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THE PROTECTION OF INTELLECTUAL PROPERTY
K) Intellectual property refers to property, such as computer software, a screenplay, or the
chemical formula for a new drug that is the product of intellectual activity. Intellectual property
rights include patents (documents giving the inventor of a new product or process exclusive
Teaching Tip: For information on intellectual property rights and policies, go to the World
Trade Organization at http://www.wto.org/english/tratop_e/trips_e/trips_e.htm and the United
States Patent and Trade Office at http://www.uspto.gov/ip.
L) Over 185 nations are part of the World Intellectual Property Organization. These countries
have all signed an international agreement to protect intellectual property rights known as the
Paris Convention for the Protection of Industrial Property. In addition, an agreement known
as the Trade-Related Aspects of Intellectual Property Rights (TRIPS) requires WTO members to
grant and enforce patents lasting at least 20 years and copyrights lasting 50 years.
management FOCUS: Starbucks Wins Key Trademark Case in
China
Summary
This feature focuses on intellectual property laws in China. When Starbucks entered China in
1999, the company was quickly challenged by a look-alike competitor, Shanghai Xing Ba Ke
Coffee Shop. Not only did the name Xing Ba Ke mimic the Starbucks name, but Xing Ba Ke’s
stores were virtual replicas of those operated by Starbucks. In 2003, Starbucks sued Xing Ba Ke
for trademark violations. In 2006, Starbucks won its case, and Xing Ba Ke was fined $62,000
and ordered to stop using its name. The case was seen as a breakthrough of sorts, a signal that
China was finally caving to pressure from other nations and the World Trade Organization to
respect intellectual property rights. Today, Starbucks operates over 400 stores in China and
expects the market to become second only to the U.S.
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Discussion Questions
1. Discuss the concept of property rights protection and why it is so important to companies.
What does the court ruling against Xing Ba Ke mean for other companies that are already doing
business in China, or are considering entering the market?
2. How important is the Chinese market to Starbucks? Does the presence of look-alike
companies like Xing Ba Ke deter firms from entering the market?
Teaching Tip: To explore Starbucks in more depth, go to the company’s website at
http://www.starbucks.com. Click on “International” to explore individual country sites.
PRODUCT SAFETY AND PRODUCT LIABILITY
M) Different countries have different product safety laws (safety standards to which a product
must adhere). In some cases, businesses must customize products to adhere to local standards if
they are to do business in a country, whether these standards are higher or just different. Product
liability involves holding a firm and its officers responsible when a product causes death, injury,
or damage. Some executives believe that the high cost of liability insurance in U.S. hampers the
competitiveness of the U.S. companies in the global marketplace.
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CONNECT
Video Case
Turmoil in Venezuela
Summary
This activity focuses on the political and legal situation in Venezuela where an unpopular
president is failing to adequately address the needs of the country. Many foreign companies have
left the troubled country as doing business there has become increasingly challenging.
Activity
FOCUS ON MANAGERIAL IMPLICATIONS
The Macro Environment Influences Market Attractiveness
A) The material discussed in this chapter has two broad implications for international business.
First, political, economic, and legal systems of a country raise important ethical issues that have
implications for the practice of international business. Second, the political, economic, and legal
environments of a country clearly influence the attractiveness of that country as a market and/or
investment site.
B) The overall attractiveness of a country as a potential market and/or investment site for an
international business depends on balancing the benefits, costs, and risks associated with doing
business in that country.
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CONNECT
Video Case
Bribing Public Officials
Summary
This activity focuses on differences in legal systems between countries and specifically on the
issue of bribery. While bribery is considered illegal in many nations, in others, it is part of doing
business. International companies must be aware of the legal system in the countries in which
they operate and how bribery is treated under that system.
Activity
CONNECT
Video Case
Google Plans a Censored Version in China
Summary
This activity focuses on differences in political and legal systems between countries, and
specifically on Google’s plans to offer a limited version of its search engine in China. Google
has been prohibited from offering its full search engine in China, and so is now considering
offering a variation of its products that meets the requests of the Chinese government.
Activity
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End-of-Chapter Resources
Critical Thinking and Discussion Questions
1. Free market economies stimulate greater economic growth, whereas state-directed economies
stifle growth. Discuss.
Answer: In a market economy, private individuals and corporations are allowed to own property
and other assets. This right of ownership provides a powerful incentive for people to work hard,
2. A democratic political system is an essential condition for sustained economic progress.
Discuss.
Answer: This question has no clear-cut answer. In the West, we tend to argue that democracy is
good for economic progress. This argument is largely predicated upon the idea that innovation is
the engine of economic growth, and a democratic political system encourages rather than stifles
3. What is the relationship between corruption in a country (i.e., government officials taking
bribes) and economic growth? Is corruption always bad?
Answer: Economic evidence suggests that high levels of corruption significantly reduce the
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4. You are the CEO of a company that has to choose between making a $100 million investment
in either Russia or Poland. Both investments promise the same long-run return, so your choice of
which investment to make is driven by risk considerations. Assess the various risks of doing
business in each of these nations. Which investment would you favor and why?
Answer: When assessing the risks of investment, one should consider the political, economic,
and legal risks of doing business in either Russia or Poland. Today, the risk in Russia would
5. Reread the Management Focus “Did Walmart Violate the Foreign Corrupt Practices Act?”
What is your opinion? If you think it did, what do you think the consequences will be for
Walmart?
Answer: The Foreign Corrupt Practices Act prohibits companies from bribing foreign
government officials to obtain or maintain business over which that foreign official has authority.
globalEDGE™ Research Task
Use the globalEDGE™ site (globaledge.msu.edu) to complete the exercises in the text.
Exercise 1
Search phrase: Freedom in the World or Freedom House
Resource Name: Freedom House Surveys
Additional Info:
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Exercise 2
Search phrase: World Bank Doing Business Indicators
Resource Name: World Bank: Doing Business Indicators
Additional Info:
The Decline of Zimbabwe
closing case
Summary
This closing case explores the political and economic situation in Zimbabwe since its
independence from Great Britain. In 1980, Zimbabwe, with its vibrant agricultural sector, strong
economy, and abundant natural resources, was considered the jewel of Africa. Robert Mugabe
was elected prime minister, an office he continued to hold, despite accusations of corrupt
elections, for the next 37 years. Corruption under Mugabe became endemic, prompting
Transparency International to rank Zimbabwe as one of the most corrupt nations in the world.
The country’s economic performance really began to deteriorate in 2000 following the
imposition of a fast-track land reform that essentially took land from farmers and gave it to
Mugabe’s supporters. The country’s economy suffered another blow when foreign investors
pulled out following the 2008 Indigenisation and Economic Empowerment Act requiring 51
percent local ownership of all businesses. After so many disappointing years, Zimbabwe’s future
suddenly looks brighter. In 2018, Mugabe was forced out of office by his own party and replaced
by his vice president, Emmerson Mnangagwa. The World Bank also issued a report suggesting
that with its natural resource endowment, Zimbabwe has the potential for economic growth.
Case Discussion Questions
1. Why has Zimbabwe’s economic performance been so poor?
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2. Do you think that Zimbabwe’s economic performance would have been better under a
different system of government? Which one? Explain your reasoning.
3. What steps need to be taken now to improve the economic outlook for Zimbabwe?
CONNECT
Geography
Summary
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This activity is designed to test the student’s knowledge of geography. Questions related to
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Continuous Case Concept
Recent sanctions by the United States and Europe against Russia are posing problems for global
automakers. The sanctions, imposed in response to Vladimir Putin’s policy decisions are creating
challenges not only for Russian citizens, but also for U.S. and European companies. France’s
Renault is likely to be hit hardest. It is the most dependent on the Russian market followed by
South Korea’s Kia and Hyundai, and Japan’s Nissan, and German automakers VW and
Mercedes. If these sanctions persist, the companies could experience considerable production
issues. Already, General Motors is offering buyouts to its workers in Russia as sales slump in the
country.
• Ask students to consider the impact of the sanctions relative to the overall attractiveness
of the Russian market. What are the political and economic costs of doing business in
countries like Russia where political problems threaten economic growth?
This exercise could be used at the beginning of the discussion of this chapter’s material, and/or
again at the end. To take the discussion into greater depth, ask students to read the pertinent
selections in the Additional Readings section below. The exercise also works well at the
beginning of the Focus on Managerial Implications section.
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Additional Readings and Sources of Information
Vladimir Putin: Russia’s action man president
http://www.bbc.com/news/world-europe-15047823
Political Corruptions Enters a New Golden Age
https://www.theatlantic.com/politics/archive/2017/11/a-golden-age-for-corruption/546143
Walmart Is Reportedly Getting Reading to Settle a Bribery Probe for $300 Million
http://fortune.com/2017/05/10/walmart-bribery-investigation-settlement
Can Starbucks Sell Espresso Back to Italians?
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http://www.bloomberg.com/news/articles/2016-06-15/starbucks-finds-itself-late-for-once-to-a-
market-it-created
Looking back at nearly 20 years of Starbucks in China
https://news.starbucks.com/news/looking-back-at-nearly-20-years-of-starbucks-in-china