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 legal conventions does ION most likely have?
A) intellectual property right
B) trademark credential
C) patent certificate
D) TRIPS permit
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
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.
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
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
56) Garnet Footwear suffered significant financial losses and had to close its foreign operations. The
dissolution process took six months and cost four percent of the firm’s estate. Where was Garnet’s
foreign operations most likely located?
A) Ecuador
B) France
C) Japan
D) China
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
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 Venezuelan government.
Which type of political risk is Harmon most likely experiencing?
A) catastrophic
B) distributive
C) procedural
D) systemic
59) Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has recently
developed an innovative blender design that Wharton executives anticipate being very profitable.
Currently, Wharton has production facilities in the U.S. and China. Wharton executives are trying to
determine where the new product should be manufactured. Which of the following best supports a
decision to manufacture the new product in the U.S. instead of China?
A) Intellectual property rights are strongly protected by U.S. patent laws.
B) A strategic marketing plan can be quickly developed in the U.S.
C) Contract enforcement is a simple process in the U.S.
D) The U.S. is experiencing an economic recession.
60) Wharton Enterprises, a U.S. firm, manufactures small kitchen appliances. The firm has recently
developed an innovative blender design that Wharton executives anticipate being very profitable.
Currently, Wharton has production facilities in the U.S. and China. Wharton executives are trying to
determine where the new product should be manufactured. Which of the following questions is most
relevant to the decision?
A) What selection procedures would be best in China?
B) Should expatriates or locals manage the Chinese facility?
C) How can the firm guard against counterfeiting in China?
D) How would China’s individualistic system affect the firm?
61) The term collectivism refers to a system that stresses the primacy of societal goals over individual
goals.
62) Societies that emphasize collectivism place the interests of individuals over the interests of the state.
63) In some collectivist systems, such as Venezuela, politicians control media outlets and limit
individual property rights in order to acquire power in the business environment.
64) As exemplified in China, the government in a collectivist society is highly connected to and
interdependent with business.
65) A political ideology is the collection of ideas that expresses the goals, theories, and aims that
constitute a sociopolitical program.
66) Democracy and totalitarianism fall on the same end of the political spectrum.
67) The fundamental element of democracy is justice.
68) A democracy grants the voting citizenry the power to alter the laws and structures of government.
69) Totalitarianism is a political ideology that typically involves constant indoctrination of the
population by agents of the government to eliminate dissent.
70) Totalitarian countries are favored by MNEs because state governments typically favor foreign
investors over local companies.
71) The Third Wave of Democratization was partially triggered by improved communication systems.
72) Research indicates that democracy is declining around the world and that totalitarian regimes are
increasing.
73) According to EIU research, 37% of the world’s population live in full democracies.
74) The Washington Consensus promotes democracy, freedom, the rule of man, and human rights.
75) Civil strife, tax discrimination, weak legal systems, and terrorist actions are political risks faced by
MNEs operating in foreign countries.
76) Managers who take an active approach to political risk management are likely to rely on statistical
modeling to quantify the precise degree of political risk.
77) Political risk insurance is more likely to be purchased by MNEs that apply an active approach to
political risk management.
78) Multilateral development banks encourage development in risky environments through financial
incentives.
79) The political system of a country refers to the laws that regulate actions, along with the processes by
which those laws are enforced and by which redress for grievances is acquired.
80) 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.
81) A civil law system anchors itself in the wisdom of daily experience or, more intellectually, great
spiritual or philosophical traditions.
82) The rule of man, a practice that has been in play for millennia, presumes that the law is the will of
the ruler, whether the king, czar, raj, or emperor.
83) The rule of law holds that governmental authority is legitimately exercised only in accordance with
written, publicly disclosed laws that have been appropriately adopted and which are enforced in keeping
with established procedure.
84) Laws on local business activities directly influence the operations of domestic and foreign
companies in areas such as hiring and firing workers.
85) Countries with a theocratic legal system encourage precise, detailed contracts whereas countries
with a common legal system encourage shorter and less specific contracts.
86) International law takes precedence over national laws in determining permissible practices in
pricing, distribution, advertising, and promotion of products and services in a particular country.
87) International companies often must customize products to comply with local standards if they are to
do business in a particular country.
88) Intellectual property refers to the creative ideas, innovative expertise, or intangible insights that give
an individual, company, or country a competitive advantage.
89) The International Anti-Counterfeiting Coalition estimates that international trade in counterfeit
products runs less than 5 percent of the value of total world trade.
90) The protection of intellectual property rights is very similar from country to country.
91) What is the difference between individualism and collectivism? What is the relationship between
government and business under each orientation?
92) What are the differences between democratic and totalitarian political systems? What does current
research suggest about the spread of democracy and totalitarianism in the world?
93) What is political risk? What is the relationship between political environment and political risk?
94) Identify the three common components of modern legal systems and explain their relevance to
managers.
95) Contrast common law, civil law, customary law, and theocratic law.
96) Compare and contrast the rule of law and the rule of man.
97) In a brief essay, describe the political and legal systems in China and their effect on MNEs doing
business in China.
98) How has intellectual property theft affected China’s economy? What is the relationship between
China’s legal environment and intellectual property theft?
99) How does a nation’s legal environment affect an MNE’s marketplace behavior, especially when the
rule of man prevails?
100) What is procedural political risk? How does a nation’s political and legal environment influence
procedural risk for MNEs?