Politics, Laws and Operating Internationally Chapter 3

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Questions and Answers

What is the ultimate test of any political system?

its ability to hold a society together

What must a multinational enterprise's management do to succeed in countries with different political and legal environments?

carefully analyze the fit between its corporate policies and the political and legal conditions of each particular nation in which it operates

What is the significance of Individualism versus Collectivism in profiling political systems?

it helps to highlight the similarities and differences among political systems according to the primacy of individual rights versus the larger community

What do political systems integrate, according to the definition?

the various parts of a society into a viable, functioning entity Signup and view all the answers

Why do multinational enterprises face risks when investing and operating internationally?

because of the risks that arise from change in a country’s political system Signup and view all the answers

What influences the extent to which government intervenes in business and the way business is conducted?

the political system Signup and view all the answers

What is the defining characteristic of democracy?

freedom Signup and view all the answers

How do decentralized democracies, such as Canada and the US, affect companies?

Companies may face different and sometimes conflicting laws from one state or province to another. Signup and view all the answers

What are the three categories used to rate countries based on their political rights and civil liberties?

free, partly free, or not free Signup and view all the answers

How does a totalitarian government maintain power?

Through the control of media, education, and police. Signup and view all the answers

What is the key difference between theocratic totalitarianism and secular totalitarianism?

In theocratic totalitarianism, religious leaders are also the political leaders, while in secular totalitarianism, the government maintains power through the authority of the state. Signup and view all the answers

What is the role of citizens in a totalitarian system?

Citizens seldom, if ever, participate in the decision-making and governance process. Signup and view all the answers

What is a mixed legal system, and where are most countries with such systems found?

A mixed legal system emerges when two or more legal systems are used within a single country. Most countries with mixed legal systems are found in Africa and Asia. Signup and view all the answers

How do national laws and regulations affect business operations?

National laws and regulations affect efforts to start a business, enter and enforce contracts, hire and fire employees, and close a business. Signup and view all the answers

What is the relationship between a country's per capita income and its tendency to regulate business?

There appears to be an inverse relationship between a country's per capita income and its tendency to regulate business. Signup and view all the answers

How do legal contingencies affect an international competitor's strategic plans?

Legal contingencies, such as product regulation, shape an international competitor's strategic plans. Signup and view all the answers

What is country-of-origin labeling, and what is its purpose?

Country-of-origin labeling (COOL) is a policy that regulates access based on a product's country of origin, informing consumers and supporting local producers. Signup and view all the answers

Why do countries with easier business startup processes tend to have fewer regulations?

Countries that make it easy to start a business tend to impose fewer and simpler regulations. Signup and view all the answers

What national security concern shapes country-of-origin regulations?

National security concerns Signup and view all the answers

What aspect of marketing practices do national laws determine?

Pricing, distribution, advertising, and promotion of products Signup and view all the answers

Why must products often be customized in foreign markets?

To comply with local standards Signup and view all the answers

What determines which law applies and where litigation occurs in international business?

Legal jurisdiction Signup and view all the answers

What type of assets do intellectual property rights consist of?

Intangible assets Signup and view all the answers

Why are intellectual property rights complicated to specify, regulate, and enforce?

Due to cross-national and cross-cultural legal differences Signup and view all the answers

What is the primary challenge in enforcing International Property Rights (IPRs) worldwide?

The lack of a global registration system for patents, trademarks, and copyrights. Signup and view all the answers

What is a key distinction between legal and ethical behavior in business?

While everything illegal is unethical, not everything unethical is necessarily illegal. Signup and view all the answers

What is a significant difficulty faced by countries transitioning from a totalitarian to a democratic political system?

Economic difficulties, such as adjusting to new market structures and institutions. Signup and view all the answers

What is a key consideration for companies operating internationally when assessing political risk?

The country in which they operate and the nature of their products and operations. Signup and view all the answers

Why are International Property Rights important for registered owners?

They provide a legally enforceable monopoly, protecting against lost sales and royalties and promoting future creativity. Signup and view all the answers

What is a key challenge for companies operating in countries with underdeveloped legal systems?

The lack of clear guidance on business decisions, requiring the development of internal guidelines. Signup and view all the answers

Study Notes

Political Environment

A political system refers to a complete set of institutions, political organizations, and interest groups, as well as the relationships among them, and the political norms and rules that govern their activities.
A political system integrates various parts of a society into a functioning entity and influences the extent of government intervention in business and how business is conducted domestically and internationally.

Individualism vs. Collectivism

Societies can be profiled according to the primacy of individual rights and roles versus those of the larger community.
Contemporary democracies share characteristics such as freedom of opinion, expression, and information, as well as fair elections and an independent judiciary.

Democracy

Decentralized democracies, like Canada and the US, may have different laws in different states or provinces.
The defining characteristic of democracy is freedom, and measures of political rights and civil liberties can assess levels of freedom.

Totalitarianism

Totalitarianism is a system in which citizens rarely participate in decision-making and governance, with power monopolized by a single agent, and opposition is not recognized or tolerated.
Theocratic totalitarianism combines religious and political leadership, while secular totalitarianism relies on state authority.

Mixed Legal Systems

Mixed legal systems emerge when two or more legal systems are used within a single country, such as the US, which combines common and civil law.

Legal Issues Facing International Companies

Operational concerns include national laws and regulations affecting business startup, contracts, employee management, and business closure.
Strategic concerns include product regulation, marketplace behavior, product safety and liability, legal jurisdiction, and intellectual property rights.

Intellectual Property Rights

Intellectual property rights consist of ownership rights to intangible assets, such as copyrights, patents, and trademarks.
Enforcement of intellectual property rights is difficult due to cross-cultural and cross-national differences, and the lack of a global registration system.

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Description

This quiz covers the dynamics of politics and laws in international business, including the risks that arise from changes in a country's political system. Learn about the challenges faced by multinational enterprises operating in countries with different political and legal environments.