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International Business The New
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International Business: The New Realities, 4e (Cavusgil)
Chapter 6 Political and Legal Systems in National Environments
1) Which of the following terms indicates potential loss or adverse effects on company
operations and profitability caused by developments in a country's political and/or legal
environments.
A) commercial risk
B) currency risk
C) cross-cultural risk
D) country risk
Answer: D
Diff: 1: Easy
Skill: Concept
Objective: 6-1: Distinguish political and legal environments in international business
AACSB: Analytical Thinking
2) Country risk is considered similar to ________.

A) political risk
B) commercial risk
C) currency risk
D) cross-cultural risk
Answer: A
Diff: 1: Easy
Skill: Concept
3) An individual from a country with a high degree of political risk would most likely be from
________.
A) Canada
B) Singapore
C) Iraq
D) Japan
Answer: C
Diff: 1: Easy
Skill: Concept
1
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4) An individual from a country with a low degree of political risk would most likely be from
________.
A) Venezuela
B) Canada
C) Zimbabwe
D) Iraq
Answer: B
Diff: 1: Easy
Skill: Concept
5) Which of the following best explains why India was once characterized by high country risk?
A) taxes and financial incentives benefited Indian businesses over foreign firms
B) Indian business leaders distrusted most European corporations
C) political leaders enacted laws that targeted foreign firms for harassment
D) Indian leaders feared the modern influences of American firms
Answer: C
Diff: 2: Moderate
Skill: Concept
6) Which of the following characterizes country risk?

A) The political and legal systems of adjacent nations greatly impact the country risk of nations
that host foreign firms.
B) Country risk will change only after the creation of laws and regulations that affect foreign
firms.
C) A nation's country risk level remains fairly constant until the election and installation of a
new political leader.
D) Country risk is always present, but its nature and intensity vary over time and from country to
country.
Answer: D
Diff: 2: Moderate
Skill: Concept
2
7) ________ are the people and organizations that support the political system and receive
government resources.
A) Subsidiaries
B) Regional trade blocs
C) Constituents
D) Shell corporations
Answer: C
Diff: 1: Easy
Skill: Concept
8) Which of the following statements is true of country risk?

A) Its nature remains constant over time and across nations.
B) Its intensity seldom varies over time and across nations.
C) It is present only in poor nations.
D) It is always present.
Answer: D
Diff: 2: Moderate
Skill: Concept
9) The immediate cause of country risk is a legal or political factor.

Answer: TRUE
Diff: 1: Easy
Skill: Concept
10) Trade unions are part of a country's legal system.

Answer: FALSE
Diff: 1: Easy
Skill: Concept
11) Country risk is present in select nations.

Answer: FALSE
Diff: 1: Easy
Skill: Concept
3
12) Describe how the political and legal systems of a host country can both harm and benefit a
foreign firm.
Answer: The political and legal systems of a host country can be both beneficial and harmful to
a foreign firm. Firms can benefit from preferential subsidies, government incentives, and
protection from competition that reduce business costs and influences strategic decision making.
Numerous governments encourage local MNE investment by offering tax holidays and cash
incentives to employ local workers.
On the other hand, political or legislative actions can harm business interests. Laws may be
unexpectedly strict or result in unintended consequences. Many laws favor host-country
interests, that is, interests in foreign countries where the firm has direct operations.
Diff: 2: Moderate
Skill: Concept
13) Describe the two elements which contribute to country risk. Provide examples of countries
with high and low country risk, and explain the reasons for these two distinctions.
Answer: The two elements which determine a nation's country risk are the political system and
legal system. A political system refers to a set of formal institutions that constitute government.
It includes legislative bodies, political parties, lobbying groups, and trade unions. A political
system also defines how these groups interact with each other. A legal system refers to a system
for interpreting and enforcing the laws. The laws, regulations, and rules establish norms for
conduct. A legal system incorporates institutions and procedures for ensuring order and resolving
disputes in commercial activities, as well as protecting intellectual property, and taxing economic
output. Political and legal systems are both dynamic and constantly changing. The two systems
are interdependent because changes in one affect the other.
Country risk can be high or low depending on the political and legal systems of a country. In the
wake of war and the emergence of a new political regime, Iraq is one of the riskiest countries.
Zimbabwe is risky because of ongoing corruption (bribery and fraud) and political turmoil. By
contrast, Singapore and Canada are characterized with low country risk.
Diff: 2: Moderate
Skill: Synthesis
4
14) Describe country risk and discuss how political and legal systems contribute to country risk.
Explain the differences between political systems and legal systems in your answer.
Answer: Country risk is exposure to potential loss or adverse effects on company operations and
profitability caused by developments in a country's political and/or legal environments. Also
referred to as political risk, it is one of four major types of international business risks. While the
immediate cause of country risk is a political or legal factor, underlying such factors may be
economic, social, or technological developments. Government intervention, protectionism, and
barriers to trade and investment are particularly notable in international business.
Mismanagement or failure of the national economy can lead to financial crises, recessions,
market downturns, currency crises, and inflation. Such events usually arise from business cycles,
poor monetary or fiscal policies, a defective regulatory environment, or imbalances in the
underlying economic fundamentals of the host country.
Political or legislative actions can inadvertently harm business interests, such as laws that are
unexpectedly strict or result in unintended consequences. Many laws favor host-country
interests-that is, interests in foreign countries where the firm has direct operations.
A political system is a set of formal institutions that constitute a government. It includes
legislative bodies, political parties, lobbying groups, and trade unions. The principal functions of
a political system are to provide protection from external threats, establish stability based on
laws, and govern the allocation of valued resources among the members of a society. A political
system also defines how these groups interact with each other.
Each country's political system is unique, having evolved within a particular historical,
economic, and cultural context. Political systems are also constantly evolving in response to
constituent demands and the evolution of the national and international environment.
Constituents are the people and organizations that support the political system and receive
government resources.
A legal system is a system for interpreting and enforcing laws. Laws, regulations, and rules
establish norms for conduct. A legal system incorporates institutions and procedures for ensuring
order and resolving disputes in commercial activities, as well as taxing economic output and
protecting intellectual property and other company assets. Political and legal systems are
dynamic and constantly changing. The two systems are interdependent-changes in one affect the
other. Adverse developments in political and legal systems give rise to country risk. They can
result from installation of a new government, shifting values or priorities in political parties,
initiatives developed by special interest groups, and the creation of new laws or regulations.
Gradual change is easier for the firm to accommodate, while sudden change is harder to deal
with and poses greater risk to the firm.
Unfavorable developments give rise to new conditions that may threaten the firm's products,
services, or business activities. For example, a new import tariff may increase the cost of a key
component used to manufacture a product. A modification in labor law may alter the hours the
firm's employees are allowed to work. The installation of a new political leader may lead to
government takeover of corporate assets.
Country risk is always present, but its nature and intensity vary over time and from country to
country.
Diff: 3: Hard
Skill: Synthesis
5
15) The three major types of current political systems are ________.
A) totalitarianism, socialism, and democracy
B) socialism, democracy, and monarchy
C) totalitarianism, liberalism, and fascism
D) democracy, republicanism, and oligarchy
Answer: A
Diff: 1: Easy
Skill: Concept
Objective: 6-2: Understand political systems
16) Religion-based totalitarian states are called ________.

A) theocratic
B) secular
C) socialistic
D) atheistic
Answer: A
Diff: 1: Easy
Skill: Concept
17) A ________ government seeks to control not only all economic and political matters but also
the attitudes, values, and beliefs of the citizenry.
A) democratic
B) socialistic
C) mixed
D) totalitarian
Answer: D
Diff: 1: Easy
Skill: Concept
18) Which of the following countries is considered primarily socialist?

A) Germany
B) Canada
C) India
D) Libya
Answer: C
Diff: 1: Easy
Skill: Concept
6
19) ________ fundamental tenet is that capital and wealth should be vested in the state and used
primarily as a means of production rather than for profit.
A) Socialism's
B) Democracy's
C) Totalitarianism's
D) Theocracy's
Answer: A
Diff: 1: Easy
Skill: Concept
20) Which of the following is the underlying principle of socialism?

A) The welfare of individuals far outweighs the welfare of society.
B) Collective welfare of people outweighs the welfare of the individual.
C) Capital and wealth should be vested in the hands of few and used primarily as a means of
profit.
D) The state should protect itself from individual and group interests.
Answer: B
Diff: 2: Moderate
Skill: Concept
21) Which form of government is characterized by private property rights and limited
government?
A) autocratic
B) democratic
C) socialist
D) totalitarian
Answer: B
Diff: 1: Easy
Skill: Concept
22) What has been the impact of social democracy on international business relations in some
European countries?
A) Regulations have forced foreign firms to invest elsewhere.
B) Politically conscious foreign firms have begun investing in socialist nations.
C) Low income tax rates have encouraged an influx of FDI.
D) Political stability has decreased the country risk of socialist nations.
Answer: A
Diff: 2: Moderate
Skill: Concept
7
23) Which of the following is an element of socialism often found in democratic societies?
A) government subsidies for foreign firms
B) government sponsored businesses
C) government intervention in the affairs of individuals and firms
D) government control of information technology
Answer: C
Diff: 2: Moderate
Skill: Concept
24) Which of the following pairs of nations are on opposite ends of the political freedom scale?
A) New Zealand and Chile
B) China and Vietnam
C) Japan and South Korea
D) Cuba and Sweden
Answer: D
Diff: 2: Moderate
Skill: Concept
25) Which of the following countries is considered a mixed economy?

A) Norway
B) Russia
C) Vietnam
D) China
Answer: A
Diff: 1: Easy
Skill: Concept
8
World Conference (Scenario)
At a world conference to be conducted in Tokyo, representatives from nearly every country in
the world will gather to discuss issues related to international trade. Representative A is from a
totalitarian state. Representative B is from a socialist nation. Representative C hails from a
democratic society.
26) Which of the following countries would Representative A most likely be from?
A) Denmark
B) Zimbabwe
C) Sweden
D) Australia
Answer: B
Diff: 3: Hard
Skill: Application
27) Representative B is most likely from ________.

A) New Zealand
B) North Korea
C) Russia
D) Canada
Answer: C
Diff: 3: Hard
Skill: Application
28) Representative C is most likely from ________.

A) Canada
B) Sudan
C) North Korea
D) Zimbabwe
Answer: A
Diff: 3: Hard
Skill: Application
29) Most democracies include elements of socialism.

Answer: TRUE
Diff: 1: Easy
Skill: Concept
9
30) A democratic government seeks to control not only all economic and political matters but
also the attitudes, values, and beliefs of the citizenry.
Answer: FALSE
Diff: 1: Easy
Skill: Concept
31) Totalitarianism's fundamental tenet is that capital and wealth should be vested in the state
and used primarily as a means of production rather than for profit.
Answer: FALSE
Diff: 1: Easy
Skill: Concept
32) Socialism is based on a collectivist ideology which assumes that the collective welfare of
people outweighs the welfare of the individual.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
33) Democracy is characterized by limited governmental interference.

Answer: TRUE
Diff: 1: Easy
Skill: Concept
34) Democracy is closely associated with openness.

Answer: TRUE
Diff: 1: Easy
Skill: Concept
35) A market economy is also called a centrally planned economy.

Answer: FALSE
Diff: 1: Easy
Skill: Concept
10
36) In a market economy, the government may intervene to address the inequalities that market
economies sometimes produce.
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
37) Provide an overview of totalitarianism, socialism and democracy. Provide examples of

nations which adhere to each system.
Answer: a. Under totalitarianism, the state attempts to regulate most aspects of public and
private behavior. A totalitarian government seeks to control not only all economic and political
matters but the attitudes, values, and beliefs of its citizenry. Usually there is a state party, led by
a dictator, such as Kim Jong-un in North Korea. Party membership is mandatory for those
seeking to advance within the social and economic hierarchy. Power is maintained by means of
secret police, propaganda disseminated through state-controlled mass media, regulation of free
discussion and criticism, and the use of terror tactics.
b. Socialism's fundamental tenet is that capital and wealth should be vested in the state and used
primarily as a means of production rather than for profit. It is based on a collectivist ideology in
which the collective welfare of people is believed to outweigh the welfare of the individual.
Socialists argue that capitalists earn a disproportionate amount of society's wealth relative to
workers. They believe that because the pay of workers does not reflect the full value of their
labor, government should control the basic means of production, distribution, and commercial
activity. Socialism has manifested itself in much of the world as social democracy and has been
most successful in Western Europe. It has played a major role in the political systems of large
countries such as Brazil and India, and today remains a viable system in much of the world. In
social democratic regimes, such as Italy and Norway, government does intervene in the private
sector and business activities.
c. Democracy has become the prevailing political system in much of the advanced economies,
such as the United States and Japan. Democracy is characterized by two key features: private
property rights and limited government. Private property rights means that an individual is able
to own property and assets, and to increase one's asset base by accumulating private wealth.
Property includes tangibles such as land and buildings, as well as intangibles such as stocks,
contracts, patent rights, and intellectual assets. Limited government means that the government
performs only essential functions that serve all citizens, such as national defense, maintaining
law and order, diplomatic relations, and the construction of infrastructure such as roads, schools,
and public works. State control and interference in the economic activities of private individuals
or firms is minimal.
Diff: 2: Moderate
Skill: Concept
11
38) Explain the connection between democracy and economic freedom. What are some of the
characteristics associated with political and economic freedom?
Answer: Compared to totalitarianism and socialism, democracy is associated with greater
economic freedom and higher economic living standards. Economic freedom flourishes when
governments support the institutions necessary for that freedom, such as freely operating markets
and rule of law. The more political freedom in a nation, the more its citizens enjoy economic
freedom.
Political freedom is characterized by free and fair elections; the right to form political parties;
fair electoral laws; existence of a parliament or other legislative body; freedom from domination
by the military, foreign powers, or religious hierarchies; and self-determination for cultural,
ethnic, and religious minorities. Economic freedom relates to the extent of government
interference in business, the strictness of the regulatory environment, and the ease with which
commercial activity is carried out according to market forces.
Diff: 2: Moderate
Skill: Concept
39) Explain command economies. Provide examples of nations that exhibit characteristics of
command economies and why command economies are no longer common today.
Answer: Command economies are also known as centrally planned economies. A command
economy exists when the state is responsible for making all decisions with respect to what goods
and services the country produces, the quantity of their production, the prices at which they are
sold, and the manner of their distribution. The state owns all productive wealth, land, and capital.
The government allocates resources based on which industries they want to develop. A large
bureaucracy with central planners is created to manage the nation's affairs.
But while command economies were common in the 20th century, they proved so inefficient that
most have gradually died out. Central planning is less accurate than market forces in
synchronizing supply and demand. For example, shortages were so common in the Soviet Union
that people often waited in lines for hours to buy basic goods like sugar and bread. Today,
countries such as Russia and China still exhibit some characteristics of command economies.
Diff: 2: Moderate
Skill: Concept
40) Which of the following is characteristic of an effective legal system?

A) a stable and rigid framework of rules and norms across nations
B) systematically enforced laws and regulations
C) political involvement in business transactions
D) universal emphasis on religious law over common and civil law
Answer: B
Diff: 2: Moderate
Skill: Concept
Objective: 6-3: Understand legal systems
12
41) Which of the following terms refers to the existence of a legal system based on clear rules
and fair enforcement?
A) conciliation
B) arbitration
C) culture of law
D) rule of law
Answer: D
Diff: 1: Easy
Skill: Concept
42) The U.S. Securities and Exchange Act encourages confidence in business transactions by
________.
A) protecting public companies from government scrutiny
B) evaluating the inner workings of privately owned firms
C) requiring public companies to frequently disclose their financial indicators to investors
D) shielding investors from bankruptcy and excessive taxation
Answer: C
Diff: 2: Moderate
Skill: Concept
43) Both common law and civil law systems originated in ________.
A) eastern Europe
B) western Europe
C) western Asia
D) eastern Asia
Answer: B
Diff: 1: Easy
Skill: Concept
44) The most widespread form of religious law is ________ law.

A) Hindu
B) Jewish
C) Islamic
D) Catholic
Answer: C
Diff: 1: Easy
Skill: Concept
13
45) Islamic law is based on the ________.
A) Bible
B) Bhagavad Gita
C) Tanakh
D) Qur'an
Answer: D
Diff: 1: Easy
Skill: Concept
46) Which of the following legal systems is largely practiced in the Middle East?
A) religious
B) socialist
C) civil
D) common
Answer: A
Diff: 1: Easy
Skill: Concept
47) Which of the following legal systems is based on legal precedents and past practices set by
the nation's courts through interpretation of statutes, legislation, and past rulings?
A) common
B) religious
C) socialist
D) civil
Answer: A
Diff: 1: Easy
Skill: Concept
48) Common law can best be described as a system ________.

A) designed from political and legislative regulations
B) derived from religious beliefs and moral values
C) based on an all-inclusive system of laws that have been codified
D) based on legal precedents set by the nation's courts
Answer: D
Diff: 2: Moderate
Skill: Concept
14
Common and Civil Law (Scenario)
Zane Computer Corporation is considering the possibility of building a new manufacturing
facility in a foreign country in order to lower labor and production costs. The legal department of
Zane has raised some issues regarding two countries that are the top contenders for the new
facility. The legal system of Country A is based on civil law, while the legal system of Country
B is based on common law. Other than the legal systems of the two countries, all other aspects
are virtually identical. Zane's legal experts must determine which system would be the most
beneficial to Zane in the long-term.
49) Which of the following statements is most likely applicable to Country B?

A) local and national legislatures pass laws
B) ethics and morality are the underlying tenets
C) an all-inclusive system of law that has been codified
D) detailed contracts that clearly state all potential contingencies
Answer: D
Diff: 3: Hard
Skill: Application
50) Which of the following statements supports Country B over Country A?

A) Rules and principles form the starting point for legal reasoning and administering justice.
B) The flexibility of common law allows for judicial interpretation in unique cases.
C) Common law nations administer justice based on a structured set of rules.
D) Laws are primarily legislative in origin and based on laws passed by national and local
legislatures.
Answer: B
Diff: 3: Hard
Skill: Critical Thinking
AACSB: Environments and Reflective Thinking
51) Which of the following supports Country A over Country B?

A) contractual noncompliance provisions are broader in scope
B) contracts are so detailed that they are expensive to draft
C) higher flexibility compared to other legal systems
D) judges confer with legislators on international business issues
Answer: A
Diff: 3: Hard
15
52) Market forces and free trade are encouraged in democracies.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
53) Common law originated in the United States.

Answer: FALSE
Diff: 1: Easy
Skill: Concept
54) Common law is more flexible than the other legal systems.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
55) Common law is also known as code law.

Answer: FALSE
Diff: 1: Easy
Skill: Concept
56) Common law is primarily judicial in origin and based on court decisions.
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
57) Civil law is primarily legislative in origin and based on laws passed by national and local
legislatures.
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
16
58) Unlike other legal systems, Islamic law evolves very little over time .
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
59) Compare and contrast common law with civil law specifically as the two systems relate to
international business.
Answer: Both common law and civil law systems originated in western Europe and represent
the common values of western Europeans. A key difference between the two systems is that
common law is primarily judicial in origin and based on court decisions, whereas civil law is
primarily legislative in origin and based on laws passed by national and local legislatures.
Common law and civil law pose various differences for international business.
With regard to patents and other types of intellectual property, ownership is determined by
registration under civil law. Under common law, ownership of intellectual property is determined
by prior use. With a civil law system, contracts tend to be briefer because many potential
problems are already covered in the civil code. In a common law system, contracts tend to be
very detailed, with all possible contingencies spelled out. It is generally more expensive to draft
a contract in a common law system than in a civil law system.
Diff: 2: Moderate
Skill: Concept
17
60) Describe the similarities and differences of common law and civil law, and explain how
inadequate or underdeveloped legal systems pose a risk for international businesses.
Answer: Also known as case law, common law is a legal system that originated in England and
spread to Australia, Canada, the United States, and former members of the British
Commonwealth. The basis of common law is tradition, previous cases, and legal precedents set
by the nation's courts through interpretation of statutes, legislation, and past rulings. The national
legislature in common-law countries (such as Parliament in Britain and Congress in the United
States) holds ultimate power to pass or amend laws. In the United States, because the
constitution is difficult to amend, the Supreme Court and even lower courts have much flexibility
to interpret the law. Because common law is more open to interpretation by courts, it is more
flexible than other legal systems. Thus, judges in a common-law system have substantial power
to interpret laws based on the unique circumstances of individual cases, including commercial
disputes and other business situations.
Also known as code law, civil law is found in France, Germany, Italy, Japan, Turkey, and Latin
America. Its origins go back to Roman law and the Napoleonic Code. Civil law is based on an
all-inclusive system of laws that have been "codified"; the laws are clearly written and
accessible. It is divided into three separate codes: commercial, civil, and criminal. Civil law is
considered complete as a result of catch-all provisions found within the law. Rules and principles
form the starting point for legal reasoning and administering justice. The codified rules emerge
as specific laws and codes of conduct produced by a legislative body or some other supreme
authority.
Both common law and civil law systems originated in western Europe and represent the common
values of western Europeans. A key difference between the two systems is that common law is
primarily judicial in origin and based on court decisions, whereas civil law is primarily
legislative in origin and based on laws passed by national and local legislatures. Common law
and civil law pose various differences for international business.
Inadequate or underdeveloped legal systems pose a risk for international business. Just as laws
and regulations can lead to country risk, an underdeveloped regulatory environment or poor
enforcement of existing laws can pose challenges for the firm. Safeguards for intellectual
property are often inadequate. Regulations to protect intellectual property may exist on paper but
not be adequately enforced. When an innovator invents a new product, develops new computer
software, or produces some other type of intellectual property, another party can copy and sell
the innovation without acknowledging or paying the inventor. As reported in the opening
vignette, Russia's legal framework is relatively weak and inconsistent. Russian courts lack
substantial experience ruling on commercial and international affairs. Due to the unpredictable
and potentially harmful legal environment, Western firms frequently abandon joint ventures and
other business initiatives in Russia.
18
Inadequate legal protection is most common in developing economies, but it can be a factor in
developed economies as well. The most recent global financial crisis was precipitated, in part, by
insufficient regulation in the financial and banking sectors of the United States, Europe, and
other areas. Government authorities have been considering how regulatory structures can be
revamped to provide a sounder footing for connecting global savers and investors, as well as a
reliable method for dealing with financial instability. Regulators seek to expand the reach of
regulation, provide new means to increase transparency and information flows, and find ways to
harmonize regulatory policies and legal frameworks across national borders. Banks and other
financial institutions are revising disclosure rules to make information more specific and
consistent. Some experts suggest the financial crisis is not proof that more regulation is needed.
Rather, they argue for more intelligent regulation, better enforcement of existing regulation, and
better supervision of national financial institutions.
Diff: 3: Hard
Skill: Synthesis
Objective: 6-3, 6-6: Understand legal systems, Identify the types of country risk produced
bylegal systems
61) The World Bank is classified as a(n) ________.

A) international organization
B) regional economic bloc
C) special interest group
D) competing firm
Answer: A
Diff: 1: Easy
Skill: Concept
Objective: 6-4: Know the participants in political and legal systems
62) The European Union is classified as a(n) ________.

B) regional trade organization
D) competing firm
Answer: B
Diff: 1: Easy
Skill: Concept
19
63) The Organisation for Economic Co-operation and Development (OECD) is classified as a(n)
________.
B) regional trade organization
D) competing firm
Answer: C
Diff: 1: Easy
Skill: Concept
64) Which of the following types of organizations would wield the greatest power over a firm
attempting to do business in Canada?
A) Canada's Ministry of Foreign Affairs
B) World Trade Organization
C) North American Free Trade Agreement
D) Public Works and Government Services Canada
Answer: A
Diff: 3: Hard
Skill: Concept
65) Which of the following is a typical complaint of host-country competitors against foreign
firms?
A) Foreign firms burden the host-country with infrastructure requirements.
B) Foreign firms do not have to obey host-country laws and regulations.
C) Foreign firms receive financial support from host-country governments.
D) Foreign firms lure host-country workers to the home-country businesses.
Answer: C
Diff: 2: Moderate
Skill: Concept
66) Of the five types of participants that are active in transforming political and legal systems,
the public sector is the most important.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
20
67) Special interest groups serve the interests of particular countries, industries, or causes.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
68) Government agencies, institutions, and public officials influence the manner in which foreign
firms conduct business.
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
69) The European Union impacts international trade and business because of its ability to enact
and enforce laws and regulations.
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
70) Explain the purpose of special interest groups. How do these organizations affect
international business? Provide examples to support your answer.
Answer: Special interest groups engage in political activity to advance specific causes, ranging
from labor rights to environmental protection. They often influence national political processes
and produce outcomes with far-reaching consequences for business. Many groups target
particular industries and affect individual firms accordingly. Special interest groups operate not
only in host countries but also in the home country.
For example, In China, activists are pressuring the government to reduce pollution. Rapid
industrialization-especially in the form of factory output, burning coal, and motor vehicles-has
contaminated China's air, water, and soil. In the United States, Greenpeace and other
environmentalist groups opposed construction of the Keystone pipeline, fearing it would produce
oil spills, polluting ground water and killing wildlife. Environmentalist groups were instrumental
in halting construction of the pipeline in 2015.
Diff: 2: Moderate
Skill: Concept
21
71) ________ is the seizure of corporate assets without compensation.
A) Confiscation
B) Expropriation
C) Embargo
D) Sanction
Answer: A
Diff: 1: Easy
Skill: Concept
Objective: 6-5: Identify the types of country risk produced bypolitical systems
72) ________ is seizure of corporate assets with compensation.

A) Confiscation
B) Expropriation
C) Embargo
D) Sanction
Answer: B
Diff: 1: Easy
Skill: Concept
73) A(n) ________ is a type of trade penalty imposed on one or more countries by one or more
other countries.
A) confiscation
B) expropriation
C) subsidy
D) sanction
Answer: D
Diff: 1: Easy
Skill: Concept
74) A(n) ________ is an official ban on exports to or imports from a particular country, in order
to isolate it and punish its government.
A) embargo
B) confiscation
C) expropriation
D) sanction
Answer: A
Diff: 1: Easy
Skill: Concept
22
75) A(n) ________ is a voluntary refusal to engage in commercial dealings with a nation or a
company.
A) expropriation
B) sanction
C) boycott
D) confiscation
Answer: C
Diff: 1: Easy
Skill: Concept
76) Boycotts and protests have the potential to harm businesses by ________.
A) preventing businesses from shipping their products to foreign markets
B) lost sales and increased costs for public relations activities
C) destroying the ability of all local firms to carry on normal business operations
D) raising concerns about a firm's foreign operations by initiating lawsuits
Answer: B
Diff: 2: Moderate
Skill: Concept
77) Expropriation is the term used to describe a host-country government seizing the assets of a
foreign corporation and providing no compensation in return.
Answer: FALSE
Diff: 1: Easy
Skill: Concept
78) Confiscation is the seizure of assets with compensation.

Answer: FALSE
Diff: 1: Easy
Skill: Concept
79) Nationalization describes government seizure of an entire industry, with or without

compensation.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
23
80) An embargo is an official ban on exports to or imports from a particular country.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
81) Describe the methods used by governments to seize the assets of foreign firms. How would
proactive environmental scanning mitigate this risk?
Answer: Governments seize corporate assets in three major ways: confiscation, expropriation,
and nationalization. Confiscation refers to the seizure of foreign assets without compensation.
Expropriation refers to the seizure of corporate assets with compensation.
Nationalization generally refers to government takeover of an entire industry, with or without
compensation.
Proactive environmental scanning can mitigate the risks of these types of seizure. Anticipating
country risk requires advance research. Initially, managers develop a comprehensive
understanding of the political and legal environment in target countries. They then engage in
scanning to assess potential risks and threats to the firm. Scanning allows the firm to improve
practices in ways that conform with local laws and political realities and to create a positive
environment for business success.
One of the best sources of intelligence in the scanning process is employees working in the host
country. They are knowledgeable about evolving events and can evaluate them in the context of
local history, culture, and politics. Embassy and trade association officials regularly develop and
analyze intelligence on the local political scene. Some consulting firms specialize in country-risk
assessment and provide guidelines for appropriate strategic responses. Once the firm has
researched the political climate and contingencies of the target environment, it develops and
implements strategies to facilitate effective management of relations with policymakers and
other helpful contacts in the host country. The firm then takes steps to minimize its exposure to
country risks that threaten its performance.
Diff: 3: Hard
Skill: Synthesis
Objective: 6-5, 6-7: Identify the types of country risk produced bypolitical systems, Know about
managing country risk
82) The United States restricts foreign investments that might affect ________.
A) immigration reforms
B) labor negotiations
C) national security
D) manufacturing technologies
Answer: C
Diff: 1: Easy
Skill: Concept
Objective: 6-6: Identify the types of country risk produced bylegal systems
24
83) Which of the following laws is responsible for the ban on cigarette advertisements in France?
A) environmental laws
B) product and liability laws
C) foreign investment laws
D) marketing and distribution laws
Answer: D
Diff: 2: Moderate
Skill: Concept
84) Income repatriation laws affect MNEs that earn profits in foreign countries by ________.
A) enforcing strict stipulations on cross-border transactions and joint ventures
B) limiting the amount of net income or dividends that can be transferred to the home-country
headquarters
C) restricting the amount of earned income being re-invested in the foreign facility
D) imposing restrictions on the distribution of products from the foreign facility
Answer: B
Diff: 2: Moderate
Skill: Concept
85) Which of the following terms refer to the application of home-country laws to persons or
conduct outside national borders?
A) anti-boycott regulations
B) extraterritoriality
C) transparency
D) anti-dumping policies
Answer: B
Diff: 1: Easy
Skill: Concept
25
Host-Country Legal System (Scenario)
Super Sports, a large sporting goods chain based in Australia, wants to open a store in Norway.
With stores around the world, Super Sports executives realize that legal systems vary from
country to country. Having never opened a store in Norway, the Super Sports legal team is
investigating Norwegian laws to determine how they would impact the corporation and its ability
to do business in Norway.
86) Which of the following is the most important issue to consider when determining the best
entry strategy for Super Sports?
A) What are the regulations regarding income repatriation?
B) What type of promotion and advertising is prohibited?
C) What are the restrictions on inward foreign direct investment?
D) Is the recycling of product packaging mandatory?
Answer: C
Diff: 3: Hard
87) Which of the following supports a decision in favor of Super Sports opening a store in
Norway?
A) MNEs may transfer profits back to the home country without restriction.
B) The opening of warehouse-style stores requires the approval of local retailers.
C) Product injury cases generally rule in favor of plaintiffs regardless of evidence.
D) Advertising and marketing of particular products are banned under local distribution laws.
Answer: A
Diff: 3: Hard
88) Which of the following would most likely oppose the opening of a Super Sports store in
Norway?
A) labor unions
B) local sports retailers
C) international banks
D) local sports enthusiasts
Answer: B
Diff: 3: Hard
Skill: Application
26
89) Manufacturers face legal penalties and lawsuits under product safety and liability laws if they
are responsible for damage, injury, or death caused by defective products.
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
90) A foreign firm's entry strategy, operations, and performance are often dictated by foreign
investment laws.
Answer: TRUE
Diff: 1: Easy
Skill: Concept
91) The protection of intellectual property rights is guaranteed and enforceable in every country
in the world.
Answer: FALSE
Diff: 2: Moderate
Skill: Concept
92) What are some of the risks for firms involved with international e-commerce?
Answer: Firms that undertake e-commerce in countries with weak laws face considerable risk.
Many consumer-privacy laws have yet to be enacted, and progress has been delayed on the
development of methods to protect private data from criminal or competitive eyes.
Diff: 2: Moderate
Skill: Concept
AACSB: Analytical Thinking; Information Technology
27
93) Explain extraterritoriality. Provide examples to illustrate how extraterritoriality affects
international business.
Answer: Extraterritoriality refers to the application of home-country laws to persons or conduct
outside national borders. In most cases, the laws are applied in an attempt to prosecute
individuals or firms located abroad for some type of wrongdoing.
Examples of extraterritoriality in international business abound. A French court ordered Yahoo!
to bar access to Nazi-related items on its Web site in France and to remove related messages and
images from its sites accessible in the United States. In 2015, the European Union charged
Google with monopolistic practices in the promotion of its web search services. Monopolies are
considered harmful because they can unfairly restrain trade. Businesses generally oppose
extraterritoriality because it tends to increase the costs and uncertainty of operating abroad.
Diff: 2: Moderate
Skill: Concept
94) What is transparency? Explain how transparency varies around the world.
Answer: Transparency is the degree to which firms regularly reveal substantial information
about their financial condition and accounting practices. The timing and transparency of
financial reporting vary widely around the world. For example, in the United States, public firms
are required to report financial results to stockholders and to the Securities and Exchange
Commission every quarter. In much of the world, however, financial statements may come out
once a year or less often, and they often lack transparency. Not only does greater transparency
improve the environment for business decision-making, it also improves the ability of citizens to
hold companies accountable.
Diff: 2: Moderate
Skill: Concept
28
95) Explain why contract laws can represent a country risk arising from the host-country legal
environment, and explain the three approaches firms typically employ to settle international
contractual disputes.
Answer: Governments in host countries can impose a variety of legal stipulations on foreign
companies doing business there, and contract laws represent one form of country risk.
International contracts attach rights, duties, and obligations to the contracting parties. Contracts
are used in five main types of business transactions: (1) sale of goods or services, especially
large sales, (2) distribution of the firm's products through foreign distributors, (3) licensing and
franchising-that is, a contractual relationship that allows a firm to use another company's
intellectual property, marketing tools, or other assets for a fee, (4) FDI, especially in
collaboration with a foreign entity, in order to create and operate a foreign subsidiary, and (5)
joint ventures and other types of cross-border collaborations.
Convergence toward an international standard for international sales contracts is occurring. The
United Nations instituted the Convention on Contracts for the International Sale of Goods
(CISG), a uniform text of law for international sales contracts. More than 75 countries are now
party to the CISG, covering about three-quarters of all world trade. Unless excluded by the
express terms of a contract, the CISG is deemed to supersede any otherwise applicable domestic
law(s) regarding an international sales transaction.
A legal contract spells out the rights and obligations of each party and is especially important
when relationships go awry. Contract law varies widely from country to country, and firms must
adhere to local standards. For example, a Canadian firm doing business in Belgium generally
must comply with the laws of both Belgium and Canada, as well as with the evolving laws of the
European Union.
International contractual disputes arise from time to time, and firms generally employ any of
three approaches for resolving them: conciliation, arbitration, and litigation. Conciliation is the
least adversarial method. It is a formal process of negotiation with the objective to resolve
differences in a friendly manner. The parties in a dispute employ a conciliator, who meets
separately with each in an attempt to resolve their differences. Parties can also employ mediation
committees-groups of informed citizens-to resolve civil disputes. Arbitration is a process in
which a neutral third party hears both sides of a case and decides in favor of one party or the
other, based on an objective assessment of the facts. Compared to litigation, arbitration saves
time and expense, while maintaining the confidentiality of proceedings. Arbitration is often
handled by supranational organizations, such as the International Chamber of Commerce in Paris
or the Stockholm Chamber of Commerce. Litigation is the most adversarial approach and occurs
when one party files a lawsuit against another in order to achieve desired ends. Litigation is most
common in the United States; most other countries favor arbitration or conciliation.
Diff: 3: Hard
Skill: Synthesis
Objective: 6-6, 6-7: Identify the types of country risk produced bylegal systems, Know about
managing country risk
29
96) Which of the following statements is true about managing country risk?
A) Scanning allows a firm to assess the potential country risk.
B) Firms can reduce country risk by entering markets in collaboration with a foreign partner.
C) Country risk can seldom be anticipated by advance research.
D) Home-country employees are the best source for anticipating country risk in host-countries.
Answer: A
Diff: 2: Moderate
Skill: Concept
Objective: 6-7: Know about managing country risk
97) Which of the following would be the best way for a manager to learn about country risks in a
host country?
A) analysis of records of competitor firms
B) employees working in the host country
C) host country nationals working abroad
D) employees working in the home country
Answer: B
Diff: 2: Moderate
Skill: Concept
98) Which of the following is the LEAST adversarial method of resolving a contractual dispute?
A) trial
B) arbitration
C) litigation
D) conciliation
Answer: D
Diff: 1: Easy
Skill: Concept
30
Common and Civil Law (Scenario)
Zane Computer Corporation is considering the possibility of building a new manufacturing
facility in a foreign country in order to lower labor and production costs. The legal department of
Zane has raised some issues regarding two countries that are the top contenders for the new
facility. The legal system of Country A is based on civil law, while the legal system of Country
B is based on common law. Other than the legal systems of the two countries, all other aspects
are virtually identical. Zane's legal experts must determine which system would be the most
beneficial to Zane in the long-term.
99) Which of the following questions would be more important for Zane legal experts to
consider before recommending Country A or Country B?
A) Have other corporations based in these two countries been profitable?
B) What is the prevalence of industrial crime in these two countries?
C) How would a contractual dispute with a local vendor be resolved?
D) Would local environmental organizations target Zane for its manufacturing practices?
Answer: C
Diff: 3: Hard
100) One of the best sources of intelligence in the scanning process is employees working in
foreign countries targeted for market entry
Answer: TRUE
Diff: 2: Moderate
Skill: Concept
31
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Such townes and forts as might eyther helpe[634] or hurt,
I manned Mayon and Suzan’s, townes of strength,
Fort Barnard, Thanceaur, and S. Cales the curt,
With Lile sues Bolton, standing in the durt:
Eke Gwerland, Suze, Loupeland and Mountsure,
With Malycorne, these wan I and kept full sure.
30.
Besides all this I tooke nere forty holdes,

But those I razed euen with the ground:
And for these deedes, as scely sheepe in foldes
Doe shrinke for feare at euery litle sound,
So fled my foes before my face, full round
Was none so hardy that durst abide the fight,
So Mars and fortune furdered mee their knight.
31.
I tell no lye, so gastfull grewe my name,

That it alone discomfited an hoast:
The Scots and Frenchmen[635] well[636] confesse the
same,
Els will the towne which they like cowards lost:
For whan they sieged Beauron with great boast,
Being fourty thousand Britaynes, French, and Scots,
Fiue hundred men did vanquish them like sots.[637]
32.
For while the Frenchmen freshly assaulted[638] still,

Our Englishmen came boldly forth at night,
Crying: “Sainct George, Salisbury, kill, kill, [kill:”]
And offered freshly with their foes to fight,
And they as Frenchly tooke themselues to flight:
Supposing surely that I had bene there,
See how my name did put them all in feare.
33.
Thus was the Dolphin’s power discomfited,

Four thousand slayne, theyr campe tane as it stood,
Whereby our towne and souldiers profited,
For there were vitayles plentifull and good:
This while was I in England, by the rood,
To appease a strife that was right foule befall,
Betweene duke Humfrey and the cardinall.
34.
The duke of Exeter shortly[639] after died,

Which of the king at home had gouernaunce,
Whose roume the earle of Warwicke then supplied,
And I tooke his and sped mee into Fraunce,
And hauing a zeale to[640] conquere Orliaunce,
With much a doe I gat the regent’s aide,
And marched thither,[641] and siege about it layde.
35.
But in the way I tooke the towne of Yayne,

Where murdered were for stoutnes many a man:
But Baugencey I tooke with litle payne,
For which to shewe them fauour I began:
This caused the townes of Mewne and Iargeman,
That stoode on Loyer, to profer mee the keyes,
Ere I came nere them, wel nigh by two dayes.
36.
See here how fortune froward[642] can allure,

What baytes shee layeth to bring men to their endes:
Who hauing hap like this, but hopeth sure,[643]
To bring to bale what euer hee entendes?
But soone is sower the sweete that fortune sendes:
Whan hope and hap, when health and wealth is
highest,
Then woe and wracke, disease, and neede bee
nighest.
37.
For while I, suing this so good successe,

Layde siege to Orliaunce on the riuer side,
The bastard (cuckold Cawnie’s sonne I gesse,
Tho thought the duke’s) who had the towne in guide,
Came fiercely forth, when hee his time espyde,
To rayse the siege, but was bet backe agayne,
And hard pursued both to his losse and payne.
38.
For there wee wan the bulwarke on the bridge,

With a mighty tower standing fast thereby:
Ah, cursed tower, that didst my dayes abridge,
Would God thou hadst bene furder, eyther I:
For in this tower a chamber standes on hie,
From which a man may view through all the towne
By certayn windowes iron grated downe.
39.
Where on a day, now, Baldwine, note mine end,

I stoode in viewing where the towne was weake,
And as I busily talked with my frend,
Shot fro the towne, which all the grate did breake,
A pellet came, and droue a mighty fleake
Against my face and tare away my cheeke,
For payne whereof I died within a weeke.[644]
40.
See, Baldwine, see the vncertayne glory,[645]

How sodayne mischief dasheth all to dust,
And warne all princes by my broken story,
The happiest fortune chiefly to mistrust:
Was neuer man that alway had his lust:
Then such be[646] fooles, in fancy more then mad,
Which hope to haue that neuer any had.[647]
[This straunge aduenture of the good earle draue vs all into a
dumpe, inwardly lamenting his woefull destiny, out of which wee
were awaked after this sort. “To what end,” sayde[648] one, “muse we
so much on the matter. This earle is neyther first nor last[649] whom
fortune hath foundred in the height of theyr prosperity. For all through
the raigne of this vnfortunate king Henry, we shall finde many which
haue beene likewise serued, whose chaunces sith they be martiall,
and therefore honourable, may the better be omitted. And therefore
wee will let goe the lordes Molines, and Poyninges, slayne both at
the siege of Orleaunce, shortly after the death of this earle. Also the
valiaunt earle of Arundel destroyed with a bowlet at the assault of
Gerborye,[650] whose stories neuerthelesse are worth the hearing.
And to quicken vp your spirites, I will take vpon mee a tragicall
person in deede, I meane king Iamy slayn by his seruauntes in his
priuy chamber: who although he be a Scot, yet seeing hee was
brought vp in England, where hee learned the language, his example
also so notable, it were not meete it should bee forgotten. And
therfore marke, Baldwine, what, I thinke, he may say.”]
[Howe King Iames the first, for
breaking his othes and bondes, was
by God’s sufferaunce miserably
murdered of his owne subiectes,
Anno 1437.[651]
1.
If for example’s sake thou wrote[652] thy booke,

I charge thee, Baldwine, thou forget mee not,
Whom fortune alwayes frowardly forsooke,
Such was my lucke, my merite, or my lot:
I am that Iames, king Robert’s sonne, the Scot
That was in England prysoner all his youth,
Through mine vncle Walter’s trayterous vntruth.
2.
For when my father through disease and age,

Unwieldy was to gouerne well his land,
Because his brother Walter seemed sage,
Hee put the rule thereof into his hand:
Than had my father (you shall vnderstand)
Of lawfull barnes mee and one only other,
Nempt Dauy Rothsay, who was mine elder brother.
3.
This Dauy was prince of Scotland, and so take

Till his aduoutry caused men complayne:
Which that hee might by monishment forsake,
My father prayed mine uncle take the payne,
To threaten him his vices to refrayne:
But hee false traytor, bucherly, murdering wretch,
To get the crowne began to fetch a fetch.
4.
And finding now a proffer to his pray,

Deuised meanes my brother to deuour,
And for that cause conuayde him, day by day,
From place to place, from castle vnto towre,
To Faulkland fort, where like a tormentour
Hee starued him, and put to death a wife
Whom through a reede hee suckt to saue his life.
5.
O wretched death, fye cruell tyranny,

A prince in pryson lost for want of foode![653]
Was neuer enmy wrought such vilany,
A trusty brother destroy his brother’s bloode:[654]
Woe worth so friendly, fye on double hoode:
Ah, wretched father, see thy sonne is lost,
Starued by thy brother whome thou trustedst most.
6.
Of whom when some beganne to finde the fraud,

(And yet the traytor made himselfe so cleare,
That hee should seeme to haue deserued laud,
So woefull did hee for his prince[655] appeare)
My doubtfull father, louing mee full deare,
T’avoyde[656] all daunger that might after chaunce,
Sent mee away, but nine yeares olde, to Fraunce.
7.
But windes and weather were so contrary,
That wee were driuen to the English coast,
Which realme with Scotland at that time did vary,
So that they tooke mee as prysoner,[657] not as[658]
hoast:[659]
For which my father, fearing I was[660] lost,
Conceiued shortly such an inward thought,
As to the graue immediatly him brought.
8.
Then had mine uncle all the regiment

At home, and I in England prisoner lay:
For to himselfe hee thought it detriment
For my release any ransome for to pay,
For as hee thought hee had possest his pray:
And therefore wisht I might in duraunce dure
Till I had died, so should his raigne be sure.
9.
But good king Henry, seeing I was a childe,

And heyr by right vnto a realme and crowne,
Did bring mee vp, (not like my brother, wilde)
But vertuously, in feates of high renowne,
In liberall artes, in instrumentall sowne:
By meane whereof when I was after king,
I did my realme to ciuill order bring.[661]
10.
For ere I had beene prysoner eighteene yeere,

In which short space two noble princes dyed,
Whereof the first in prudence had no peere,
The other in warre most valiaunt throughly tryed,
Whose roume his sonne babe Henry, eke supplyed:
The peeres of England which did gouerne all,
Did of theyr goodnes helpe mee out of thrall.
11.
They maryed mee to a cosin of theyr king,

The duke of Somerset’s daughter rich and fayre,[662]
Releast my ransome saue a trifling thing:
And after I had done homage to th’heyre,[663]
And sworne my frendship neuer should appayre,
They brought mee kingly furnisht to my land,
Which I receaued at mine vncle’s hand.
12.
Whereof my lords and commons were full glad,

So was mine vncle chiefly, as hee sayde,
Who in his mouth no other matter had,
Saue punish such as had my brother trayed:
The fault whereof apparauntly hee layed
To good duke Murdo, his elder brother’s sonne,
Whose father dyed long ere this was done.
13.
My cursed vncle, slyer than the snake,

Which would by craft vnto the crowne aspire,
Because hee sawe this Murdo[664] was a stake
That stayed vp the top of his desire,
(For his elder brother was duke Murdoe’s syre)[664]
Hee thought it best to haue him made away,
So was hee sure (I gone) to haue his pray.
14.
And by his craftes the traytour brought to passe,

That I destroyde duke Murdo and his kin,
Poore innocents, my louing friendes, alas:
O kinges, and princes, what plight stand wee in,
A trusted traytour shall you quickly win,
To put to death your kin and friendes most iust:
Take heede therefore, take heede whose reede yee
trust.
15.
And at the last to bring mee whole in hate

With God and man, at home and eke abrode,
Hee counsayl’d mee, for suraunce of my state
To help the Frenchmen, then nigh ouertrode
By Englishmen: and more to lay on lode,
With power and force all England to inuade,
Against the oth and homage that I made.
16.
And though at first my conscience did grudge,

To breake the boundes of friendship knit by oth,
Yet after proofe (see mischiefe) I did iudge
It madnes for a king to keepe his troth,
And semblably with all the world it goth:
Sinnes oft assayde are thought to bee no sinne,
So soyleth sinne the soule it sinketh in.
17.
But as diseases common cause of death,

Bring daunger most when least they pricke and smart,
Which is a signe they haue expulst the breath
Of liuely heate, which doth defend the heart:
Euen so such sinnes as felt are on no part
Haue conquered grace, and by theyr wicked vre
So kild the soule, that it can haue no cure.
18.
And grace agate, vice still succedeth vice,

And all to haste the vengeaunce for the furst,
I areade therefore all people to bee wise,
And stop the brake when it begins to burst:
Attast no poyson (vice is venim worst,
It mates the minde) beware eke of too much,
All kill through muchnes, some with onely touch.
19.
When I had learnde to set my oth at nought,

And through much vse the sence of sinne exiled,
Against king Henry what I could, I wrought,
My fayth, my oth, vniustly foule defiled:[665]
And while slye fortune at my doings smyled,
The wrath of God, which I had well deserued,
Fell on my necke, for thus loe was I serued.
20.
Ere I had raygned fully fifteene yeare,

While time I lay at Pertho, at my place,
With the queene my wife and children mee to chare,
My murdring uncle with the double face,
That longed for my kingdome and my mace,
To slay mee there suborned Robert Grame,
With whom his nephue, Robert Stuard, came.
21.
And when theyr time fit for theyr[666] purpose founde,

Into my priuy chamber they astart,
Where with theyr swordes they gaue mee many a wound,
And slue all such as stuck vnto my part:
There loe my wife did shew her louing heart,
Who, to defend mee, felled one or twayne,
And was sore wounded ere I coulde bee slayne.[667]
22.
See Baldwine, Baldwine, the vnhappy endes

Of such as passe not for theyr lawfull oth:
Of those that causeles leaue theyr fayth and[668] frendes,
And murder kinsfolkes through their foes vntroth:
Warne, warne all princes, all like sinnes to loth,
And chiefly such as in my realme be borne,
For God hates highly all that[669] are forsworne.][670]
[When[671] this was sayde, quoth[672] one of the company: “Let
passe these Scottish matters, and returne wee to our English storyes
which minister matter enough of tragedy, without seking or trauayling
to forayne countreyes. Therefore returne wee to the rest of the
tragicall troubles and broyles which happened in this realme during
the minority of king Henry the sixt, and the sondry falls and
ouerthrowes of great princes and other noble persons happening
thereby.” “Well sayd (qd maister Ferrers) as[673] it happeneth I haue
penned here two[674] notable tragedies, the one of Humfrey duke of
Glocester, the other of the duchess Elianor his wife, which (as mee
seemeth) be two of the most memorable matters fortuning in that[675]
time: but whether of them is to bee placed first in[676] the order of our
booke, I somwhat stand in doubt. For albeit the sayd duke’s death
happened before the deceasse of the duches, yet was her fall first,
which finally was cause of both.”[677] “Why should you doubt then
(quod the rest of the company) for seeing the cause doth alwayes
goe before th’effect and sequell of any thing, it is good reason you
should begin with her first. And therefore wee pray you let vs heare
first what shee hath to say: for all this while wee haue not heard the
complaynt of any lady or other woman.”]
How Dame Elianor Cobham Duchesse
of Glocester, for practising of
witchcraft and sorcery, suffred open
penaunce, and after was banished the
realme into the Ile of Man.
1.
If a poore lady damned in exile

Amongst princes may bee allowed place,
Then, gentle Baldwine, stay thy pen a while,
And of pure pitty ponder well my case,
How I a duches, destitute of grace,
Haue found by proofe, as many haue and shall,
The prouerbe true, that pride will haue a fall.
2.
A noble prince extract of royall bloud,

Humfrey, sometime protector of this land,
Of Glocester duke, for vertue calde, the good,
When I but base beneath his state did stande,
Vouchsafte with mee to ioyne in wedlocke’s band,
Hauing in court no name of high degree,
But Elinor Cobham, as parents left to mee.
3.
And though by birth[678] of noble race I was,

Of baron’s bloud, yet was I thought vnfitte
So high to match, yet so it came to passe,
Whether by grace, good fortune, or by witte,
Dame Venus’ lures so in mine eyes did sitte,
As this great prince without respect of state,
Did worthy mee to bee his wedded mate.
4.
His wife I was, and hee my true husband,

Though for a while hee had the company
Of lady Iaquet, [the] dutchesse of Holland,
Being an heyre of ample patrimony,
But that fell out to bee no matrimony:
For after warre, long sute in lawe, and strife,
Shee proued was the duke of Brabant’s wife.
5.
Thus of a damsell [a] duchesse I became,

My state and place aduaunced next the queene,
Whereby mee thought I felt no ground, but swam,
For in the court mine equall was not seene,
And so possest with pleasure of the spleene,
The sparkes of pride so kindled in my brest,
As I in court would shine aboue the rest.
6.
Such giftes of nature God in mee had graft

Of shape and stature,[679] with other graces moe,
That by the shot of Cupid’s fiery shaft,
Which to the harte of this great prince did goe,
This mighty duke with loue was kindled so,
As hee abasing the height of his degree,
Set his whole hart, to loue and honour mee.
7.
Grudge who so would, to him I was most deere,

Aboue all ladyes[680] aduaunced in degree,
(The queene except) no princesse was my peere,
But gaue mee place, and lordes with cap and knee
Did all honour and reuerence vnto mee:
Thus hoisted high vppon the rolling wheele,
I sate so sure, mee thought I could not reele.
8.
And weening least that fortune hath a turne,

I lookt aloft, and would not looke alowe,
The brondes of pride so in my brest did burne
As the hot sparkes, burst forth in open showe,
And more and more the fire began to glowe
Without quenching, and daily did encrease,
Till fortune’s blastes with shame did make it cease.
9.
For (as tis sayd) pride passeth on afore,

And shame followes, for iust rewarde and meede,
Would God ladyes, both now and euermore,
Of my hard hap, which shall the story reede,
Would beare in mind, and trust it as their creede,
That pryde of hart is a most hatefull vice,
And lowlines, a pearle of passing price.
10.
Namely in queenes, and ladyes of estate,

Within whose mindes all meekenes should abound,
Since high disdayne doth alwayes purchase hate,
Being a vice, that most part doth redound
To their reproach, in whome the same is found,
And seeldome gets good fauour or good fame,
But is at last knit vp with worldly shame.
11.
The proofe wherof I found most true in deede,
That pryde afore, hath shame to wayt behinde:
Let no man doubt, in whom this vice doth breede,
But shame for pride by iustice is assynde,
Which I well found, for truely in my minde
Was neuer none, whome pride did more enflame,
Nor neuer none receiued greater shame.
12.
For not content to bee a duchesse great,

I longed sore to beare the name of queene,
Aspiring still vnto an higher seat,
And with that hope my selfe did ouerweene
Since there was none, which that time was betweene
Henry the king, and my good duke his eame,
Heyre to the crowne and kingdome of this realme.
13.
So neare to bee, was cause of my vayne hope

And long awayte, when this faire hap would fall:
My studies all were tending to that scope,
Alas, the while to councell I did call
Such as would seeme, by skill coniecturall
Of art magique and wicked sorcery,
To deeme and dyuine[681] the prince’s destiny:
14.
Among which sort of those that bare most fame

There was a beldame called the witch of Ey,
Old mother Madge her neighbours did her name,[682]
Which wrought wonders in countryes by here say,
Both feendes and fayries her[683] charming would obay:
And dead corpsis[684] from graue shee could vp rere,
Such an inchauntresse [as] that time had no peere.
15.
Two priests also, the one hight Bolenbroke,

The other Suthwell, [great] clerkes in coniuration,[685]
These two chapleins were they that vndertooke
To cast and calke the kinge’s constellation,[686]
And then to iudge by deepe[687] diuination
Of thinges to come, and who should next succede
To Englande’s crowne, all this was true in deede.
16.
And further sure they neuer did proceede,

Though I confesse that this attempt was ill,
But for my part, for any thing in deede,
Wrought, or else thought, by any kinde of skill,
God is my iudge I neuer had the will,
By any inchauntment, sorcery, or charme,
Or otherwise, to worke my prince’s harme.
17.
Yet nethelesse,[688] when this case came to light

By secrete spies to Cayphas, our cardinall,
Who long in hart had borne a priuy spight
To my good duke, his nephue naturall,
Glad of the chaunce so fitly forth to fall,
His long hid hate with justice to color,
Used this case with most extreame rigor.
18.
And caused mee with my complices all,

To bee cyted by processe peremptory,
Before judges, in place judiciall,
Whereas Cayphas, sitting in his glory,
Would not allow my aunswere dilatory,
Ne doctor, or proctor, to alledge the lawes,
But forced mee to plead in mine owne cause.
19.
The kinge’s councell were called to the case,

(My husband than shut out for the season)
In whose absence I found but little grace,
For lawyers turned our offence to treason:
And so with rigor, without ruth or reason,
Sentence was gieuen that I for the same
Should doe penaunce, and suffer open shame.
20.
Nay the like shame had neuer wight I weene,

Duches, lady, ne damsel of degree,
As I that was a princesse, next the queene,
Wife to a prince, and none so great as hee,
A kinge’s vncle, protector of his countrey,
With taper burning, shrouded in a sheete,
Three dayes a row, to passe the open streete,
21.
Bareleg’d, and barefoote, to all the worlde’s wonder,

Yea, and as though such shame did not suffise,
With more despite then to part asunder
Mee and my duke, which traytors did deuise
By statute lawe, in most vnlawfull wise,
First sending mee with shame into exile,
Then murdring him by trechery and gyle.
22.
Yea, and besides this cruell banishment,[689]

Far from all friendes to comfort mee in care,
And husband’s death, there was by parliament
Ordayn’d for mee a messe of courser fare:
For they to bryng mee to begger’s state most bare,
By the same act from mee did then withdrawe
Such right of dower, as widowe’s haue by lawe.[690]
23.
Death (as tis sayd) doth set all things at rest,

Which fell not so in mine vnhappy case:
For since my death, mine enmies made a jest
In minstrel’s rymes, mine honour to deface:
And then to bring my name in more disgrace,
A song was made in manner of a laye,
Which olde wiues sing of mee vnto this day.[691]
24.
Yet with these spites theyr malice could not end,

For shortly after, my sorrowes to renue,
My loyall lord, which neuer did offend,
Was calde in haste, the cause hee litle knew,
To a parliament, without sommons due,
Whereas his death was cruelly contriued,
And I, his wife, of earthly ioyes depriued.
25.
For all the while my duke had life and breath,

So long I stoode in hope of my restore:
But when I heard of his most causles death,
Then the best salue for my recureless sore
Was to despayre of cure for euermore,
And as I could, my carefull heart to cure
With pacience, most paynfull to endure.
26.
O traytors fell, which in your heartes could find,

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International Business The New

Realities 4th Edition Cavusgil Test Bank

2) Country risk is considered similar to ________.

6) Which of the following characterizes country risk?

8) Which of the following statements is true of country risk?

9) The immediate cause of country risk is a legal or political factor.

10) Trade unions are part of a country's legal system.

11) Country risk is present in select nations.

16) Religion-based totalitarian states are called ________.

18) Which of the following countries is considered primarily socialist?

20) Which of the following is the underlying principle of socialism?

25) Which of the following countries is considered a mixed economy?

27) Representative B is most likely from ________.

28) Representative C is most likely from ________.

29) Most democracies include elements of socialism.

33) Democracy is characterized by limited governmental interference.

34) Democracy is closely associated with openness.

35) A market economy is also called a centrally planned economy.

37) Provide an overview of totalitarianism, socialism and democracy. Provide examples of

40) Which of the following is characteristic of an effective legal system?

44) The most widespread form of religious law is ________ law.

48) Common law can best be described as a system ________.

49) Which of the following statements is most likely applicable to Country B?

50) Which of the following statements supports Country B over Country A?

51) Which of the following supports Country A over Country B?

53) Common law originated in the United States.

55) Common law is also known as code law.

61) The World Bank is classified as a(n) ________.

62) The European Union is classified as a(n) ________.

72) ________ is seizure of corporate assets with compensation.

78) Confiscation is the seizure of assets with compensation.

79) Nationalization describes government seizure of an entire industry, with or without

Besides all this I tooke nere forty holdes,

I tell no lye, so gastfull grewe my name,

For while the Frenchmen freshly assaulted[638] still,

Thus was the Dolphin’s power discomfited,

The duke of Exeter shortly[639] after died,

But in the way I tooke the towne of Yayne,

See here how fortune froward[642] can allure,

For while I, suing this so good successe,

For there wee wan the bulwarke on the bridge,

Where on a day, now, Baldwine, note mine end,

See, Baldwine, see the vncertayne glory,[645]

If for example’s sake thou wrote[652] thy booke,

For when my father through disease and age,

This Dauy was prince of Scotland, and so take

And finding now a proffer to his pray,

O wretched death, fye cruell tyranny,

Of whom when some beganne to finde the fraud,

Then had mine uncle all the regiment

But good king Henry, seeing I was a childe,

For ere I had beene prysoner eighteene yeere,

They maryed mee to a cosin of theyr king,

Whereof my lords and commons were full glad,

My cursed vncle, slyer than the snake,

And by his craftes the traytour brought to passe,

And at the last to bring mee whole in hate

And though at first my conscience did grudge,

But as diseases common cause of death,

And grace agate, vice still succedeth vice,

When I had learnde to set my oth at nought,

Ere I had raygned fully fifteene yeare,