Global Marketing Management, 8e (Keegan)
Chapter 3 The Political, Legal, and Regulatory Environments of Global Marketing
1) Political risk tends to be higher in developing countries compared to industrialized countries.
2) Many companies make efforts to minimize their tax liability by shifting the location of
income.
3) Creeping expropriation is said to have occurred when a previously expropriated property by
the government is returned to the original owners.
4) Expropriation is said to have occurred when a foreign national company dispossesses a home-
country company through uncompetitive practices.
5) If a foreign company is taken over by the host-country government and some form of
compensation is paid, confiscation is said to have occurred.
6) A government can limit the economic activities of a foreign firm that resists its effort to
introduce home-country nationals into the company.
7) Foreign properties expropriated by a government cannot be reclaimed.
8) Private International Law is the body of law that applies to interpretations of and disputes
arising from commercial transactions between companies of different nations.
9) Most countries that were once part of the British Empire now have civil law systems.
10) Common law cases are decided by precedents set in past judicial decisions.
11) If a foreign company can be shown to be doing business in the United States, then it is
subject to the jurisdiction of U.S. courts.
12) Typically, all economic activity within a nation is governed by that nation’s laws.
13) In the United States, a patent holder retains all rights for the life of the patent only if the
product is produced or sold.
14) An associative counterfeit 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.
15) Brand value is one of the most important assets that a business holds.
16) Antitrust laws are designed to restrict new competition from entering foreign markets.
17) U.S. companies are subject to U.S. antitrust laws no matter what country they are doing
business in.
18) Each act of privatization dilutes the command portion of a mixed economic system.
19) In the United States, laws do not regulate the licensing process per se as do technology
transfer laws in the EU, Australia, Japan, and many developing countries.
20) Licensing agreements do not come under antitrust scrutiny.
21) A company hoping to protect its trade secrets from being stolen by a foreign company can
seek relief under the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement.
22) U.S. individuals are exempted from being prosecuted for bribery under the Foreign Corrupt
Practices Act.
23) A common economic characteristic of countries with pervasive corruption is a lack of
integration with the global economy.
24) A U.S. company is exempt from the Foreign Corrupt Practices Act if a host-country citizen
serving as an agent for the company pays a bribe to a government official in the host country.
25) The fact that the United States has more lawyers per 100,000 people than other countries is,
in part, a reflection of the low-context nature of American culture.
26) Generally, companies find that the fastest, easiest, and least expensive way to resolve
international commercial disputes is litigation.
27) By law, U.S. courts can be discretionary while accepting an arbitrator’s decision in patent
disputes.
28) GATT is primarily based on the principle of trade protectionism.
29) Which of the following statements is true about the political risks in a global marketing
environment?
A) The political risk of low-income countries is lesser than high-income countries.
B) The more a country is developed, the greater is the political risk.
C) Political risk is a major deterrent for companies that want to invest abroad.
D) A country with high political risks attracts more investors.
30) Which of the following is an approach that foreign companies in the United States use for
avoiding taxes on their revenues?
A) confiscation
B) liquidation
C) expropriation
D) earnings stripping
31) ________ refers to governmental action to dispossess a company or investor.
A) Equity dilution
B) Deracination
C) Expropriation
D) Earnings stripping
32) ________ occurs if ownership of a property or assets of a company is transferred to the host
government.
A) Internalization
B) Nationalization
C) Deportation
D) Deracination
33) When a nation refuses to accept the judgment against it made by the International Court of
Justice, the plaintiff nation can seek recourse through the ________.
A) International Law Commission
B) Permanent Court of International Justice
C) United Nations Security Council
D) World Bank Investment Dispute Settlement Center
34) Which of the following statements is true about code law?
A) In code-law countries, intellectual property rights are established by prior use.
B) It is established based on the rulings from previous cases.
C) It uses written norms, which are complemented by court decisions.
D) In code-law countries, companies are granted the ability to operate by public authority.
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35) The national laws applying to a transaction crossing boundaries must be determined by
________.
A) both parties involved in the agreement
B) only the host-country government
C) only parent-country government
D) the International Law Commission
36) Which of the following statements is true about patent and trademark protection in the global
marketing environment?
A) Patents and trademarks protected in one country are not necessarily protected in another.
B) Foreign organizations can register patents and trademarks only in their parent country.
C) Patent and trademark laws are the same across all nations.
D) Trademarks and patents cannot be counterfeited.
37) ________ refers to the unauthorized copying or production of a product.
A) Accommodation
B) Embezzlement
C) Counterfeiting
D) Expropriation
38) In many parts of the world, sales of unauthorized videos of Hollywood movies cost the
movie studios billions of dollars. When illegal copies of movies are made, what form of
intellectual property has been wrongly appropriated?
A) patent
B) copyright
C) trademark
D) trade secrets
39) Which of the following business practices does the Sherman Act of 1890 prohibit?
A) limiting production
B) betting
C) licensing trademarks
D) direct investments
40) How can a licensor prevent a licensee from using the licensed technology to compete with it
directly?
A) by allowing the licensee to continue using the technology after the contract has expired
B) by limiting the licensee to selling only in the home country
C) by keeping the licensed technology unchanged
D) by cancelling the contractual agreement
41) ________ are confidential information or knowledge that has commercial value.
A) Copyrights
B) Trade secrets
C) Trademarks
D) Patents
42) Which of the following is an example of a trade secret?
A) customer list
B) brand logo
C) product price
D) company profit
43) Which of the following marked the first international trade agreement with provisions for
protecting trade secrets?
A) EPA
B) EU
C) NAFTA
D) TRIPs
44) ________ refers to the misuse of entrusted power for private gain.
A) Corruption
B) Counterfeiting
C) Piracy
D) Imitation
45) ________ consists of isolated transactions executed by individual public officials that abuse
their office.
A) Bureaucratic corruption
B) Earnings stripping
C) Grand corruption
D) Influence peddling
46) Which of the following is an example of grand corruption?
A) isolated transactions executed by individual public officials that abuse their office
B) favors granted in exchange for personal consideration to a public official
C) collusion between members of the private sector and public officials for mutual benefit
D) state officials misusing large amounts of public resources over a prolonged period
47) ________ involves collusion between members of private sector and public officials to gain
mutual benefit.
A) Bureaucratic corruption
B) State capture
C) Grand corruption
D) Expropriation
48) Which of the following is an economic attribute shared by countries with a high perceived
level of corruption?
A) high levels of poverty
B) high economic growth rate
C) free trade policies
D) low import tariffs
49) Americans doing business abroad must conform to proper ethical and legal behavior as
spelled out by the ________.
A) TRIPs
B) FCPA
C) FERA
D) ICJ
50) Which of the following has been empowered to resolve conflicts between national law and
EU law?
A) the European Court of Auditors
B) the European Court of Justice
C) the International Chamber of Commerce
D) the International Criminal Court
51) Which of the following replaced the General Agreement on Tariffs and Trade?
A) the World Trade Organization
B) the European Union
C) the North American Free Trade Agreement
D) the World Intellectual Property Organization
52) Explain the different forms of corruption.
53) What is the role of GATT and the World Trade Organization in international trade?