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Department
Administrative Studies
Course
ADMS 3960
Professor
Brian Zeiler- Kligman
Semester
Fall

Description
International Business: Environments and Operations, 14e (Daniels et al.) Chapter 3 The Political and Legal Environments Facing Business 1) 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 latent industrialization. Answer: C Diff: 3 Learning Outcome: Describe how differences in political economy influence economic development Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 2) Which of the following problems in China is blamed for the annual loss of $250 billion by American MNEs? A) theft of intellectual property B) environmental hazards C) child labor violations D) embezzlement Answer: A Diff: 2 Learning Outcome: Explain the implications of foreign direct investment for both host and home country Skill: Concept Objective: 6 3) Which of the following countries has an individualistic orientation? A) Venezuela B) Japan C) Egypt D) Canada Answer: D Diff: 2 Skill: Concept Objective: 1 AACSB: Multicultural and diversity understanding 1 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 4) Which of the following asserts that a government should NOT interfere in business affairs? A) collectivism B) laissez-faire C) the rule of man D) pluralism Answer: B Diff: 1 Skill: Concept Objective: 1 5) The principle that an individual has the freedom to pursue his or her interests is called ________. A) socialism B) totalitarianism C) individualism D) collectivism Answer: C Diff: 1 Skill: Concept Objective: 1 6) Proponents of ________ argue that individual interests are not as important as the welfare of the group. A) pluralism B) capitalism C) collectivism D) individualism Answer: C Diff: 1 Skill: Concept Objective: 1 7) In a country that emphasizes collectivism, ________. A) the interests of the individual are more important than the interests of the state B) one person or political party exercises absolute control over the political and economic systems C) the needs of society and the needs of individuals are treated as equally important D) the needs of society take precedence over individual freedoms Answer: D Diff: 3 Learning Outcome: Describe how differences in political economy influence economic development Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 2 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 8) Which of the following has a collectivist orientation? A) Canada B) Australia C) Japan D) Netherlands Answer: C Diff: 2 Skill: Concept Objective: 1 9) Political systems based on the ________ paradigm, such as those of Japan and China, promote the principle that government may intervene to ensure that business practices benefit society. A) individualistic B) collectivistic C) pluralistic D) laissez-faire Answer: B Diff: 2 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 10) 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 Answer: A Diff: 2 Skill: Concept Objective: 1 11) 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 Answer: B Diff: 1 Skill: Concept Objective: 1 3 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 12) 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 Answer: C Diff: 1 Skill: Concept Objective: 1 13) 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 Answer: D Diff: 1 Skill: Concept Objective: 1 14) Which of the following 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. Answer: C Diff: 2 Skill: Concept Objective: 1 15) ________ refers to a political system in which government is organized by and accountable to the people. A) Totalitarianism B) Fascism C) Socialism D) Democracy Answer: D Diff: 1 Skill: Concept Objective: 1 4 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 16) In a democracy, ________. A) citizens have the right to participate in the decision-making process B) the opportunity to truly participate in the political process is restricted to a select few C) the court system is directly supervised by the political system D) the rights of the individual are merged with the state Answer: A Diff: 2 Skill: Concept Objective: 1 17) In a totalitarian political system, ________. A) political power resides with the citizens of the country B) governments direct most economic activity but few social ones C) an individualistic outlook shapes political debate and policy formation D) one agent monopolizes political power Answer: D Diff: 2 Skill: Concept Objective: 1 18) Which of the following would most likely be used in a totalitarian system to ensure unquestioning 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 Answer: C Diff: 2 Skill: Application Objective: 1 19) 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 Answer: D Diff: 2 Skill: Concept Objective: 1 5 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 20) All of the following countries have totalitarian systems EXCEPT ________. A) China B) Russia C) South Korea D) Saudi Arabia Answer: C Diff: 2 Skill: Concept Objective: 1 21) Which of the following is most likely a characteristic of a partly free country, such as Guatemala? A) strict religious constraints B) fair election procedures C) respect for civil liberties D) weak rule of law Answer: D Diff: 2 Skill: Concept Objective: 1 22) In which of the following countries would business activity be under the greatest government control? A) Vietnam B) Pakistan C) India D) Brazil Answer: A Diff: 2 Learning Outcome: Describe how differences in political economy influence economic development Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 6 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 23) 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 the world as people looked to strong state leadership in uncertain times. Answer: A Diff: 3 Skill: Concept Objective: 2 24) Recently, the Economist Intelligence Unit investigated the status of democracies around the globe. Relying on 60 indicators that focus on the performance of free elections, civil liberties, government functioning, political participation, and political culture in a country, the study found that ________. A) almost all of the world's democracies are full democracies B) nearly half of the world's democracies qualify as "full" or "flawed" democracies C) less than a quarter of the countries studied are outright authoritarian regimes D) most democracies are hybrid political systems that share theocratic and totalitarian characteristics Answer: B Diff: 3 Skill: Concept Objective: 3 AACSB: Multicultural and diversity understanding 25) 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 Answer: B Diff: 3 Learning Outcome: Describe how differences in political economy influence economic development Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 7 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 26) 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 populations. 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. Answer: D Diff: 3 Skill: Concept Objective: 2 27) ________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return. A) Governmental risk B) Operating risk C) Transaction risk D) Political risk Answer: D Diff: 1 Learning Outcome: Describe how differences in political economy influence economic development Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 28) Which of the following types of political risks often is caused by ethnic conflict or civil disorder and includes 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 Answer: C Diff: 2 Learning Outcome: Describe how differences in political economy influence economic development Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 8 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 29) ________ political risks arise from political actions, such as public corruption or a partisan judicial system, that interfere with transactions between sellers and buyers and that can significantly raise the costs of getting things done. A) Systemic B) Procedural C) Catastrophic D) Distributive Answer: B Diff: 2 Learning Outcome: Describe how differences in political economy influence economic development Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 30) 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 Answer: D Diff: 3 Skill: Application Objective: 3 AACSB: Analytic Skills 31) 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 positive and negative political events in any country are neither independent nor random events. D) Active political risk management assumes that political events unfold in observable patterns that statistical methods can detect. Answer: A Diff: 3 Skill: Concept Objective: 3 9 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 32) Barkely Enterprises received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia. Which of the following did Barkely most likely receive from OPIC? A) financial capital B) cultural training C) legal guidance D) political risk insurance Answer: D Diff: 1 Skill: Application Objective: 3 33) The ________ of a country specifies the 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 Answer: D Diff: 1 Skill: Concept Objective: 4 34) 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 Answer: B Diff: 1 Skill: Concept Objective: 4 35) Which of the following is NOT a component of modern legal systems? A) constitutional law B) criminal law C) commercial law D) private law Answer: D Diff: 2 Skill: Concept Objective: 4 10 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 36) 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 Answer: C Diff: 2 Skill: Application Objective: 4 37) A(n) ________ 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 Answer: C Diff: 1 Skill: Concept Objective: 4 38) 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 Answer: B Diff: 1 Skill: Concept Objective: 4 39) 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 Answer: D Diff: 2 Skill: Application Objective: 4 11 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 40) 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 Answer: C Diff: 2 Skill: Application Objective: 5 AACSB: Reflective thinking skills 41) Which of the following is most likely a true statement regarding the rule of law? A) The rule of law is a hallmark of a totalitarian government. B) The rule of law is a hallmark of a democratic government. C) The rule of law is a hallmark of societies that place ultimate power in the hands of one person. D) Under the rule of law, the law is an apparatus of the state. Answer: B Diff: 2 Skill: Concept Objective: 5 42) The largest percentage of nations that adhere to the rule of man are located in ________. A) Central Africa B) Northern Africa C) Eastern Europe D) Central America Answer: A Diff: 2 Skill: Concept Objective: 5 AACSB: Multicultural and diversity understanding 43) Skinner Electronics plans to expand into foreign markets. Top executives want the firm to focus only on locations where the rule of law prevails. Which of the following should most likely be considered by Skinner? A) wealthier, westernized countries B) developing, non-Western countries C) emerging economies experiencing rapid growth D) countries inclined toward totalitarian-style government Answer: A Diff: 2 Learning Outcome: Describe how differences in political economy influence economic development Skill: Application Objective: 5 AACSB: Dynamics of the global economy 12 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 44) Rockwall Enterprises is planning to expand the firm by establishing operations outside of the U.S. In which of the following countries would Rockwall most likely be able to establish operations most quickly? A) Japan B) Brazil C) Germany D) Australia Answer: D Diff: 2 Skill: Application Objective: 6 45) Premium Manufacturing is planning to expand operations overseas. Executives at the firm are considering a number of different countries. Which of the following would most likely have the lowest start-up costs? A) India B) China C) Japan D) Guatemala Answer: B Diff: 2 Skill: Application Objective: 5 46) 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 Answer: B Diff: 3 Skill: Concept Objective: 6 13 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 47) Elite Manufacturing seeks a foreign location with a highly favorable business environment and a comprehensive legal code. Which of the following would be most suitable for Elite? A) Japan B) Canada C) Singapore D) United Kingdom Answer: C Diff: 1 Learning Outcome: Describe how differences in political economy influence economic development Skill: Application Objective: 6 AACSB: Dynamics of the global economy 48) 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 Answer: B Diff: 3 Skill: Concept Objective: 6 49) Countries often use local content regulations to determine the proportion of the product that must be made in the local market versus made outside of the local market in order to ________. A) maximize product safety B) ensure a cultural fit C) favor domestic companies D) relieve production pressures on local companies Answer: C Diff: 2 Skill: Concept Objective: 6 50) ________ refer(s) to the creative ideas, innovative expertise, or intangible insights that give an individual, company, or country a competitive advantage. A) Proprietary goods B) Exclusive ownership C) Restrictive goods D) Intellectual property Answer: D Diff: 1 Skill: Concept Objective: 6 14 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 51) ION Software is the registered owner of a program designed to help sort and organize incoming and outgoing e-mail. Which of the following does ION most likely have? A) intellectual property right B) trademark credential C) patent certificate D) TRIPS permit Answer: A Diff: 1 Skill: Application Objective: 6 52) 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 Answer: A Diff: 2 Skill: Concept Objective: 6 AACSB: Ethical understanding and reasoning abilities 53) 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. Answer: B Diff: 3 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 15 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 54) All of the following are reasons piracy has occurred EXCEPT ________. A) technology allows copyrighted material to be reproduced cheaply without much loss of quality B) some countries offer little protection for certain products C) in some cultures, people see little morally wrong in buying counterfeit goods D) the protection of intellectual property rights varies little from country to country Answer: D Diff: 3 Skill: Concept Objective: 6 AACSB: Ethical understanding and reasoning abilities 55) The vigor of IPR protection is highly related to a country's stage of ________. A) economic development B) cultural heterogeneity C) natural resource development D) standardization of patent regulations Answer: A Diff: 1 Skill: Concept Objective: 6 AACSB: Multicultural and diversity understanding 56) Garnet Footwear suffered significant financial losses and had to close its foreign operations. The dissolution process took six months and cost 4% of the firm's estate. Where was Garnet's foreign operations most likely located? A) Ecuador B) France C) Japan D) China Answer: C Diff: 2 Skill: Application Objective: 6 57) Logan Electronics has a production facility in Bolivia. Recently, the firm was taxed at a significantly higher rate than a local electronics company. Which type of political risk is Logan most likely experiencing? A) systemic B) procedural C) distributive D) catastrophic Answer: B Diff: 2 Skill: Application Objective: 3 16 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 58) Harmon Clothing has a production facility located in Venezuela. Recently, Harmon has been unable to arrange for overseas loans due to the burdensome regulatory policies of the Vene
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