55) Explain the benefits and drawbacks of a value-added tax.
56) The U.S. legal system is largely based on ________.
A) common law
B) social law
C) civil law
D) theocratic law
57) ________ 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
58) ________ is a legal system which is based on a detailed set of written rules and statutes that
constitute a legal code and it is also based on a codification of what is and is not permissible.
A) International law
B) Civil law
C) Tribal law
D) Common law
59) A legal tradition based on religious teachings is called ________ law.
A) democratic
B) common
C) civil
D) theocratic
60) Laws designed to prevent companies from fixing prices, sharing markets, and gaining unfair
monopoly advantages are called ________.
A) antitrust laws
B) theocratic laws
C) anarchist laws
D) bilateral laws
61) Susan is worried that San Tarino’s demand that she must use locally available raw material
and employ local workers might interfere with the quality and efficiency of her business. San
Tarino, on the other hand, views this as a way to foster local business activity and lessen regional
unemployment. What are these laws called?
A) local content requirements
B) antitrust laws
C) nationalization laws
D) internalization policies
62) The first question that Stephanie expects participants to ask is: “Which is more important for
the Chinese, contacts or contracts?” Which of the following is the most effective response
Stephanie could give for this question?
A) Contracts are critical because of their extreme importance in Chinese business.
B) Face-to-face communications and personal relationships take priority over written contracts.
C) Non-Chinese businesspeople should take time to agree on a legal contract before developing
personal relationships.
D) Business relationships are established only after successful legal dealings are concluded.
63) Which of the following factors should the legal experts of Wayne’s consider while evaluating
the legal systems of Paribo and Kirawi?
A) the profits made by local companies in the countries
B) the prevalence of crime in the two countries
C) the resolution of contractual dispute with local vendors
D) the profits made by international companies in other countries
64) Which of the following statements is true of Kirawi, a democratic nation whose legal system
is based on common law?
A) The law is based on religious teachings and is enforced by the country’s religious leaders.
B) The law is inflexible and is applied the same way in all situations.
C) The law is based on a detailed set of written rules that constitute a legal code.
D) The law is interpreted on the basis of tradition, precedent and usage.
65) Which of the following statements is true of Paribo, a democratic nation whose legal system
is based on civil law?
A) The law is based on religious teachings and is enforced by the country’s religious leaders.
B) The law is flexible and its interpretations differ with situations.
C) The law is based on a detailed set of written rules that constitute a legal code.
D) The law is interpreted on the basis of tradition, precedent and usage.
66) Which of the following, if true, demonstrates that Kirawi has an unstable business
environment?
A) Its business laws are inflexible and cannot be interpreted according to the comfort of
government officials.
B) Its government does not enforce product liability laws or protect individual property rights.
C) Its activities are bound by several multilateral agreements conducted with neighboring
countries.
D) Its private sector comprises independently owned firms that exist to make profits.
67) A common law system is based on tradition, judge-made precedent, and usage in which the
courts assign a preeminent position to existing case law to guide dispute resolution.
68) Islamic law is the most widely practiced theocratic legal system today.
69) Describe the importance of a nation’s legal system, and identify the main differences between
the three main types of legal systems.
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70) Explain each of the following terms, giving examples of each: patent, trademark, and
copyright.
71) Explain the purpose of antitrust laws. How would the Friedman philosophy of corporate
social responsibility most likely support a decision by a company to expand internationally into a
country with weak antitrust laws? Include a description of the Friedman philosophy in your
answer.
72) Which of the following is an important factor in forming successful business ventures in
China?
A) following the strategies of western countries for establishing business relationships
B) focusing on establishing tight formal contracts
C) giving high importance to written contracts
D) establishing a trusting relationship before proceeding with business
73) ________ refers to the transfer of ownership of resources from the private to the public
sector.
A) Nationalization
B) Expropriation
C) Federalization
D) Conversion
74) A ________ is a right granted to the inventor of a product or process that excludes others
from making, using, or selling the invention.
A) patent
B) trademark
C) watertight
D) copyright
LO: 3.4: Outline the global legal issues facing international firms.
75) 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
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76) Shimmer and Sparkle is an American jewelry store which discovers that several shops in
developing countries are selling counterfeited necklaces under their name and label. Which of
the following problems are they facing?
A) patent expiration
B) trademark infringement
C) copyright expiration
D) monopolization
77) 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.
78) Which of the following functions does a copyright perform?
A) It protects the trade secrets of an organization, including its business plans.
B) It prevents a company from monopolizing an invention.
C) It distinguishes the product and manufacturers from competitors through distinct words and
symbols.
D) It gives creators of original work the freedom to publish or dispose of them as they choose.
79) Product liability laws are those which ________.
A) provide consumers with a wide variety of products at fair prices
B) add value to a product throughout its production and distribution
C) protect people from defective products
D) define the taxation on locally manufactured products
80) On a recent trip to Hong Kong, a group of tourists found several Prada bags being sold on the
pavement. They cost only a few dollars and were clearly fake; though they bore the Prada
trademark. This is an example of ________.
A) piracy
B) monopolization
C) ethnocentrism
D) nationalization
81) Susan finally settles upon Valmira because it has a stable business environment. Which of
the following factors, if true, proves her decision to be a good one?
A) Valmira does not enforce any product liability laws.
B) Valmira’s legal system protects individual property rights satisfactorily.
C) The business laws of Valmira are flexible and can be interpreted according to the comfort of
government officials.
D) The government of Valmira does not allow the private sector to flourish.
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Scenario: Stephanie Wong
Stephanie Wong, a Chinese-American, owns a consultancy that advises clients on strategies for
business expansions into China. Wong is to lead a symposium for small and mid-sized exporters
who are planning on expanding their businesses in China. Therefore, she is preparing answers in
advance for questions that symposium participants would most likely ask.
82) Stephanie also expects participants to ask: “Are the Chinese as formal and business-oriented
as Americans are?” Which of the following would most likely be Stephanie’s response?
A) The Chinese operate very much like Americans, for them business is more important than
pleasure.
B) The Chinese dislike guessing games; give them your sales pitch right away and let the
meeting develop.
C) Don’t overlook the importance of personal relationships; friendship comes before business.
D) The Chinese are very flexible and will easily adapt to your culture’s way of doing business.
83) Another question that Stephanie anticipates concerns the acceptability of certain topics of
discussion like: “Should we avoid discussing our families and spouses?” Which of the following
represents the most effective response to this question?
A) Absolutely, family is kept completely separate from business in China.
B) Yes, because it is considered very rude by businesspeople to discuss family.
C) No, Chinese businesspeople may invite business partners to family functions.
D) It’s fine to discuss family, but never agree to go to a business partner’s house.
84) Trademark protection typically lasts indefinitely, provided the word or symbol continues to
be distinctive.
85) Product liability laws hold only manufacturers responsible for damage, injury, or death
caused by defective products.
86) Developed nations have the toughest product liability laws, while developed countries have
more relaxed laws.
87) ________ is the layer of corporate social responsibility whereby a corporation donates
money and, perhaps, employee time toward a specific social cause.
A) Risk management
B) Strategic Corporate Social Responsibility (CSR)
C) Socialist Corporate Social Responsibility (CSR)
D) Traditional philanthropy
88) ________ is the layer of corporate social responsibility whereby a company develops a code
of conduct that it will follow in its global operations and agrees to operate with greater
transparency.
A) Strategic Corporate Social Responsibility (CSR)
B) Risk management Corporate Social Responsibility (CSR)
C) Traditional philanthropy
D) Task orientation
89) ________ is the layer of corporate social responsibility in which a business builds social
responsibility into its core operations to create value and build competitive advantage.
A) Risk management
B) Traditional philanthropy
C) Strategic Corporate Social Responsibility (CSR)
D) Political polity
90) Horizon Ltd. is a software company that, over the last year, incorporated social responsibility
into its core operations to create value and build competitive advantage. Which layer of
corporate social responsibility does Horizon Ltd. function at?
A) risk management
B) traditional philanthropy
C) strategic Corporate Social Responsibility (CSR)
D) political Corporate Social Responsibility (CSR)
91) Which of the following philosophies maintains that a company’s sole responsibility is to
maximize profits for its owners?
A) utilitarian view
B) righteous moralist view
C) Friedman view
D) cultural relativist view
92) The ________ view states that a company should adopt local ethics wherever it operates
because all belief systems are determined within a cultural context.
A) Friedman
B) cultural relativist
C) righteous moralist
D) utilitarian
93) The ________ view says that a company should maintain its home-country ethics wherever it
operates because the home-country’s view of ethics and responsibility is superior to others’
views.
A) Friedman
B) righteous moralist
C) cultural relativist
D) utilitarian
94) Which of the following philosophies maintains that a company should maximize “good”
outcomes and minimize “bad” outcomes wherever it operates?
A) Friedman view
B) righteous moralist view
C) cultural relativist view
D) utilitarian view
95) ________ is the environmental impact of greenhouse gases (measured in units of carbon
dioxide) that results from human activity.
A) Carbon footprint
B) Greenhouse log
C) Carbon cycle
D) Greenhouse check
96) ________ measures the indirect carbon dioxide emissions from the whole life cycle of
products—from their manufacture to eventual breakdown.
A) Primary footprint
B) Secondary footprint
C) Tertiary footprint
D) Internalized footprint
97) Which of the following does the secondary footprint measure?
A) the burning of fossil fuels
B) direct energy consumption
C) indirect carbon dioxide emissions
D) emissions caused by natural forces
98) The cultural relativist view says that a company’s sole responsibility is to maximize profits
for its owners while operating within the law.
99) Corporate social responsibility is the practice of going beyond legal obligations to actively
balance commitments to investors, customers, other companies, and communities.
100) Describe four corporate responsibility issues and explain how these issues can impact a
company’s international relations.