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Ch 3: Politics, Law, and Business Ethics
CHAPTER 3
POLITICS, LAW, AND BUSINESS ETHICS
TRUE/FALSE QUESTIONS 1. As a global player in helping communicate, access information, and sell things on the Internet,
Yahoo! must be conscious of political and legal differences worldwide.
2. A political system includes the structures, processes, and activities by which a nation governs
itself.
3. A country’s political system derives from the history and culture of its people. 4. A political system can be characterized by who participates in it and to what extent they
participate.
5. The “four tigers” of Asia—Hong Kong, Singapore, South Korea, and Taiwan—built strong
market economies in the absence of truly democratic practices.
6. In a totalitarian system, individuals govern without the support of the people, government
maintains control over many aspects of people’s lives, and leaders do not tolerate opposing viewpoints.
7. A totalitarian system is marked by narrow participation. 8. Totalitarian regimes require the near-total centralization of political power. 9. A “pure” form of totalitarianism is entirely possible. 10. The likelihood that a government or society will undergo political changes that negatively
affect local business activity is called tribal totalitarianism.
11. Conflict among races, religions, and ethnic groups is a source of political risk. 12. Frequent changes in the form of government reduces a nation’s political risk. 13. International businesses can reduce their political risk if they simply ignore local customs,
values, and traditions.
14. Macro political risk threatens companies within a particular industry or even smaller groups. 15. Local content requirements are one form of political risk. 16. Conflict can arise from a people’s resentment toward their government or from territorial
disputes between countries.
17. Terrorism always has silent approval from the local population. 18. Latin American countries have some of the world’s lowest kidnapping rates. 19. Experts agree that the best investment a company can make against kidnapping is to buy
kidnap, ransom, and extortion insurance.
20. Laws designed to prevent companies from fixing prices, sharing markets, and gaining unfair
monopoly advantages are called antitrust (antimonopoly) laws.
21 No legal system can anticipate nor address every conceivable situation in which a person or
firm may find themselves.
22. Ethical dilemmas are similar to legal questions in that there are clear-cut right and wrong
behaviors in every international business situation.
23. Companies today often require prodding from governments and special interest groups before
enacting socially responsible policies.
24. Political relations among countries tend to have little impact on international business. 25. Treaties concluded among several nations are called multilateral agreements. 26. The United Nations does not concern itself with issues such as international trade and
economic development.
Ch 3: Politics, Law and Business Ethics
MULTIPLE CHOICE QUESTIONS 1. Which of the following influence a country’s political system?
a. Current population b. Age and race composition c. Per capita income d. All of the above
2. In ________, citizens vote directly on many national issues.
a. Switzerland b. Canada c. Austria d. Norway
3. Which of the following includes the structures, processes, and activities by which a nation
governs itself? a. Political system b. Legal system c. Cultural system d. Judicial system
4. The Swiss system of public referendums works because ________.
a. of extensive training provided to Swiss citizens b. Switzerland consists of a relatively small population in a small geographic area c. Swiss culture has little trust in representative democracy d. politicians generally rig the results prior to the referendum
5. ________ occurs when people who are capable of influencing the political system make an
effort to do so. a. Narrow participation b. Wide participation c. Normal participation d. Ordinary participation
6. Political systems can be characterized by ________.
a. why people participate in them b. the number of corruption charges brought forward by the judicial system c. the geography and the environmental sciences of the country d. who participates in them and to what extent they participate
7. When people who are capable of influencing the political system make an effort to do so,
which of these is said to occur? a. Wide participation b. Representative democracy c. Tribal totalitarianism d. Narrow participation
8. Totalitarian political systems include authoritarian regimes such as ________.
a. democracy and theocracy b. anarchism and pluralism
Ch 3: Politics, Law, and Business Ethics
c. d.
9. 10. 11. 12. 13. 14. 15. 16.
communism and fascism capitalism and secularism
The belief that only individuals and private groups should control a nation’s political activities is called ________. a. pluralism b. anarchism c. theocracy d. totalitarianism Which of the following refers to the belief that every aspect of people’s lives must be controlled for a nation’s political system to be effective? a. Totalitarianism b. Capitalism c. Anarchism d. Pluralism What is it called when bureaucrats implement decisions according to their own political views rather than those of the people’s representatives? a. Public referendums b. Parliamentary democracies c. Politicized bureaucracies d. Pure democracy The segment of the economic environment comprising independently owned firms that exist to make a profit is called the ________. a. tribal sector b. private sector c. democratic sector d. public sector An important distinction between democratic and totalitarian governments is the ________. a. economic development of the country b. absence of government c. concentration of power d. rate of growth Totalitarian governments tend to share all of these features EXCEPT ________. a. imposed authority b. lack of constitutional guarantees c. minority rights d. restricted participation Which of the following is NOT a feature of a totalitarian regime? a. Imposed authority b. Lack of constitutional guarantees c. Restricted participation d. Nonpolitical bureaucracies A totalitarian political system is marked by ________. a. narrow participation
Ch 3: Politics, Law and Business Ethics
17.
b. c. d.
total participation wide participation public referendums
All of the following are true of totalitarian governments EXCEPT ________. a. imposed authority b. lack of constitutional guarantees c. restricted participation d. pluralistic ideals
When a country’s religious leaders are also its political leaders, its political system is called a(n) ________. a. democracy b. theocracy c. adhocracy d. bureaucracy A political system under the control of totalitarian religious leaders is called ________. a. communist totalitarianism b. tribal totalitarianism c. right-wing totalitarianism d. theocratic totalitarianism Political risk arises from all of the following sources EXCEPT ________. a. poor relations with other countries b. infrequent change in the form of government c. corrupt or poor political leadership d. political involvement of military or religious leaders ________ risk threatens companies within a particular industry. a. Local content b. Macro c. Property d. Micro Events that can cause political risk include which of the following? a. Conflict and violence b. Property seizure c. Local content requirements d. All of the above
Which of the following tries to force change through fear and destruction of life or property? a. Conflict b. Kidnapping c. Terrorism d. Property seizure Asset seizure falls into all of the following categories EXCEPT ________. a. confiscation b. localization c. expropriation
18. 19. 20. 21. 22. 23. 24.
Ch 3: Politics, Law, and Business Ethics 25. 26. 27.
d.
nationalization
Which of the following is the forced transfer of assets from a company to the government without compensation? a. Expropriation b. Nationalism c. Nationalization d. Confiscation ________ is the forced transfer of assets from a company to the government with compensation. a. Expropriation b. Nationalization c. Confiscation d. Localization Local content requirements can force a company to do all of the following EXCEPT ________. a. bank with a non-local institution b. use locally available raw materials c. procure parts from local suppliers d. hire local workers All of the following are methods of managing political risk EXCEPT ________. a. influencing local politics b. information gathering c. adaptation d. domination
Risk can be incorporated into business strategies using all of the following methods EXCEPT ________. a. local equity and debt b. localization c. development assistance d. local customer service The Foreign Corrupt Practices Act forbids U.S. companies from ________ government officials or political candidates in other nations. a. lobbying b. influencing c. bribing d. contacting The devotion of a people to their nation’s interest and advancement is referred to as ________. a. communism b. nationalism c. capitalism d. egalitarianism The U.S. legal system is based largely on ________.
28. 29.
30. 31. 32.