answer: C Diff: 3 Skill: Application Objective: 2 Learning Outcome: Explain the implications of foreign direct investment for both host and home country 39) Hawkins Tire is an international chain of discount tire stores. The firm has recently opened a store in Frankfurt, Germany, where there are already a number of local tire stores. Which of the following is the most likely negative effect of Hawkins Tire on Frankfurt? A) failure of local tire stores B) higher prices for tires C) lower tire selection D) poor tire quality Answer: A Diff: 3 Skill: Application Objective: 2 Learning Outcome: Explain the implications of foreign direct investment for both host and home country

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40) The ________ provides that a country will honor and enforce within its own territory the judgments and decisions of foreign courts with certain limitations. A) Helms-Burton Act B) principle of comity C) arbitration agreement D) principle of fairness Answer: B Diff: 1 Skill: Concept Objective: 3 Learning Outcome: Define the fundamental concepts of international business 41) Which of the following questions is most relevant when resolving an international business dispute? A) Which country's law applies? B) Is the defendant financially solvent? C) How long should litigation occur? D) Where does the plaintiff prefer to file the dispute? Answer: A Diff: 2 Skill: Concept Objective: 3 42) Which of the following is not one of the conditions required for the principle of comity to apply? A) Reciprocity is extended between the countries. B) The defendant is given improper notice. C) The foreign court judgment violates domestic statutes or treaty obligations. D) The foreign court has less stringent punitive damages for corporations. Answer: A Diff: 2 Skill: Concept Objective: 3 43) When a company seeks to have a dispute heard in the court system most favorable to its own interests, the company is ________. A) forum shopping B) adopting the principle of comity C) rejecting the principle of comity D) engaging in arbitration Answer: A Diff: 1 Skill: Concept Objective: 3 Learning Outcome: Define the fundamental concepts of international business

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44) ________ is the process by which both parties in a conflict agree to submit their cases to a private individual or body whose decision they will honor. A) Negotiation B) Repatriation C) Arbitration D) Resolution Answer: C Diff: 1 Skill: Concept Objective: 3 Learning Outcome: Define the fundamental concepts of international business 45) ________ provides that the actions of foreign governments against U.S. firms are generally beyond the jurisdiction of U.S. courts. A) Arbitration B) The Helms-Burton Act C) The principle of comity D) The Foreign Sovereign Immunities Act of 1976 Answer: D Diff: 1 Skill: Concept Objective: 3 46) What was the key to the transition from communism to capitalism for Hungary and Poland? A) technology transfer from FDI B) investment in infrastructure C) the adoption of the euro D) low-cost labor forces Answer: A Diff: 1 Skill: Concept Objective: 3 47) In which country are monetary awards in legal disputes usually the highest? A) United States B) France C) United Kingdom D) Canada Answer: A Diff: 1 Skill: Concept Objective: 3

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48) Which of the following would most likely help a country change its technological environment? A) more government regulations B) greater government spending C) minimum wage increase D) foreign direct investment Answer: D Diff: 2 Skill: Concept Objective: 4 49) The transmittal of technology from one country to another is known as technology ________. A) repatriation B) transfer C) drain D) piracy Answer: B Diff: 1 Skill: Concept Objective: 4 50) Which country has the highest rate of software piracy? A) China B) Azerbaijan C) Pakistan D) Bangladesh Answer: A Diff: 2 Skill: Concept Objective: 4 51) The United States frequently has patent flooding disputes with ________. A) China B) Japan C) Germany D) Hong Kong Answer: B Diff: 2 Skill: Concept Objective: 2

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52) In which country do firms publish a social balance sheet detailing their treatment and compensation of their workforce? A) France B) Germany C) the United Kingdom D) China Answer: A Diff: 2 Skill: Concept Objective: 5 53) Which law was passed to address perceived public accounting problems? A) Burton-Helms Act B) Sarbanes-Oxley Act C) Berne Convention D) Hays-Douglas Act Answer: B Diff: 2 Skill: Concept Objective: 5 54) Accounting reserves ________. A) are the basis for assessing a firm's income tax burden B) record deductions and expenses that are relevant for taxes C) are important in determining how inventory should be valued D) record foreseeable future expenses that might affect a firm's operations Answer: D Diff: 2 Skill: Concept Objective: 5 Learning Outcome: Define the fundamental concepts of international business 55) ________ is a systematic analysis of the political risks possible in foreign countries. A) Environmental scanning B) SWOT analysis C) Political risk assessment D) Operating risk analysis Answer: C Diff: 1 Skill: Concept Objective: 6

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56) Which results in a loss of assets? A) repatriation B) confiscation C) expropriation D) inflation Answer: B Diff: 1 Skill: Concept Objective: 6 57) ________ is the risk associated with the potential for the firm's property to be confiscated or expropriated. A) Transfer risk B) Ownership risk C) Operating risk D) Exchange rate risk Answer: B Diff: 1 Skill: Concept Objective: 6 Learning Outcome: Define the fundamental concepts of international business 58) ________ is the risk associated with the potential for the employees or operations of the firm to be threatened by changes in laws, environmental standards, tax codes, and terrorism. A) Transfer risk B) Ownership risk C) Operating risk D) Exchange rate risk Answer: C Diff: 1 Skill: Concept Objective: 6 Learning Outcome: Define the fundamental concepts of international business 59) ________ is the risk associated with the potential for the government to interfere with the firm's ability to move funds in and out of the country. A) Transfer risk B) Ownership risk C) Operating risk D) Exchange rate risk Answer: A Diff: 1 Skill: Concept Objective: 6 Learning Outcome: Define the fundamental concepts of international business

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60) Wilfred Enterprises has foreign operations in Taiwan, India, and China. The firm pays an annual insurance premium to the Overseas Private Investment Corporation. The firm is most likely protecting itself from ________. A) privatization B) natural disasters C) nationalization D) financial instability Answer: C Diff: 2 Skill: Application Objective: 6 61) Political risk that affects all firms in a country is referred to as ________. A) micropolitical risk B) macropolitical risk C) inclusive political risk D) exclusive political risk Answer: B Diff: 1 Skill: Concept Objective: 6 62) ________ is political risk that affects only a specific firm or firms within a specific industry. A) Inclusive political risk B) Exclusive political risk C) Micropolitical risk D) Macropolitical risk Answer: C Diff: 1 Skill: Concept Objective: 6 63) ________ has one of the highest levels of macropolitical risk. A) Saudi Arabia B) Chile C) Venezuela D) Afghanistan Answer: D Diff: 2 Skill: Concept Objective: 6

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64) The Unites States limits foreigners to ________ ownership of U.S. television and radio stations. A) 25% B) 49% C) 67% D) 99% Answer: A Diff: 2 Skill: Concept Objective: 2 65) Saudi Arabia's nationalization of the oil industry in the 1970s is an example of ________. A) macropolitical risk B) micropolitical risk C) transfer risk D) ownership risk Answer: B Diff: 2 Skill: Concept Objective: 6 66) Martin, a manager at an international firm located in China, is required to monitor political risks for his employer. Which of the following would least likely provide Martin with useful information? A) consulting firms B) embassy officials C) telecommunication firms D) home country employees Answer: C Diff: 2 Skill: Application Objective: 6 67) BGL Enterprises, a global firm, operates a facility in Angola. Managers want to reduce the firm's vulnerability to political risk in Angola. All of the following actions would most likely accomplish this task except ________. A) reducing net investment in the subsidiary B) purchasing capital equipment outright C) buying inputs from local suppliers D) being a good corporate citizen Answer: B Diff: 3 Skill: Application Objective: 6 Learning Outcome: Define the fundamental concepts of international business

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68) APO Manufacturing is a U.S. based firm that manufactures electronic equipment. The firm conducts business with a Japanese electronics firm, and a dispute has arisen between the two firms regarding intellectual property rights. APO management plans to use arbitration to resolve the problem. Which of the following best supports this decision? A) APO's legal department is knowledgeable in global patent laws. B) APO's legal department expects the principle of comity to apply. C) APO needs to settle the dispute quickly and inexpensively. D) APO expects to have record profits during the next year. Answer: C Diff: 3 AACSB: Reflective Thinking Skill: Critical Thinking Objective: 3 69) The IT department at World Airlines has recently improved the airlines' Website to help facilitate transactions. Now, when repeat customers log on to the Website, their seating preferences and billing addresses are automatically...