Local content regulations are primarily intended to ________.
A) address cultural differences between local employees and expatriates
B) encourage MNEs to increase production activities in a country
C) address contract negotiation difficulties
D) assess local tax rates on MNEs
Answer: B
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Multinational Business Chapter 3
- The protection of intellectual property rights is very similar from country to country.
- The International Anti-Counterfeiting Coalition estimates that international trade in counterfeit products runs less than 5 percent of the value of total world trade.
- Intellectual property refers to the creative ideas, innovative expertise, or intangible insights that give an individual, company, or country a competitive advantage.
- International companies often must customize products to comply with local standards if they are to do business in a particular country.
- International law takes precedence over national laws in determining permissible practices in pricing, distribution, advertising, and promotion of products and services in a particular country.
- Countries with a theocratic legal system encourage precise, detailed contracts whereas countries with a common legal system encourage shorter and less specific contracts.
- Laws on local business activities directly influence the operations of domestic and foreign companies in areas such as hiring and firing workers.
- The rule of law holds that governmental authority is legitimately exercised only in accordance with written, publicly disclosed laws that have been appropriately adopted and which are enforced in keeping with established procedure.
- The rule of man, a practice that has been in play for millennia, presumes that the law is the will of the ruler, whether the king, czar, raj, or emperor.
- A civil law system anchors itself in the wisdom of daily experience or, more intellectually, great spiritual or philosophical traditions.
- A common law system is based on tradition, judge-made precedent, and usage in which the courts assign a preeminent position to existing case law to guide dispute resolution.
- The political system of a country refers to the laws that regulate actions, along with the processes by which those laws are enforced and by which redress for grievances is acquired.
- Multilateral development banks encourage development in risky environments through financial incentives.
- Political risk insurance is more likely to be purchased by MNEs that apply an active approach to political risk management.
- Managers who take an active approach to political risk management are likely to rely on statistical modeling to quantify the precise degree of political risk.
- Civil conflict, tax discrimination, weak legal systems, and terrorist actions are political risks faced by MNEs operating in foreign countries.
- The Washington Consensus promotes democracy, freedom, the rule of man, and human rights.
- According to EIU research, 37% of the world's populations live in full democracies.
- Research indicates that democracy is declining around the world and that totalitarian regimes are increasing.
- The Third Wave of Democratization was partially triggered by improved communication systems.
- Totalitarian countries are favored by MNEs because state governments typically favor foreign investors over local companies.
- Totalitarianism is a political ideology that typically involves constant indoctrination of the population by agents of the government to eliminate dissent.
- A democracy grants the voting citizenry the power to alter the laws and structures of government.
- The fundamental element of democracy is justice.
- Democracy and totalitarianism fall on the same end of the political spectrum.
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