International Business Law
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Course Introduction
International Business Law provides an in-depth exploration of the legal frameworks governing cross-border commercial transactions and global business operations. The course examines key international treaties, regulations, and dispute resolution mechanisms, with particular focus on contracts, trade law, intellectual property rights, and investment law. Students will analyze case studies highlighting the complexities of conducting business in multiple jurisdictions and learn how multinational enterprises navigate legal challenges related to imports, exports, e-commerce, and foreign direct investment. The course also addresses ethical considerations and the impact of cultural differences on international legal practices.
Recommended Textbook
International Business Competing in the Global Market Place 9th editon by Charles W. L. Hill
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Chapter 1: Globalization
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Q1) Companies hope to lower their overall cost structure or improve the quality or functionality of their product offering through globalization of production.
A)True
B)False
Answer: True
Q2) A current trend in international business is the decline of medium-sized and small multinationals,known as mini-multinationals.
A)True
B)False
Answer: False
Q3) A firm does not have to become a multinational enterprise to engage in international business.
A)True
B)False
Answer: True
Q4) The most global markets currently are markets for consumer products.
A)True
B)False
Answer: False
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Chapter 2: National Differences in Political Economy
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Q1) Property rights refer to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.
A)True
B)False
Answer: True
Q2) When collectivism is emphasized,an individual's right to do something may be restricted on the grounds that it runs counter to "the good of society."
A)True
B)False
Answer: True
Q3) In a totalitarian country,there are safeguards to protect an individual's right to freedom of expression,opinion,and organization.
A)True
B)False
Answer: False
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4
Chapter 3: Political Economy and Economic Development
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Q1) What are the factors that contribute to the risks of doing business in a country?
Answer: The risks of doing business in a country are determined by a number of political,economic,and legal factors.Political risk has been defined as the likelihood that political forces will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a business enterprise.An economic risk can be defined as the likelihood that economic mismanagement will cause drastic changes in a country's business environment that hurt the profit and other goals of a particular business enterprise.A legal risk can be defined as the likelihood that a trading partner will opportunistically break a contract or expropriate property rights.
Q2) Which of the following is an example of deregulation?
A) A country that implements a simplified income tax filing system
B) A country that takes over a leading private bank to prevent it from filing for bankruptcy
C) A country that provides agricultural subsidies to farmers
D) A country that encourages foreign direct investment
Answer: D
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Chapter 4: Differences in Culture
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Q1) Class consciousness refers to a condition where people tend to perceive themselves in terms of their class background.
A)True
B)False
Q2) Why is the role of education in a culture important to international companies?
Q3) The individualism versus collectivism dimension of Hofstede's study explored:
A) the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty.
B) the relationship between gender and work roles.
C) how a society deals with the fact that people are unequal in physical and intellectual capabilities.
D) the relationship between the individual and his/her fellows.
Q4) Social rules and guidelines that prescribe appropriate behavior in particular situations are best described as:
A) norms.
B) values.
C) culture.
D) society.
Q5) What are the economic implications of the caste system supported by Hinduism?
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Chapter 5: Ethics in International Business
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Q1) Milton Friedman's basic position is that the only social responsibility of business is to increase profits,so long as the company stays within the rules of law.
A)True
B)False
Q2) A multinational company is accused of paying bribes to the government of a host country to obtain permission to build a production factory.The public relations manager of the company defends the company's actions as being ethically sound; he states that in the host country,paying bribes to government officials is the accepted norm and is in keeping with the social practices in the host country.The public relations manager is using which of the following philosophical doctrines to defend the actions of the company?
A) The Friedman doctrine
B) Righteous moralist
C) Noblesse oblige
D) Cultural relativism
Q3) How can companies strengthen the moral courage of employees?
Q4) Why do organizations appoint an ethics officer?
Q5) Discuss the notion of social responsibility.What does it mean for corporations?
Q6) What is a code of ethics?
Page 7
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Chapter 6: International Trade Theory
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Q1) Heckscher-Ohlin theory supports the case for unrestricted free trade between nations.
A)True
B)False
Q2) According to Adam Smith,A country should specialize in the production of a good when it has _____.
A) an absolute advantage in the production of the good
B) a strong domestic demand for the good
C) the ability to help country increase its national output
D) the necessary raw materials for production
Q3) According to Ricardo's theory of comparative advantage,countries should produce all the products for which they have an absolute advantage.
A)True
B)False
Q4) Porter argues that a nation's firms gain competitive advantage if _____.
A) their domestic consumers lack technical awareness
B) they function in a labor intensive market
C) the country has abundant supply of unskilled workers
D) their domestic consumers are demanding
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Chapter 7: The Political Economy of International Trade
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Q1) Krugman has suggested that trade policy designed to retaliate against another country's trade policy would hurt the citizens of both countries.
A)True
B)False
Q2) A key issue in the "millennium round" of the WTO was to increase barriers to cross-border trade in agricultural products.
A)True
B)False
Q3) Which of the following statements concerning a voluntary export restraint is NOT true?
A) It benefits domestic producers by limiting import competition.
B) In most cases,it benefits consumers.
C) It raises the domestic price of an imported good.
D) It is a variant of the import quota.
Q4) Discuss the Doha Round of trade talks.
Q5) Specific tariffs are levied as a proportion of the value of the imported good.
A)True B)False
Q6) What happened to GATT during the 1980s and early 1990s?
Page 9
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Chapter 8: Foreign Direct Investment
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Q1) How does the free market view support FDI?
Q2) Which of the following observations was made by Raymond Vernon?
A) Firms undertake FDI at particular stages in the life cycle of a product they have pioneered.
B) Firms will favor exporting over FDI as an entry strategy when trade barriers are high.
C) FDI is prompted by imitative behavior in oligopolistic industries.
D) Impediments to the sale of know-how increase the profitability of FDI relative to licensing.
Q3) Discuss the trends in FDI over the last 30 years.Be sure to differentiate between the stock of FDI and the flow if FDI.
Q4) Which of the following primarily explains why developing nations are characterized by lower percentage of cross-border mergers and acquisitions compared to developed nations?
A) Fewer target firms to acquire in developing nations
B) Fierce opposition to mergers and acquisitions in developed nations
C) Unwillingness of foreign companies to invest in developing nations
D) Presence of import quotas in developing nations
Q5) Explain the product life-cycle theory and its connection with FDI.
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Chapter 9: Regional Economic Integration
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Q1) The European Union is an example of a perfect economic union.
A)True
B)False
Q2) Which feature of an economic union differentiates it from a common market?
A) Free flow of products and factors of production between member countries
B) A common monetary and fiscal policy
C) A common external trade policy toward nonmembers
D) Ability of factors of production to move freely between members
Q3) Linking neighboring countries economically and making them interdependent creates incentives to increase political cooperation as well.
A)True
B)False
Q4) The governments of both Canada and the United States are keen on adding other Latin American countries to NAFTA.
A)True
B)False
Q5) Discuss the economic case for economic integration.How does it relate to trade theory?
Q6) Discuss the trend toward increased regional economic integration.
Page 11
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Chapter 10: The Foreign Exchange Market
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Q1) Which term refers to the rate at which one currency is converted into another?
A) Basis point
B) Spread
C) Exchange rate
D) Interchange rate
Q2) Assume that the interest rate on borrowings in Japan is 1 percent,while the interest rate on deposits in Australian banks is 5 percent.A trader borrows in yen and then converts the money into Australian dollars and deposits it in an Australian bank to make a 4 percent margin.Which type of trade is this an example of?
A) Swing trade
B) Carry trade
C) Channel trade
D) Price action trade
Q3) The impact of currency exchange rates on the reported financial statements of a company is called economic exposure.
A)True
B)False
Q4) What are the main uses of foreign exchange markets for international business?
Q5) How can a firm minimize its foreign exchange exposure?
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Chapter 11: The International Monetary System
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Q1) The international monetary system refers to the institutional arrangements that govern _____.
A) microeconomic parameters
B) exchange rates
C) gross domestic produce
D) foreign direct investment
Q2) Which of the following changes were made to IMF's Articles of Agreement in the Jamaica agreement?
A) IMF members were permitted to use Dollar as the convertible currency.
B) Gold was declared as a formal reserve asset for IMF members.
C) IMF members were permitted to sell their gold reserves at the market price.
D) IMF members were restricted from entering the foreign exchange market.
Q3) After World War II,world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate.This is an example of a _____ system.
A) fixed exchange rate
B) dirty float exchange
C) pegged exchange rate
D) floating exchange rate
Q4) Explain the events that led to the failure of the Bretton Woods system.
Page 13
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Chapter 12: The Global Capital Market
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Q1) Depositors are not protected against bank failures in the Eurocurrency market.
A)True
B)False
Q2) An investor purchases the right to receive a specified fixed stream of income from the corporation when he purchases a share of stock.
A)True
B)False
Q3) Using floating exchange rates will help countries reduce the risk of investing in foreign assets.
A)True
B)False
Q4) A Chinese firm borrows 1 million U.S.dollars from an American bank.The cost of this loan will be less if U.S.dollar appreciates against the Chinese currency.
A)True
B)False
Q5) Eurocurrency market is characterized by lack of government regulation.
A)True
B)False
Q6) Describe the factors that make the Eurobond market attractive.
Page 14
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Chapter 13: The Strategy of International Business
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Q1) Because differentiation across countries can involve significant duplication and a lack of product standardization,it may reduce costs.
A)True
B)False
Q2) _____ strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences,and where cost pressures are not too intense.
A) Localization
B) Transnational
C) Global standardization
D) International
Q3) Diminishing returns imply that when a firm already has significant value built into its product offering,increasing value by a relatively small amount requires significant additional costs.
A)True
B)False
Q4) Discuss efficiency frontier.How does strategic positioning relate to the efficiency frontier?
Q5) Describe localization strategy.
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Chapter 14: The Organization of International Business
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Q1) Discuss the global matrix structure.
Q2) An organizational culture can be strong but bad.
A)True
B)False
Q3) Which of the following is an argument favoring centralization?
A) It permits greater flexibility.
B) Motivational research favors it.
C) It can avoid the duplication of activities.
D) It gives top management time to focus on critical issues by delegating routine issues to lower-level managers.
Q4) A firm's organizational culture refers to the formal organizational structure of the company,the control systems and incentives in place,and the human resources component.
A)True
B)False
Q5) Firms pursuing a localization strategy have a high need for coordination between subunits.
A)True
B)False
Q6) What are output controls?
Page 16
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Chapter 15: Entry Strategy and Strategic Alliances
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Q1) The most typical joint venture is a 25/75 venture.
A)True
B)False
Q2) _____ refer to cooperative agreements between potential or actual competitors.
A) Greenfield investments
B) Strategic alliances
C) Takeovers
D) Licensing agreements
Q3) Cross-licensing agreements are increasingly common in the _____ industries.
A) transportation
B) high-technology
C) construction
D) consumer durables
Q4) Discuss strategic alliances.How successful are they? Why do firms form strategic alliances?
Q5) How can a firm increase the probability of selecting a good partner?
Q6) Relational capital refers to the building of interpersonal relationships between the firms' managers in a strategic alliance.
A)True
B)False
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Chapter 16: Exporting, Importing, and Countertrade
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Q1) Japan's great trading houses are called Samurai houses.
A)True
B)False
Q2) Japan's great trading houses are called _____.
A) sogo shosha
B) kaizen
C) MITI
D) Samurai
Q3) U.S.organizations can get financing aid from the Export-Import Bank.
A)True
B)False
Q4) _____ denotes a whole range of barter-like agreements and its principle is to trade goods and services for other goods and services when they cannot be traded for money.
A) Countertrade
B) Cross-selling
C) Matchmaking
D) Letter of credit
Q5) Why do so many firms take a reactive approach to exporting rather than a proactive approach?
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Chapter 17: Global Production, Outsourcing, and Logistics
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Q1) Identify an advantage of adopting a low minimum efficient scale.
A) It helps companies reduce the level of initial capital required for business.
B) It allows the firm to accommodate demands for local responsiveness.
C) It allows firms discount political risks and other global capital risks.
D) A minimum efficient scale of a plant allows decentralization of production.
Q2) The firm that sources from independent suppliers has fewer subunits to control.
A)True
B)False
Q3) Outsourcing some manufacturing to independent suppliers based in other countries would help firms capture more orders from that country.
A)True
B)False
Q4) Modern consumer products such as personal computers serve universal needs.
A)True
B)False
Q5) Explain how the strategic role of foreign factories evolves over time.
Q6) Explain why a firm might adopt the just-in-time system.Why might a firm choose a different inventory system?
Q7) Explain how fixed costs impact the decision to locate a plant.
Page 19
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Chapter 18: Global Marketing and RD
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Q1) Which of the following statements is true?
A) Firms in consumer goods industries that are trying to sell to a large segment of the market generally favor a push strategy.
B) Mass communication has cost advantages for firms in consumer goods industries that are trying to sell to a large segment of the market.
C) Direct selling may be the only way to reach consumers in poor nations with low literacy levels.
D) Firms that sell industrial products or other complex products favor a pull strategy.
Q2) The goal of market segmentation is to optimize the fit between the purchasing behavior of consumers in a given segment and the marketing mix,thereby maximizing sales to that segment.
A)True
B)False
Q3) The means a firm chooses for delivering the product to the consumer is its ____.
A) communication strategy
B) segmentation strategy
C) product attributes
D) distribution strategy
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20
Chapter 19: Global Human Resource Management
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Q1) Why should a firm pursue an ethnocentric approach to staffing? What are the disadvantages of this approach?
Q2) If a company recruits host-country nationals to manage subsidiaries while parent-country nationals occupy key positions at corporate headquarters,the firm is following a(n):
A) polycentric staffing policy
B) ethnocentric staffing policy
C) geocentric staffing policy
D) internal staffing policy
Q3) What are the three actions taken by organized labor to respond to the increased bargaining power of multinationals? How successful have these efforts been?
Q4) HRM professionals have a critically important strategic role.
A)True B)False
Q5) An expatriate needs to have language fluency to show willingness to communicate. A)True
B)False
Q6) Discuss the reasons why expatriate managers fail to complete their foreign assignment.Do
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Chapter 20: Accounting and Finance in the International Business
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Q1) What are the shortcomings of IASB?
Q2) Lessard and Lorange recommend that firms use the projected spot exchange rate to translate both the budget and performance figures into the corporate currency.
A)True
B)False
Q3) The technical process by which an independent person gathers evidence for determining if financial accounts conform to required accounting standards is known as _____.
A) standardization
B) an audit
C) reporting
D) a benchmark
Q4) Accounting is shaped by the environment in which it operates.
A)True
B)False
Q5) What is capital budgeting?
Q6) Describe the three exchange rates that Lessard and Lorange pointed out.
Page 22
Q7) What are the criticisms against adjusting discount rates to reflect a location's riskiness?
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