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MGMT 450 > Chapter 3 > Flashcards

Chapter 3 Flashcards

0
Q

What is common law and who uses it?

A

The use of past cases (precedents) to make decision

UK, former colonies, USA, Canada, India, Australia

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1
Q

What are the 4 legal systems?

A

Common law, civil law, religious law, bureaucratic law

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2
Q

What is civil law and who uses it?

A

Use of codifications; reinforced by the Napoleonic code; origins in Rome

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4
Q

What is religious law and who is known for using it?

A

Follow the rules and practices of a religion; Theocracy

Ex. Iran, Sharia role of interest

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5
Q

What is bureaucratic law and who uses it?

A

communist dictatorship, authoritarian, totalitarian, lack of predictability, need to re-validate contracts
ex. Russia and China

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6
Q

What would you say the difference between common and civil law is?

A

common lay judges take on more of a nuetral referee job where as the cicil law judge takes on a lot of the lawyers duties

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7
Q

What is halal? and Haraam?

A

Halal- the practice of something (its okay)

Haraam- not okay and not practiced

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8
Q

What has become a problem with the law and the internet?

A

who should oversee e-commerce, who enforces intelectual property rights, privacy protection on the internet varies in different countries, “cybersquatter” are people who try to register dominion names of already established companies and then sell back the names to the owners at inflated prices

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9
Q

there are 2 kinds of laws: those directed at the home country and those directed internationally to regulate IB. What are the laws affecting IB?

A

sanctions, embargo, and extraterritality

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10
Q

What is a sanction?

A

restraint of trade against a country ex. restrict access, deny loans, impose tariffs

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11
Q

There may be a saction agains what specific type of good?

A

one that has a dual use-dual use of products

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12
Q

What is an embargo? What are the 2 types?

A

comprehensive sanction against all commerce with a country; unilateral(cuba) and bilateral

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13
Q

What is an extraterritoriality? Give for examples.

A 
regulates business activities conducted outside their boarders 
Antitrust laws
Helms-Burton Act(Cuba)
Anti-boycott laws
Foreign Corrupt Practices Act
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14
Q

What are the 5 laws directed against foreign firms?

A

nationalization, expropriation, confiscation, privatization, repatriation

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15
Q

What is nationalization? What are the 2 types?

A

transferring ownership of resources from private to public sector; expropriation and confiscation

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16
Q

Nationalization is especially difficult for whom?

A

industries that lack mobility

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17
Q

What is privatization?

What does it stem from?

A

the conversion of state-owned property to privately owned property
political ideology and economic pressures

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18
Q

What was the main antitrust case that is an example of extraterritoriality?

A

PLC case where PLC was selling flat glass and the US claimed that this was lessening competition

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19
Q

What happened in the Helms Burton Act?

A

Cuba stole assests from us so we have decided to not work with anyone who benefits from these assets

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20
Q

Anti-boycott laws do what internationaly?

A

we cannot comply with a boycott that is against a country friendly to the US

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21
Q

Foreign Corrupt Practices Act

A

we cannot bribe officials for their business

22
Q

What are other constraints of foreign ownership discussed in this book?

A

many gov’t limit foreign ownership of domestic firms to avoid having their economies or key industries controlled by foreigners; another thing they do is place restrictions on repatriation

23
Q

What is repatriation?

A

making a profit in one country and then moving back to their own country

24
Q

What are the advantages of MNC’s?

A

gives greater selection, creates higher standards, creates jobs, they pay taxes, technology is transfered

25
Q

What are the disadvantages of MNC’s?

A

competition with local firms, this can lead to job loss in local firms, can become dependent on the health of MNC, can get political power

26
Q

What 4 questions arise when a dispute must be resolved internationally?

A
  1. Which country’s law applies?
  2. In what country should the issue be resolved in?
  3. Which technique?: litigation, arbitration, mediation, or negotiation
  4. How will the settlement be enforced?
27
Q

What happen is the law that applies or place of where dispute is resolved is not stated in the contract?

A

forum shopping can occur-where you look for the most favorable court to hear your case

28
Q

What is the principle of comity?

What are the conditions of the principle?

A

whether or not the foreign court order is actually enforced or not
reciprocity is extended, defendant is given proper notice, judgement does not violate domestic statutes or treaty obligations

29
Q

What is arbitration?

A

arbitration is the process by which 2 parties send their dispute to a private individual whose decision they will honor

30
Q

What is the Foreign Sovereign Imunities Act?

A

says that the actions of foreign gov’t against the US firms are generally beyond the jurisdiction of the US courts

31
Q

What is the foundation of a countries technological environment?

A

its resource base

32
Q

What are a couple means by which a country shapes its technological environment?

A

investing in its infrastructure and human capital or technology transfer

33
Q

What is technology transfer?

How are ways countries have done this or encouraged this

A

the trasmittal of technology from one country to another
they have done this through encouraging FDI; they have also done this by requiring countries to transfer technology as part of coming into the market here

34
Q

What makes countries want to transfer their technology here?

A

the protection we offer them for intellectual property

35
Q

Intellectual property is the basis of a firms ________.

A

competitive advantage

36
Q

What is patent flooding?

A

when you make only tiny differences in the patent and there are a ton of them on the same thing; we use first to file practice

37
Q

What are 4 roots to national differences in accounting? What do each of these mean?

A

legal-how invloved the gov’t is in accounting practices
cultural-ex. society could be very detail oriented and so their accounting practices are as well
economic-
political-use the same practices as those around you

38
Q

Who uses the generally accepted accounting principles? GAAP

How does this differ from civil law practices?

A

common law countries

code law countries are based not on proffesional accounting groups but more based in the law

39
Q

How do we value assets in accounting? What is not allowed?

A

we use historical cost when valuing assets; we do not use upward valuation

40
Q

What are the 2 ways to value inventory and what is the advantage for using each?

A

FIFO and LIFO; FIFO is a clearer estimate, LIFO raises the COGS and therefore reports a lower taxable income so less taxes

41
Q

What is an issue with comparing financial reports among international firms?

A

it gets very complex and confuses investors, sometime discouraging them from listing on the NYSE

42
Q

What is an advantage we have in accounting reports?

A

we are very transparent and detailed in our practices

43
Q

What are reserves?

A

extra money for when there are fluctuations

44
Q

What is the IFRS and what does it do?

A

International Financing Reporting Standards is an alternate transparent approach to financial reporting; it is working slowly to standardize accounting procedures

45
Q

What is considered a political risk?

A

any change in the political environment that could potentially harm the value of a firms business activities

46
Q

What are the three types of political risk?

A

operating risk- ex violence or threat to operations
ownership risk- expropriation or confiscation
transfer risk- interference in the ability to shift funds from one country to another

47
Q

What are the levels of political risk?

A

macro-political-all firms

micro-political-firms in a specific industry

48
Q

When deciding to enter into a new country/market what are things to consider/questions to ask?

A 
democracy or dictatorship?
free market or controlled by gov't?
does the gov't view foreign forms as good or bad?
private or public firms?
does the gov't act arbitrarily?
is the gov't stable?
49
Q

What are some ways to reduce financial exposure?

A

reparation to other subsidaries, dividend payments, selling shares locally, and short-term leases over buying assets

50
Q

Overseas Private Investment Corporation

A

insures US overseas investments

51
Q

Multilateral Investment Guarantee Agency

A

subsidiary of the world wide bank

MGMT 450 (4 decks)

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