CH-3 The Political and Legal Environments Facing Business – International Business: Environments and Operations : Exam Guide

Chapter 3 The Political and Legal Environments Facing Business 1. The _____ believes in minimal intervention in the economy. a. individualistic paradigm b. collectivist paradigm c. communitarian paradigm d. disengagement paradigm Answer: a. individualistic paradigm 2. Which of the following paradigms believe in a limited role of government in which a series of checks and balances essentially separates government from business? a. collectivistic b. individualistic c. communitarian d. guarded Answer: b. individualistic 3. The idea that endorses the principle that an individual has the freedom to pursue his or her interest, even at the risk of threatening the common good, is called _____. a. socialism b. totalitarianism c. individualism d. collectivism Answer: c. individualism 4. Proponents of the ideal of _____ can be traced to the ancient Greek philosopher Plato, who argued that individual rights should be sacrificed for the good of the majority. a. socialism b. capitalism c. collectivism d. individualism Answer: d. individualism 5. The system that emphasizes collectivism declares that _____. a. the interests of the individual take are more important than the interests of the state b. one person or political party exercises absolute control over all facets of society c. the needs of society and the needs of individuals are equally important d. the needs of society take precedence over individual freedoms Answer: d. the needs of society take precedence over individual freedoms 6. Select from the following types of political systems that which champions the idea that an individual's right to do something may be restricted because it threatens the common welfare of society. a. liberalism b. socialism c. collectivism d. individualism Answer: c. collectivism 7. In a _____, government tends to be esteemed, authoritative, and sometimes authoritarian. a. individualistic paradigm b. collectivistic paradigm c. guarded paradigm d. communitarian paradigm Answer: b. collectivistic paradigm 8. We assess political systems in terms of two related dimensions. These are the degree to which they give emphasis to ideas of collectivism versus individualism and _____. a. the degree to which they give emphasis to ideas of democracy versus totalitarianism b. the degree to which they give emphasis to ideas that are individualistic versus democratic c. the degree to which they give emphasis to ideas that stress the common good of communities versus collectives d. the degree to which they give emphasis to ideas that are liberal versus pluralistic Answer: a. the degree to which they give emphasis to ideas of democracy versus totalitarianism 9. The essential task of a political system is to _____. a. integrate the different elements of a society into a functioning unit b. allocate scarce resources among competing users c. develop reasonable attitudes and outlooks within the population d. protect individuals within the country from foreign threats Answer: a. integrate the different elements of a society into a functioning unit 10. In a practical sense, the term political system is meant to signify the _____. a. organization of military power in a country b. working government in a country c. stipulation of economic standards in a country d. cultural values in a country Answer: b. working government in a country 11. The system primarily used to integrate the different facets of society into a workable, functioning unit is the _____. a. economic system b. legal system c. political system d. market system Answer: c. political system 12. A(n) _____ is the body of constructs, theories, and goals that constitutes a country's political program. a. technological ideology b. economic ideology. c. legal ideology. d. political ideology Answer: d. political ideology 13. _____ refers to a political system in which government is organized by and accountable to the people. a. Totalitarianism b. Despotism c. Socialism d. Democracy Answer: d. Democracy 14. A pluralistic society is one in which _____. a. multiple segments of society adhere to the same political philosophy b. there are only two dominant political parties c. different ideologies are held by different segments of society d. different ethnic groups belong to the official political party Answer: c. different ideologies are held by different segments of society 15. In a representative democracy, _____. a. the extent of personal freedoms varies by class structure b. all citizens are directly involved in the political decision-making process. c. pluralistic ideologies are prohibited d. political rights are viewed different by different groups Answer: b. all citizens are directly involved in the political decision-making process. 16. In a democracy, _____. a. citizens have the right to participate in the decision-making process b. the opportunity to truly participate in the political process is restricted to a select few c. the court system that is directly supervised by the political system d. individuals must have complete freedom to do what they desire to do Answer: a. citizens have the right to participate in the decision-making process 17. In a totalitarian political system _____. a. political power resides with the citizens of the country b. governments direct most economic activity but few social ones c. an individualistic outlook shapes political debate and policy formation d. a few individuals have the authority to participate in the political decision-making process Answer: d. a few individuals have the authority to participate in the political decision-making process 18. _____ is a form of government in which a single agent, whether an individual, group, or party, monopolizes all political power in exercising absolute control over all spheres of human activity. a. Collectivism b. Democracy c. Totalitarianism d. Individualism Answer: c. Totalitarianism 19. The form of government whereby a single person, political party, or organized group has absolute control over all facets of life in the country is called a _____ system. a. capitalist b. totalitarian c. democratic d. socialist Answer: b. totalitarian 20. Totalitarianism is ultimately a political ideology that involves constant indoctrination by agents of the government to eliminate any dissent, by anyone, anywhere within the system. Methods used by totalitarian governments commonly include which of the following? a. propaganda and persecution b. constructive conflict c. a free press d. open access to foreign information Answer: a. propaganda and persecution 21. The four major forms of totalitarianism are _____. a. authoritarian, fascist, secular, and theocratic b. democratic, liberal, theocratic, and vigilante c. secular, communal, tribal, and neoconservative d. communist, theocratic, feudal, and authoritarian Answer: a. authoritarian, fascist, secular, and theocratic 22. A theocratic totalitarian government is a _____. a. system under which all resources and production are controlled by the government b. dictatorship led by a religious group c. government in which many people participate in the decision-making process d. dictatorship that does not have any affiliation with religious groups or precepts Answer: b. dictatorship led by a religious group 23. A secular totalitarian government is a _____. a. dictatorship established by a religious groupage b. system in which individuals elect an elite group of leaders to make decisions for the society as a whole c. a dictatorship that is established without any affiliation to religious groups or precepts d. system in which all resources and production are managed by the government Answer: c. a dictatorship that is established without any affiliation to religious groups or precepts 24. An authoritarian form of totalitarianism as seen to large degree in modern day China generally permits individual _____ but restricts individual political freedom on the grounds that the latter would lead to the rise of social and civil unrest. a. forms of expression b. cultural liberties c. social rights d. economic freedom Answer: d. economic freedom 25. Since the late 1980s, there have been major changes in the political systems of many countries. Notable trends include _____. a. a wave of democratic transformations has swept the world as countries moved away from totalitarian systems b. a wave of theocratic revolutions as people around the world look toward spirituality to guide them c. a wave of socialistic revolution that has swept the world as countries aspire toward greater social justice d. a wave of communist revolution that has swept the world as people look to strong state leadership in stable times Answer: a. a wave of democratic transformations has swept the world as countries moved away from totalitarian systems 26. Presently, most democratic states practice what is commonly referred to as _____. a. neodemocracy b. representative democracy c. quasi-democracy d. collective democracy Answer: b. representative democracy 27. A notable development of the past 15 years has been the spread of _____ such that more people live in countries with elected governments than at any other time in history. a. socialism b. communism c. democracy d. individualism Answer: c. democracy 28. Several conditions helped spread democracy around the world in the past decade, including _____. a. totalitarian regimes delivered acceptable economic progress to their populations b. in many countries the economic advances of the last quarter century have led to the emergence of content middle and working classes who no longer push for democratic reforms c. few groups have yet to successfully challenge the legitimacy of democratic systems d. information and communications technologies have broken down the ability of the state to control access to uncensored information, especially that from foreign sources Answer: d. information and communications technologies have broken down the ability of the state to control access to uncensored information, especially that from foreign sources 29. The chance that political forces change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower than projected rate of return is referred to as _____. a. governmental risk b. operating risk c. transaction risk d. political risk Answer: d. political risk 30. Which of the following types of political risks includes those random political developments that adversely affect the operations of all companies in a country, but especially punish foreign MNE's local operations? a. systemic political risk b. procedural political risk c. catastrophic political risk d. distributive political risk Answer: c. catastrophic political risk 31. _____ political risks arise those actions by governments, such as public corruption or a partisan judicial system, that interfere with transactions between sellers and buyers can significantly raise the costs of getting things done. a. Systemic b. Procedural c. Catastrophic d. Distributive Answer: b. Procedural 32. Select the correct order, going from low to high total impact on an MNE, of the following types of political risk: (1) procedural political risk (2) systemic political risks (3) distributive political risks (4) catastrophic political risks a. 3, 2, 1, 4 b. 1, 2, 3, 4 c. 2, 3, 4, 1 d. 2, 1, 3, 4 Answer: a. 3, 2, 1, 4 33. Concerns about various countries' efforts to regain degrees of national sovereignty have spurred many MNEs to develop approaches to try to manage their political risk exposure. From the following, please identify the incorrect statement about approaches to political risk management: a. Passive political risk management discourages managers from fully or partially hedging exposure to political hazards. b. Passive political risk management assumes that it is difficult, if not impossible, to systematically model political risk. c. Active political risk management assumes that positive and negative political events in any country are neither independent nor random events. d. Active political risk management assumes that political events unfold in observable patterns that statistical methods can detect. Answer: a. Passive political risk management discourages managers from fully or partially hedging exposure to political hazards. 34. The degree of politically based procedural risk, like government red tape or export interferences, in many countries around the world is _____, so managers commonly rate countries _____ on this factor. a. directly measurable; subjectively b. not directly measurable; subjectively c. directly measurable; objectively d. not directly measurable; objectively Answer: b. not directly measurable; subjectively 35. The premise for active political risk management is the notion that positive and negative political events in any nation are _____. a. interdependent and occasional events b. mostly interrelated and odd events c. neither independent nor random events d. are interdispersed and occasional events Answer: c. neither independent nor random events 36. The Overseas Private Investment Corporation, a U.S. government agency, assists helps U.S. companies make foreign direct investments in emerging markets by offering _____. a. cultural analysis b. social assessment c. economic assistance d. political risk insurance Answer: d. political risk insurance 37. The _____ of a country refers to the rules and regulations, commonly referred to as laws, that order behavior as well as stipulate the processes that enforce laws and resolution of disputes. a. political system b. bureaucratic system c. economic structure d. legal system Answer: d. legal system 38. The methods that it uses to regulate business practices, defines how companies conduct business transactions, specifies the rights and obligations of those engaged in business transactions, and spells out the methods of legal redress to those who believed they have been wrong are aspects of a country's _____. a. political system b. civil system c. legal system d. economic structure Answer: c. legal system 39. The _____ of a country outlines how authorities will regulate activities, such as the investment of capital, custom duties applied to imports, or transfer of hazardous waste, as well as routine activities such as the payment of dividends to foreign investors. a. political system b. legal system c. civil system d. economic structure Answer: b. legal system 40. Generally, _____ differ from country to country in terms of their treatment of any number of variables, including tradition, precedent, usage, custom, or religious precepts. a. legal systems b. political systems c. civil systems d. economic structures Answer: a. legal systems 41. Types of legal systems include all of the following except _____. a. secular b. common c. civil d. theocratic Answer: a. secular 42. _____ is based on tradition, precedent, custom, and usage. a. Civil law b. Common law c. Theocratic law d. Customary Law Answer: b. Common law 43. A system of law based on a very detailed set of laws organized into a code is commonly referred to as _____. a. an autocratic legal system b. a common law system c. a civil law system d. an administrative law system Answer: c. a civil law system 44. A system of law based on tradition, precedent, custom, and usage, in which the courts interpret the law based on those conventions, is commonly referred to as _____. a. a codified legal system b. a common law legal system c. a customary legal system d. a civil law system Answer: d. a civil law system 45. Laws on local business activities directly influence the operations of domestic and foreign companies in areas such as ____. a. ethical standards and consumerism ideals b. environmental standards and critical social issues c. any issue that directly alters the well-being of local communities d. employment practices, contractual relationships, and business formation Answer: d. employment practices, contractual relationships, and business formation 46. Reports suggest a(n) _____ between the per capita income of a country and its tendency to regulate business activity. That is to say, richer countries tend to regulate business less whereas poorer countries tend to regulate business more. a. direct relationship b. no relationship c. inverse relationship d. random relationship Answer: c. inverse relationship 47. Countries with a _____ legal system encourage precise, detailed contracts whereas countries with a _____ legal system encourage shorter and less specific contracts because the general civil code deals with many pertinent issues. a. theocratic; mixed b. common; civil c. civil; customary d. customary; common Answer: b. common; civil 48. Generally, the legal systems of _____ countries tend to regulate the major operational features of business activity more consistently than do those in ______ countries a. rich; poorer b. individualistic; communitarian c. Asian; European d. democratic; totalitarian Answer: a. rich; poorer 49. Legal contingencies often shape an international company's strategic plans in terms of _____. a. product liability b. marketplace behavior c. resource allocations d. management standards Answer: a. product liability 50. A major legal challenge that companies face in the global environment often involves which of the following? a. dealing with cultural issues b. dealing with product liability issues c. dealing with product profitability d. dealing with employee motivation Answer: b. dealing with product liability issues 51. Countries measure product origin to determine the proportion of the product that is made in the local market versus made outside of the local market in order to maximize the degree of _____. a. product safety b. cultural fit c. local content d. economic practicality Answer: c. local content 52. Product liability involves holding a firm and its officers responsible when _____. a. a product is sold for less than its documented production cost b. a product is sold for a higher price in one part of the country than another c. a product fails to perform its advertised function d. a product causes injury, death, or damage Answer: d. a product causes injury, death, or damage 53. _____ refers to the creative ideas, innovative expertise, or intangible insights that give an individual, company, or country a competitive advantage. a. Proprietary goods b. Exclusive ownership c. Restrictive goods d. Intellectual property Answer: d. Intellectual property 54. A _____ grants the inventor of a new product to process exclusive rights for a defined period to the manufacture, use, or sale of that invention. a. trademark b. intellectual property certificate c. patent d. copyright Answer: c. patent 55. The class of intellectual property that includes literary and artistic works such as novels, poems, and plays is called (a) _____. a. transparent property b. copyright c. industrial property d. virtual property Answer: b. copyright 56. A(n) _____ grants the registered owner of the particular invention, literary or artistic work, or symbols, names, images, or designs the right to determine the use of their ideas a. intellectual property right b. trademark credential c. patent certificate d. TRIPS permit Answer: a. intellectual property right 57. The relationship between intellectual property rights and violations, principally in the form of intellectual piracy, imposes high costs and extreme risks. Please identify which of the following is not an example of these costs or risks. a. distributes safer merchandise that poses few personal threats b. accelerates the rate of lost sales and ruined brand reputation c. requires more extensive policing and legal proceedings d. increases the incentive to research and develop better products to repel counterfeiters Answer: a. distributes safer merchandise that poses few personal threats 58. Which of the following statements differentiating intellectual property rights and violations is incorrect? a. Advanced markets claim looser regulation of intellectual property rights will slow, if not halt, innovation. b. Historically, the number of International Patent Applications, particularly during the period 1978–2001, has grown slowly. c. The International Anti-Counterfeiting Coalition estimates international trade in counterfeit products at $500 billion a year, or about 9 percent of the value of world trade. d. Developing markets claim tougher regulation of IPRs will slow, if not halt, their economic development Answer: b. Historically, the number of International Patent Applications, particularly during the period 1978–2001, has grown slowly. 59. The piracy of intellectual property rights _____. a. involves losses that are not considered extensive in industrialized countries b. is combated most zealously by lesser developed countries c. can both benefit and harm consumers d. usually benefits the property holder Answer: c. can both benefit and harm consumers 60. All of the following are reasons piracy has occurred except _____. a. technology allows copyrighted material to be reproduced cheaply without much loss of quality b. some countries offer little protection for certain products c. many people see nothing morally wrong in buying counterfeit goods d. the protection of intellectual property rights varies little from country to country Answer: d. the protection of intellectual property rights varies little from country to country 61. The protection of intellectual property rights (IPRs) is the _____. a. same among countries that have free trade agreements with each other b. is more similar among countries for trademarks than for patents c. differs among countries because of their different goals d. is higher in developing than in industrial countries Answer: c. differs among countries because of their different goals 62. The _____ and the varying rules and regulations in different countries make keeping up with patents difficult. a. rapid changes in inflation rates b. rapid changes in foreign exchange rates c. rapid development of technology d. rapid changes in country cultures Answer: c. rapid development of technology 63. Countries with a(n) _____ orientation see the notion of individual ownership of an idea as intrinsically legitimate whereas countries with a(n) _____ orientation extol the virtue of sharing versus individual ownership and hence see little reason to adopt the notion of individual ownershipage. a. totalitarian; democratic b. civil; common c. individualist; collectivist d. theocratic; customary Answer: c. individualist; collectivist 64. The vigor of IPR protection is highly related to a country's stage of _____. a. economic development b. conception of intellectual property rights c. commercialization of potential innovations d. standardization of patent regulations Answer: a. economic development 65. The term collectivism refers to a system that stresses the primacy of collective goals over individual goals. Answer: False 66. Societies that emphasize collectivism place the interests of individuals over the interests of the state. Answer: False 67. The political system with an individualistic orientation endorses government intervention in the structure of industries, conduct of companies, and actions of managers to ensure that they benefit society. Answer: False 68. Government in a collectivist society is highly connected to and interdependent with business. Answer: True 69. A political ideology is the collection of ideas that expresses the goals, theories, and aims that constitute a sociopolitical program. Answer: True 70. Democracy and totalitarianism fall on the same end of the political spectrum. Answer: False 71. A democracy grants the voting citizenry the power to alter the laws and structures of government. Answer: True 72. The fundamental element of democracy is justice. Answer: False 73. Totalitarianism is a form of government in which one person or political party exercises absolute control over all spheres of human life yet still permits opposing political parties. Answer: False 74. Totalitarianism is a political ideology that involves constant indoctrination by agents of the government to eliminate dissent. Answer: True 75. Four major forms of totalitarianism exist in the world today. these are secular totalitarianism, authoritarianism, fascism, and theocratic totalitarianism. Answer: True 76. Secular totalitarianism is found in states where political power is monopolized by a party, group, or individual that governs according to religious principles. Answer: False 77. Presently, more people live in countries with elected democratic governments than at any other time in history. Answer: True 78. The general movement toward democracy and open economies inevitably leads to the homogenization of political systems around the world. Answer: False 79. Four major forms of political risk affect the operations of MNEs. These are systemic political risks, procedural political risks, distributive political risks, and catastrophic political risks. Answer: True 80. Political risk is the chance that political decisions, events, or conditions in a country lead to a higher than projected rate of return for a company's investments. Answer: False 81. Managers who take an active approach rely on statistical modeling to quantify the precise degree of political risk. Answer: True 82. Companies that see political risk as an unpredictable hazard of international business and seek cost-effective measures are more likely to take an active approach to managing it. Answer: False 83. A country's legal system is the means and methods that it uses to regulate political practices and business transactions. Answer: False 84. Differences in the structure of law influence the attractiveness of a country as an investment site. Answer: True 85. 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. Answer: True 86. A Civil Law System anchors itself in the wisdom of daily experience or, more intellectually, great spiritual or philosophical traditions. Answer: False 87. Laws on local business activities directly influence the operations of domestic and foreign companies in areas such as ethical compliance and social responsibility. Answer: False 88. Countries with a theocratic legal system encourage precise, detailed contracts whereas countries with a common legal system encourage shorter and less specific contracts. Answer: False 89. 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. Answer: False 90. International companies often must customize products to comply with local standards if they are to do business in that particular country. Answer: True 91. Intellectual property refers to the creative ideas, innovative expertise, or intangible insights that give an individual, company, or country a competitive advantage. Answer: True 92. The International Anti-Counterfeiting Coalition estimates that international trade in counterfeit products runs less than 5 percent of the value of total world trade. Answer: False 93. The protection of intellectual property rights is very similar from country to country. Answer: False 94. The vigor of IPR protection is highly related to a country's stage of economic development. Answer: True 95. Countries with an individualist orientation see the notion of individual ownership of intellectual property as intrinsically illegitimate. False (interpretation page 109) 96. Countries with a collectivist orientation see little reason to adopt the notion of individual ownership of intellectual property. Answer: True 97. Discuss the individualistic and communitarian paradigms on the roles of governments. Answer: The individualistic paradigm believes in minimal intervention in the economy. The individualistic paradigm states a belief in regulation, and they are likely to be democratic and economically free. They will handle market defects, such as entry barriers and insufficient consumer knowledge and power, but they will not intervene too much. They believe in a limited role of government, in checks and balances, and have a high distrust of central government power. Government is essentially separate from business. In a communitarian paradigm, government tends to be prestigious, authoritative, and sometimes authoritarian. It is very hierarchical and may be either democratic, as in the case of Japan, or autocratic, as in the case of China. They thrive on a respected, centralized bureaucracy with a stable political party or coalition in power. 98. What does the idea of political ideology refer to? How does it affect international business? Answer: A political ideology is the body of constructs, theories, and aims that constitute a sociopolitical program. The liberal ideology of the Democratic Party and the conservative ideology of the Republican Party in the United States are examples of political ideologies. Most modern societies are pluralistic politically, meaning different ideologies coexist because there is no one ideology that everyone accepts. Managers from the United States, where there are only two key political parties, might find it difficult to understand the political environment in a country where there are many different ideologies even within the political parties themselves. This makes it difficult for the manager to determine how to articulate the firm's interests and how to influence policy-making. 99. In a short essay, discuss the differences between democratic and totalitarian political systems. Answer: Democracy basically involves wide participation by citizens in a decision-making process. Relatively mature democracies, such as those in the United States and United Kingdom, tend to compromise viewpoints when enacting legislation. Democracy is typically represented by a high level of civil liberties, such as freedom of opinion, expression, and the press. In a totalitarian state, a single party, individual, or group of individuals monopolize political power. Decision-making is restricted to a few individuals. Some totalitarian regimes are very repressive, while others are slightly more liberal. Totalitarian states tend to be relatively low in civil liberties and political freedom. 100. What is meant by political risk? Answer: Investing overseas exposes a company to the risks that arise from the quirks of international politics or, as commonly called, political risk. Generally, political risk is the chance that political decisions, events, or conditions in a country will affect the business environment in ways that (1) lead investors to lose some or all of the value of their investment or (2) be forced to accept a lower than projected rate of return. Although political risks can occur in democratic as well as totalitarian political regimes, they tend to be more prevalent in totalitarian regimes. 101. Contrast common law, civil (codified) law, customary law, and theocratic law. Answer: a. Common law—The United States and the United Kingdom are examples of countries with a common law system. Common law is based on tradition, precedent, custom, and usage. The courts fulfill an important role in interpreting the law according to those characteristics. In a common law country, contracts tend to be detailed, with all contingencies spelled out. b. Civil law—Also called a codified legal system, civil law is based on a detailed set of laws that make up a code. Rules for conducting business transactions are a part of the code. More than 70 countries, including Germany, France, and Japan operate on a civil law basis. In a civil law country, contracts tend to be shorter and less specific because many of the issues that a common law contract would cover already are included in the civil code. c. Customary law— A system anchors that itself in the wisdom of daily experience or, more intellectually, great spiritual or philosophical traditions. Few countries in the world today operate under a legal system that is wholly customary. Still, customary laws sometimes play a significant role, namely in matters of personal conduct, in many countries with mixed legal systems. d. Theocratic law—Based on religious precepts, the best example of this system is Islamic law, which is found in Muslim countries. Islamic law is a moral rather than a commercial law and was intended to govern all aspects of life. 102. What are some of the effects of national laws on international business? Answer: Some national laws on local business activity influence both domestic and foreign companies, especially in the areas of health and safety standards, employment practices, antitrust prohibitions, contractual relationships, environmental practices, and patents and trademarks. Laws also exist that govern cross-border activities, such as the investment of capital, the payment of dividends to foreign investors, and customs duties on imports. International laws, such as treaties governing the cross-border transfer of hazardous waste, can also determine how a firm operates in transporting shipments across borders. 103. Discuss the multinational agreements of intellectual property rights (IPRs) citing specific developments in each area of property rights. Answer: a. Intellectual property—Covers rights for both industrial property, such as inventions and distinctive identifications of companies and products, and artistic property, such as books, recordings, films, and computer programs. Companies with substantial intangible assets want protection through enforceable patents, trademarks, and copyrights so that they may gain all the sales and profits because they created the property in the first place. Critics, however, argue that protection costs society dearly through high monopoly prices. Countries differ substantially in their protection of IPRs, through laws and their enforcement. Generally, developing countries offer less protection. b. Patents—The first major attempt to achieve cross-national cooperation in the protection of patents, trademarks, and other property rights was the Paris Convention, initiated in 1883. This convention gave rise to the International Bureau for the Protection of Industrial Property Rights. The three most important contemporary cross-national patent agreements are the Patent Cooperation Treaty (PCT) of the World Intellectual Property Organization (WIPO), the European Patent Convention (EPC), and the European Economic Community (EEC) Patent Convention. c. Trademarks—Companies may spend millions of dollars to develop brand names. If a trademark does not protect a brand name, then other companies may produce under the same brand name. Even if a brand name has a trademark, it may become generic because it takes on the name of a product rather than a brand. It then enters the public domain. Test Bank for International Business: Environments and Operations John D. Daniels, Lee H. Radebaugh, Daniel P. Sullivan 9780131869424, 9780201846188, 9780130308016, 9780201566260, 9780201107135, 9780132668668