California State University, Fresno

BA 104

International Business: The Challenges of Globalization, 7e (Wild)

 Chapter 3 Politics, Law, and Business Ethics

1)In a totalitarian system, rulers tightly control people's lives and do not tolerate opposing viewpoints.

2. Anarchism is the belief that every aspect of people's lives must be controlled in order for a nation's political system to be effective.

3. Pluralism is the belief that only individuals and private groups should control a nation's political activities.

4. Pluralistic political systems include authoritarian regimes such as communism and fascism.

5. When a country's religious leaders are also its political leaders, its political system is called a theocracy.

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6. Pluralism is a political system in which political leaders rely on military and bureaucratic power.

7. Secular totalitarianism is a political system in which government leaders are elected directly by the wide participation of the people or their representatives.

8. The most peaceful nations today are those that were once controlled and stabilized by colonial powers.

9. In a coalition government, the strongest political parties share power by dividing government responsibilities among themselves.

10. The bureaucracy is the part of government that implements the rules and laws passed by elected representatives.

11. Economic socialism won the battle over communist totalitarianism and capitalism.

12. A solid grasp of local values, customs, and traditions can help reduce a company's exposure to political risk.

13. Expropriation involves the forced transfer of assets from a company to the government without compensation.

14. Among asset seizure approaches, expropriation is more common than confiscation and nationalization.

15. Lobbying is the policy of hiring people to represent a company's views on political matters.

16. The Foreign Corrupt Practices Act forbids U.S. companies from bribing government officials or political candidates in other nations.

17. Totalitarian governments tend to favor private ownership of economic resources.

18. Civil law can be more adversarial than common law because civil law relies more on the need to interpret laws according to tradition, precedent, and usage.

19. Islamic law is the most widely practiced theocratic legal system today.

20. Trademark protection typically lasts indefinitely, provided the word or symbol continues to be distinctive.

21. Product liability laws hold only manufacturers responsible for damage, injury, or death caused by defective products.

22. Developing nations have the toughest product liability laws, while developed countries have more relaxed laws.

23. A value-added tax is a tax levied on each party that adds value to a product throughout its production and distribution.

24. The cultural relativist view says that a company's sole responsibility is to maximize profits for its owners while operating within the law.

25. Corporate social responsibility is the practice of going beyond legal obligations to actively balance commitments to investors, customers, other companies, and communities.

26. Which of the following political ideologies states that every aspect of people's lives must be controlled for a nation's political system to be effective?
    1. totalitarianism
    2. capitalism
    3. anarchism
    4. pluralism

27. Under a(n)                        political system, the state reigns supreme over institutions such as family, religion, business, and labor.
    1. pluralistic
    2. totalitarian
    3. democratic
    4. anarchist

28. Totalitarian political systems include authoritarian regimes such as                                 .
    1. democracy and theocracy
    2. anarchism and pluralism
    3. communism and fascism
    4. capitalism and secularism

29.                       is the belief that only individuals and private groups should control a nation's political activities.
    1. Pluralism
    2. Anarchism
    3. Theocracy
    4. Totalitarianism

30.                       is the belief that both private and public groups play important roles in a nation's political activities.
    1. Totalitarianism
    2. Capitalism
    3. Anarchism
    4. Pluralism

31.                       political systems include democracies, constitutional monarchies, and some aristocracies.
    1. Totalitarian
    2. Anarchist
    3. Fascist
    4. Pluralistic

32. Konesia is a country whose political leaders do not tolerate opposing viewpoints and often suppress or punish dissidents. The lives of Konesians are tightly controlled by its rulers. Which of the following political systems prevails in the country?
    1. totalitarianism
    2. democracy
    3. anarchism

1. 4. pluralism

33. Which of the following is a characteristic of totalitarian governments?
    1. Political dissidents can oppose the government with no repercussions.
    2. Citizens are guaranteed civil, property, and minority rights.
    3. The means of production are owned by the people who use them.
    4. Leaders rule without the explicit approval of the people.

34. A                        is a political system in which a country's religious leaders serve as its political leaders.
    1. democracy
    2. theocracy
    3. plutocracy
    4. septocracy

35. Renzi belongs to a country in which religion governs all aspects of his life, whether personal or public. He has to abide by a strict, rigid, code that dictates everything from the clothes he wears to the food he eats. Breaking away from these traditions is not an option since religion plays an important role in the functioning of the nation. What political system prevails in his country?
    1. communist totalitarianism
    2. left-wing totalitarianism
    3. right-wing totalitarianism
    4. theocratic totalitarianism

36.                       is a political system in which political leaders rely on military and bureaucratic

power to support their rule.

1. 1. Secular totalitarianism
   2. Secular anarchism
   3. Theocratic totalitarianism
   4. Theocratic pluralism

37. Which of the following terms refers to an economic system in which the government owns and controls all types of economic activity?
    1. socialism
    2. sovereign nationalism
    3. political bureaucracy
    4. pluralism

38. Robert believes that social and economic equality can be obtained only by establishing an economic system in which the government owns and controls all types of economic activity. However, he does not think of himself as a communist, but as a socialist. Which of the following statements about Robert is true?
    1. Robert does not believe that a violent revolution is needed to seize control over resources.
    2. Robert does not think that political dissidents should go unpunished.
    3. Robert believes that the pricing of goods should be left to the discretion of laborers.
    4. Robert believes that the means of production should be owned by the people who use them.

39. Both Pat and Terry believe that social and economic equality can be obtained only by establishing an economic system in which the government owns and controls all types of economic activity. Which of the following statements proves that Pat is a communist and Terry is a socialist?
    1. Unlike Terry, Pat believes that the government should decide the prices at which goods are sold.
    2. Unlike Pat, Terry does not believe in the elimination of political opponents.
    3. Unlike Terry, Pat believes that the means of production should be owned only by the public.
    4. Unlike Pat, Terry believes that a violent revolution is necessary to seize control over

resources.

40. What do communists and socialists have in common?
    1. Both believe in the elimination of political opponents.
    2. Both believe that the government should control all types of economic activity.
    3. Both believe that the pricing of goods should be the responsibility of individuals.
    4. Both believe that a violent revolution is necessary to seize control over resources.

41. Under                       the government endorses private ownership of property and a market-based economy but grants little or no political freedom.
    1. left-wing totalitarianism
    2. theocratic totalitarianism
    3. secular totalitarianism
    4. right-wing totalitarianism

AACSB: Ethical understanding and reasoning abilities; Multicultural and diversity understanding

42. Which of the following terms is also used to refer to communism?
    1. tribal totalitarianism
    2. right-wing totalitarianism
    3. left-wing totalitarianism
    4. civil totalitarianism

43. Which of the following is an advantage of conducting business in totalitarian nations?
    1. International companies are less likely to face local political opposition to their activities.
    2. Government deals are always straightforward and transparent.
    3. Laws regarding the resolution of contractual disputes are clearly defined.

1. 4. International companies run no risk of their public image being tarnished.

44. Which of the following is a disadvantage of conducting business in totalitarian nations?
    1. Laws regarding the resolution of contractual disputes are rigid and inflexible.
    2. Companies have to contend with the interference of local political opposition.
    3. A refusal to pay a bribe can result in the forfeiture of investments in the country.
    4. The government has little power over the economic activities of the nation.

45. A                        is a political system in which government leaders are elected directly by the wide participation of the people or by their representatives.
    1. democracy
    2. theocracy
    3. plutocracy
    4. autocracy

46. Which of the following statements about representative democracies is true?
    1. All citizens participate freely and actively in political processes.
    2. Leaders of representative democracies can stay in power indefinitely.
    3. Citizens elect individuals from political groups to act on their behalf.
    4. Representative democracies across the world share identical features.

47. In a                       government, the strongest political parties share power by dividing government responsibilities among themselves.
    1. coalition
    2. bilateral

1. 3. totalitarian
   4. theocratic

48. Democracies try to preserve peaceful coexistence among groups of people with diverse cultural, ethnic, and racial backgrounds. These rights are known as                                                 rights.
    1. indirect
    2. central
    3. subcapital
    4. minority

49. The segment of the economic environment comprising independently owned firms that seek to earn profits is called the                                                        .
    1. political sector
    2. private sector
    3. democratic sector
    4. public sector

50. Which of the following philosophies asserts that ownership of the means of production belongs in the hands of individuals and private businesses?
    1. capitalism
    2. communism
    3. tribalism
    4. socialism

51. Which of the following terms refers to the forced transfer of assets from a company to the government without compensation?

1. 1. expropriation
   2. nationalism
   3. nationalization
   4. confiscation

52.                       is the forced transfer of assets from a company to the government with compensation.
    1. Expropriation
    2. Nationalization
    3. Confiscation
    4. Localization

53.                       refers to the takeover of an entire industry by the government.
    1. Decentralization
    2. Globalization
    3. Nationalization
    4. Automatization

54. Which of the following is a disadvantage of local requirement laws to foreign companies?
    1. They do not foster local business activity and increase regional and national unemployment.
    2. They make it necessary for the government to resort to expropriation and confiscation.
    3. The companies are forced to bring in raw material and workers from their own countries.
    4. Companies required to hire local personnel might be forced to take on inadequately trained workers.

55. The U.S. legal system is largely based on                              .

1. 1. common law
   2. social law
   3. civil law
   4. theocratic law

56. Under                       law, the justice system decides cases by interpreting the law on the basis of tradition, precedent, and usage.
    1. civil
    2. international
    3. common
    4. theocratic

57.                       is a legal system which is based on a detailed set of written rules and statutes that constitute a legal code.
    1. International law
    2. Civil law
    3. Tribal law
    4. Common law

58. A legal tradition based on religious teachings is called                                law.
    1. democratic
    2. common
    3. civil
    4. theocratic

59. A                        is a right granted to the inventor of a product or process that excludes others from making, using, or selling the invention.
    1. patent
    2. trademark
    3. watertight
    4. copyright

60.                       are words or symbols that distinguish a product and its manufacturer from competitors.
    1. Patents
    2. Trademarks
    3. Watermarks
    4. Copyrights

61. Shimmer and Sparkle is an American jewellery 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?
    1. patent expiration
    2. trademark infringement
    3. copyright expiration
    4. monopolization

62. Which of the following is an example of a trademark infringement?
    1. manufacturers who sell different versions of their own products in different countries
    2. manufacturers who sell counterfeit products under the names and logos of more famous brands
    3. a company which exports factory rejects to developing countries
    4. a company which sells products at half the price of their competitors

63. Which of the following functions does a copyright perform?
    1. It protects the trade secrets of an organization, including its business plans.
    2. It prevents a company from monopolizing an invention.
    3. It distinguishes the product and manufacturers from competitors through distinct words and symbols.
    4. It give creators of original work the freedom to publish or dispose of them as they choose.

64. Which of the following do governments impose upon people to help pay for the consequences of using a particular product?
    1. income taxes
    2. consumption taxes
    3. property taxes
    4. value-added taxes

65. Product liability laws are those which                             .
    1. provide consumers with a wide variety of products at fair prices
    2. add value to a product throughout its production and distribution
    3. protect people from defective products
    4. define the taxation on locally manufactured products

66. Laws designed to prevent companies from fixing prices, sharing markets, and gaining unfair monopoly advantages are called                                               .
    1. antitrust laws
    2. theocratic laws
    3. anarchist laws
    4. bilateral laws

67.                       is the layer of corporate social responsibility whereby a corporation donates money and, perhaps, employee time toward a specific social cause.
    1. Risk management
    2. Strategic CSR
    3. Socialist CSR
    4. Traditional philanthropy

68.                       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.
    1. Strategic CSR
    2. Risk management
    3. Traditional philanthropy
    4. Task orientation

69.                       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.
    1. Risk management
    2. Traditional philanthropy
    3. Strategic CSR
    4. Political polity

70. 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?
    1. risk management
    2. traditional philanthropy

1. 3. strategic CSR
   4. political CSR

71. Which of the following philosophies maintains that a company's sole responsibility is to maximize profits for its owners?
    1. utilitarian view
    2. righteous moralist view
    3. Friedman view
    4. cultural relativist view

72. The                       view states that a company should adopt local ethics wherever it operates because all belief systems are determined within a cultural context.
    1. Friedman
    2. cultural relativist
    3. righteous moralist
    4. utilitarian

73. 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.
    1. Friedman
    2. righteous moralist
    3. cultural relativist
    4. utilitarian

74. Which of the following philosophies maintains that a company should maximize "good" outcomes and minimize "bad" outcomes wherever it operates?
    1. Friedman view
    2. righteous moralist view
    3. cultural relativist view
    4. utilitarian view

75.                       is the environmental impact of greenhouse gases (measured in units of carbon dioxide) that results from human activity.
    1. Carbon footprint
    2. Greenhouse log
    3. Carbon cycle
    4. Greenhouse check

76.                       measures the indirect carbon dioxide emissions from the whole life cycle of products—from their manufacture to eventual breakdown.
    1. Primary footprint
    2. Secondary footprint
    3. Tertiary footprint
    4. Internalized footprint

77. Which of the following does the secondary footprint measure?
    1. the burning of fossil fuels
    2. direct energy consumption
    3. indirect carbon dioxide emissions
    4. emissions caused by natural forces

78. 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       .
    1. piracy
    2. monopolization
    3. ethnocentrism
    4. nationalization

79. Susan decides not to set up production facilities in Konesia because its business laws are vague and are often interpreted according to the convenience of the government. Bribery is a common feature in conducting business deals there and a refusal to pay up is not an option. What kind of government does Konesia have?
    1. democratic
    2. theocratic
    3. totalitarian
    4. pluralist

80. Susan thinks that it would be easiest setting up production facilities in a country whose government leaders are elected directly by the wide participation of the people or by their representatives. Which of the following political systems should the country have?
    1. anarchist
    2. democratic
    3. theocratic
    4. facist

81. Susan also decides not to set up production facilities in Margazo, a country which functions

by a strict set of religious tenets, because some of them contradict her company's work policy. Expecting potential employees to break away from these traditions is not an option since religion plays an important role in the functioning of the nation. What kind of political system prevails in Margazo ?

1. 1. pluralistic
   2. theocracy
   3. tribal totalitarian
   4. democracy

82. 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?
    1. local content requirements
    2. antitrust laws
    3. nationalization laws
    4. internalization policies

83. 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?
    1. Valmira does not enforce any product liability laws.
    2. Valmira's legal system protects individual property rights satisfactorily.
    3. The business laws of Valmira are flexible and can be interpreted according to the comfort of government officials.
    4. The government of Valmira does not allow the private sector to flourish.

84. Global Trading just learned that the government of one country in which it does business has

taken over the entire electric utility industry. The government's actions are an example of

                     .

1. confiscation
2. globalization
3. expropriation
4. nationalization

85. Had the government taken over (with compensation) the assets of Global Trading but not those of any other company, the government's actions would be an example of                                                       .
    1. expropriation
    2. nationalization
    3. confiscation
    4. communism

86. Had the government taken over the assets of Global Trading without compensation, and not taken over the assets of any other company, the government's actions would be an example of

                     .

1. 1. expropriation
   2. nationalization
   3. confiscation
   4. communism

87. Which of the following factors should the legal experts of Wayne's consider while evaluating the legal systems of Paribo and Kirawi?
    1. the profits made by local companies in the countries
    2. the prevalence of crime in the two countries

1. 3. the resolution of contractual dispute with local vendors
   4. the profits made by international companies in other countries

88. Which of the following statements is true of Kirawi, a democratic nation whose legal system is based on common law?
    1. The law is based on religious teachings and is enforced by the country's religious leaders.
    2. The law is inflexible and is applied the same way in all situations.
    3. The law is based on a detailed set of written rules that constitute a legal code.
    4. The law is interpreted on the basis of tradition, precedent and usage.

89. Which of the following statements is true of Paribo, a democratic nation whose legal system is based on civil law?
    1. The law is based on religious teachings and is enforced by the country's religious leaders.
    2. The law is flexible and its interpretations differ with situations.
    3. The law is based on a detailed set of written rules that constitute a legal code.
    4. The law is interpreted on the basis of tradition, precedent and usage.

90. Which of the following, if true, demonstrates that Kirawi has an unstable business environment?
    1. Its business laws are inflexible and cannot be intrepreted according to the comfort of government officials.
    2. Its government does not enforce product liability laws or protect individual property rights.
    3. Its activities are bound by several multilateral agreements conducted with neighboring countries.
    4. Its private sector comprises independently owned firms that exist to make profits.