Political and Legal Barriers in International Trade
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Questions and Answers

What describes the role of political/legal barriers in international trade?

  • They influence both the home country and the host country environments. (correct)
  • They only affect the home country's environment.
  • They solely impact the host country's market.
  • They have no impact on the exporting firm's abilities.

    • In the international trading process, what elements are separated by political/legal barriers?

  • The exporting firm and the home country environment.
  • Only the exporting firm and the market.
  • The home country environment from the exporting firm.
  • The home country environment from the host country environment. (correct)

    • Which of the following correctly identifies the elements in the diagram regarding international trade?

  • There are no interactions shown in the diagram.
  • The market is influenced only by the host country's political/legal barriers.
  • The exporting firm is influenced by political/legal barriers from both the home and host countries. (correct)
  • The home country environment does not interact with the exporting firm.

    • What outcome is likely if political/legal barriers are significantly high?

    <p>The ability for the exporting firm to reach the end market may be hindered.</p> Signup and view all the answers

    Which statement is true regarding the exporting firm's interactions in the international market?

    <p>Both home and host country barriers can affect the exporting firm's operations.</p> Signup and view all the answers

    Which of the following former communist countries has not completely moved away from state trading?

    <p>Cuba</p> Signup and view all the answers

    What is one reason private businesses are concerned about state trading?

    <p>It creates import monopolies.</p> Signup and view all the answers

    Which country is mentioned as still having some extent of state trading?

    <p>China</p> Signup and view all the answers

    What role does the home country environment play for an exporting firm?

    <p>It encompasses factors that affect the firm's operations.</p> Signup and view all the answers

    What challenge do exporters face due to state trading's import monopolies?

    <p>Adjustments in export marketing programs.</p> Signup and view all the answers

    How do state traders potentially utilize their monopolistic power?

    <p>By creating barriers for international marketers.</p> Signup and view all the answers

    Which aspect is NOT considered a political/legal barrier?

    <p>Cultural preferences in the host country.</p> Signup and view all the answers

    How do political/legal barriers in the host country affect the exporting firm?

    <p>They create additional costs and complexities in market entry.</p> Signup and view all the answers

    What does the term 'exporting firm' refer to in this context?

    <p>A business seeking to expand its operations into foreign markets.</p> Signup and view all the answers

    What is essential for successful international trade?

    <p>Careful assessment of the political and legal environments</p> Signup and view all the answers

    What is indicated by the arrows in the diagram concerning political/legal barriers?

    <p>They indicate how barriers in both countries affect market entry for the firm.</p> Signup and view all the answers

    Why is the international political environment considered complex?

    <p>It includes interactions among domestic, foreign, and international politics.</p> Signup and view all the answers

    What must firms be sensitive to when investing in a foreign country?

    <p>The political concerns of that country</p> Signup and view all the answers

    What should a firm prepare to evaluate political risks systematically?

    <p>A monitoring system for political risks</p> Signup and view all the answers

    What kind of political risks should a firm be aware of when considering international trade?

    <p>Expropriation, nationalisation, and trade restrictions</p> Signup and view all the answers

    What type of political risk is associated with threats to personal safety and property?

    <p>Ownership risk</p> Signup and view all the answers

    Which type of risk relates to unexpected changes affecting a firm's ability to operate?

    <p>Operating risk</p> Signup and view all the answers

    Transfer/conversion risk primarily deals with which aspect of international business?

    <p>Capital movement between countries</p> Signup and view all the answers

    Which scenario exemplifies ownership risk in a host country?

    <p>Properties damaged during civil unrest</p> Signup and view all the answers

    Which factor can influence transfer/conversion risk in a country?

    <p>Government currency exchange controls</p> Signup and view all the answers

    What challenge may arise when a new government comes into power in a host country?

    <p>Potential rejection of existing agreements</p> Signup and view all the answers

    What is a significant risk that involves the host country seizing control over foreign companies?

    <p>Nationalisation or expropriation</p> Signup and view all the answers

    What is an example of domestication in foreign markets?

    <p>Restrictions placed on foreign firms to reduce control</p> Signup and view all the answers

    Which of the following is an effect of the nationalisation of industries?

    <p>Reduction of foreign ownership in key sectors</p> Signup and view all the answers

    What might a foreign company be required to do under domestication policies in China?

    <p>Transfer technology and form partnerships with local firms</p> Signup and view all the answers

    What does political stability primarily influence for international marketers?

    <p>The potential for political change affecting operations</p> Signup and view all the answers

    Which of the following statements best describes the role of political stability in marketing strategy?

    <p>It reduces risk and supports the planning of marketing strategies.</p> Signup and view all the answers

    Which country is likely to exhibit the lowest political risk according to the content?

    <p>A country with a consistent and stable political environment</p> Signup and view all the answers

    Why might international marketers be concerned about political risk?

    <p>It can disrupt operations and strategic planning.</p> Signup and view all the answers

    The Corruption Perception Index is used to assess what aspect of countries?

    <p>Political stability and corruption levels</p> Signup and view all the answers

    What is the primary aim of price controls imposed by host countries?

    <p>To control consumer behavior and cost of living</p> Signup and view all the answers

    How do tax controls generally affect foreign investment according to the provided content?

    <p>They are used to control or encourage foreign investment.</p> Signup and view all the answers

    What can be a consequence of labor restrictions in host countries with strong labor unions?

    <p>Heavy costs imposed on businesses due to legal protections.</p> Signup and view all the answers

    Which of the following is an example of price control mentioned in the document?

    <p>A maximum retail price for masks during a health crisis</p> Signup and view all the answers

    What might be a direct impact of heavy labor regulations on businesses in Europe, according to the context provided?

    <p>Potential for mass lorry strikes due to union activism.</p> Signup and view all the answers

    What is the purpose of local-content laws in a host country?

    <p>To ensure a portion of products are produced locally.</p> Signup and view all the answers

    Which of the following is an example of exchange controls?

    <p>Limitations on the buying and selling of currencies.</p> Signup and view all the answers

    What is one potential effect of import restrictions?

    <p>Encouragement for buyers to source supplies locally.</p> Signup and view all the answers

    What do market controls in a host country aim to achieve?

    <p>Restrict foreign companies from specific markets.</p> Signup and view all the answers

    What could be a consequence of frequent capital controls like those in Argentina?

    <p>Causing exchange rate volatility.</p> Signup and view all the answers

    Study Notes

    Political/Legal Environment

    • International trade success requires careful assessment of political and legal market environments.
    • International political environments are complex due to interactions between domestic, foreign, and international politics.
    • Companies operating in foreign countries need to consider the host country's political concerns.
    • Companies need to implement a monitoring system to assess political risks like expropriation and nationalization.
    • These risks can impact exports and/or imports.

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    Description

    This quiz explores the role of political and legal barriers in international trade, including their impact on exporting firms and market interactions. It also examines specific challenges faced by businesses in countries with state trading systems. Test your knowledge of how these barriers shape international commerce.

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