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2000 International Business > Chapter 6 Political and legal systems in national environments > Flashcards

Chapter 6 Political and legal systems in national environments Flashcards

1
Q

Four types of risk and international business

A
  1. Cross cultural risk.
  2. Commercial risk.
  3. Currencies(financial) risk
  4. Country risk.
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2
Q

The economic, social and political conditions and events in a foreign country that may adversely affect a financial institutions operations

A

Country risk/political risk

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3
Q

Two main systems for the sources of country risk

A
  1. Political system.
  2. Legal system.
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4
Q

Defines the process for making official government decisions

A

Political system

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5
Q

A system for interpreting and enforcing laws

A

Legal system

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6
Q

Three major types of political systems

A
  1. Authoritarianism.
  2. Socialism.
  3. Democracy.
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7
Q
  • associated with command economies
  • centralizes power and government
  • Soviet union, China
A

Authoritarianism

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8
Q
  • refers to a form of government in which people choose leaders by voting
  • characterized by 1. private property rights with encourages innovation 2. Limited government, which allows for more open, Marcus.
A

Democracy
(virtually all democracies include elements of socialism)

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9
Q
  • associated with mixed economies
  • based on a collectivist ideology
  • collective welfare of people to outweigh the welfare of the individual
  • Government controls, some basic means of production distribution and commercial activity
A

Socialism

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10
Q
  • associated with market economies
  • ideology that supports, economic, and social interventions to promote social justice
  • Western Europe, Brazil, India
A

Social democracy

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11
Q
  • free and fair elections
  • right to form political parties
  • existence of a legislative body
  • self determination
A

Political freedom

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12
Q
  • flourishes when government support freely operating markets and rule of law
  • ease with commercial activity is carried out according to market forces
A

Economic freedom

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13
Q

Legal system in which rules are clear publicly disclosed fairly enforced and widely respected by individuals, organizations and the government

A

Rule of law

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14
Q

Nations are primarily governed by one of four basic legal systems

A
  1. Common law.
  2. Civil law.
  3. Religious law.
  4. Mixed
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15
Q
  • the basis of law is tradition, past practice, and legal presidents set by courts via interpretation of statutes, legislation, and past railings
  • originated in England and spread to Australia, Canada and the United States
A

Common law/ case law

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16
Q
  • a legal system originating in mainland Europe, in adopted in much of the world
  • Origins go back to the framework of Roman law and Napoleonic code
  • core principles codified into a referable system which serves as a primary source of law
A

Civil law

17
Q
  • influenced by religious beliefs, ethical codes, and moral values viewed as mandated by a supreme being
  • the most important systems are based on Hindu, Jewish, and Islamic law
  • Islamic law known as a Sharayah, is based on the Quran the holy book of Muslims
A

Religious law

18
Q

How do political systems create challenges for firms and international business?

A
  • Government seizure
  • embargo and sanctions
  • boycott against firms or nations
19
Q

Is seizure of corporate assets without compensation

A

Confiscation

20
Q

Is seizure with compensation

A

Expropriation

21
Q

Seizure of an entire industry with or without compensation

A

Nationalization

22
Q

An official band to exports to, or imports from a particular country to isolate and punish its government

A

Embargo

23
Q

A type of trade penalty imposed on one or more countries one or more countries

A

Sanction
(typically take the form of tariffs, trade barriers, import duties, and import or export quotes

24
Q

A voluntary refusal to engage in commercial dealings with a nation or a company

A

Boycott

25
Q

Application of home country laws to persons or conduct outside national borders

A

Extraterritoriality

26
Q

Companies regularly reveal substantial information about their financial condition and accounting practices

A

Transparency

2000 International Business (9 decks)

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