IBUS 311 Emerging Market Ch 7 / 10

18) Advanced economies account for what percentage of the world population? A) 14% B) 42% C) 61% D) 82%

A) 14%

29) Which of the following nations is the largest emerging market? A) China B) Russia C) Brazil D) India

A) China

Economic Development Workshop (Scenario) Members of 50 different countries attend a workshop on economic development hosted by an international organization based in Geneva, Switzerland. Attendees of the workshop learn about techniques designed to assist countries in expanding their degree of economic development. 60) Workshop participants are divided into groups of three. For learning purposes, groups must be made up of individuals from countries with similar degrees of economic development. Which of the following might be grouped together? A) Representatives from Mongolia, Iran, and Sudan B) Representatives from Germany, Japan, and Syria C) Representatives from the U.S., China, and Belarus D) Representatives from Portugal, Spain, and Cuba

A) Representatives from Mongolia, Iran, and Sudan

Maximus Motor Company (Scenario) Maximus Motor Company is a British automobile manufacturer that builds high-end luxury cars for sale around the world. Maximus managers recognize they are missing opportunities in emerging markets, such as India, which have an increasing number of middle-class people ready to purchase affordable cars. Competitors have entered the Indian market and have experienced significant profits over the last two years. Maximus managers have been assigned the task of determining the best strategy for Maximus to do business in India. 66) Which of the following would Maximus managers most likely cite as a reason to market Maximus cars to the Indian government? A) The Indian government requires large numbers of automobiles. B) Indian government employees can afford automobiles. C) India's private sector influences government acquisitions. D) The Indian government has a surplus of used automobiles.

A) The Indian government requires large numbers of automobiles.

35) Purchasing power parity tells us ________. A) what a unit of local currency can buy in its home country B) the value of goods and services that can be purchased with one unit of a country's currency C) the relative ability of two countries' currencies to buy the same basket of goods in those two countries D) what a currency can actually buy in real terms

C) the relative ability of two countries' currencies to buy the same basket of goods in those two countries

36) Which of the following best describes the concept of purchasing power parity (PPP)? A) In emerging markets, the ability to buy goods and services depends on the influx of FDI from international MNEs. B) The fluctuation in exchange rates disrupts international trade because the value of goods and services is inconsistent. C) In the future, a world currency will create equality in the global marketplace and eliminate disparity. D) Eventually, the exchange rate of two currencies will be equalized and the same goods will have the same price in two countries.

D) Eventually, the exchange rate of two currencies will be equalized and the same goods will have the same price in two countries.

47) Which of the following best explains why a family conglomerate (FC) might pose a challenge to firms trying to enter emerging markets? A) FCs have superior knowledge in manufacturing and distribution. B) FCs pay no tariffs in exchange for providing employment opportunities. C) FC owners often hold positions of power within national governments. D) FCs may control large market shares in several industries within a nation.

D) FCs may control large market shares in several industries within a nation.

Vytel Communications (Scenario) Vytel Communications is a U.S.-based telecommunications company that is considering doing business in Argentina. Vytel managers hire a consulting firm to investigate the risks and benefits related to doing business in Argentina. The consulting firm identifies a number of challenges that might prohibit Vytel from entering Argentina. In addition, the consultants conduct surveys which indicate a demand for Vytel's products and services. 64) Which of the following most likely supports the consulting firm's recommendation that Vytel proceed with plans to do business in Argentina? A) The political conditions in Argentina are stable. B) Government bureaucrats favor domestic firms. C) Potential local partners have few government contacts. D) The Argentina government lacks transparency.

A) The political conditions in Argentina are stable.

41) Which of the following will most likely be the result of an increased number of middle-class households in emerging markets? A) a vital market economy B) a decrease in GDP C) urbanization decline D) multi-income families

A) a vital market economy

54) Which of the following trends supports improving economic conditions in Africa? A) direct investment from abroad B) high unemployment C) a decline in Botswana's diamond trade D) the substantial infrastructure for landline telephones

A) direct investment from abroad

Class Reports (Scenario) Professor Middleton has divided the students in his international business class into three groups. Each group has been assigned the task of presenting an overview of a major country group and outlining its distinguishing characteristics. Three students have been selected as group leaders: Jordan, Elaine, and Andrei. Jordan's group will discuss advanced economies. Elaine's group will address the characteristics of developing economies. Andrei's groups will focus on emerging markets. 55) Which of the following would most likely be used in Jordan's report to describe industry conditions? A) highly developed B) rapidly improving C) minimally developed D) slowly improving

A) highly developed

23) All of the following characterize emerging markets except ________. A) highly developed industry B) high trade volume C) expanding middle class D) improved living conditions

A) highly developed industry

39) Which of the following terms is used to refer to unofficial economic transactions? A) informal economy B) national GDP C) discretionary spending D) market potential

A) informal economy

28) All of the following are typical characteristics of emerging markets except ________. A) low inward foreign direct investment B) rapid industrialization C) moderate competition D) rapidly declining trade barriers

A) low inward foreign direct investment

32) Outsourcing certain value-added activities with foreign suppliers is known as ________. A) offshoring B) global resourcing C) privatization D) subsidizing

A) offshoring

27) Emerging markets are important in international business and trade due to their high representative percentage in which of the following categories? A) population B) energy usage C) exports D) FDI

A) population

49) Which of the following is a benefit to a foreign firm collaborating with a family conglomerate in an emerging market? A) reduced capital requirements B) improved taxation status C) protected intellectual property D) limited counterfeiting risks

A) reduced capital requirements

37) The GDP per capita of Country A is less than that of the United States. Which of the following reflects the GDP per capita of Country A? A) $49,700 B) $36,500 C) $48, 900 D) $50,300

B) $36,500

16) Which of the following is representative of a developing economy? A) Australia B) Bangladesh C) France D) Mexico

B) Bangladesh

33) All of the following are examples of global sourcing except ________. A) Mexican autoworkers manufacture generators in Mexico for General Motors B) Japanese workers are employed at a Toyota plant in central Japan C) Microsoft employs skilled workers in India for computer programming D) Massachusetts General Hospital employs doctors in the Philippines to read x-rays

B) Japanese workers are employed at a Toyota plant in central Japan

34) Which of the following explains why per-capita GDP converted at market exchange rates inaccurately depicts the potential of an emerging market? A) The market exchange rate does not take into consideration distribution and production costs for each nation. B) Products and services in emerging markets are priced significantly lower than they are in advanced economies. C) The per-capita GDP converted using PPP exchange rates provides a precise measure of consumer buying potential. D) Products manufactured in emerging markets are priced less than products that are imported outside of an economic bloc.

B) Products and services in emerging markets are priced significantly lower than they are in advanced economies.

42) Over the next two decades, which of the following is most likely to happen to middle class households in emerging markets? A) Their numbers will decrease. B) They will acquire enormous spending power. C) Their numbers will stay approximately the same. D) Their incomes will decrease.

B) They will acquire enormous spending power.

Economic Development Workshop (Scenario) Members of 50 different countries attend a workshop on economic development hosted by an international organization based in Geneva, Switzerland. Attendees of the workshop learn about techniques designed to assist countries in expanding their degree of economic development. 59) Certain attendees represent countries with relatively little economic development, compared to the other nations present. These individuals are most likely from ________. A) South Africa, Russia, and China B) Venezuela, Romania, and Libya C) Norway, Sweden, and Finland D) Nepal, Cambodia, and Austria

B) Venezuela, Romania, and Libya

22) Firms are most often prevented from doing business in developing economies by ________. A) small pools of labor B) government regulations C) regional integration D) terrorism and war

B) government regulations

Maximus Motor Company (Scenario) Maximus Motor Company is a British automobile manufacturer that builds high-end luxury cars for sale around the world. Maximus managers recognize they are missing opportunities in emerging markets, such as India, which have an increasing number of middle-class people ready to purchase affordable cars. Competitors have entered the Indian market and have experienced significant profits over the last two years. Maximus managers have been assigned the task of determining the best strategy for Maximus to do business in India. 67) Which of the following will be most beneficial to Maximus if it builds a manufacturing facility in India? A) legal precedents B) low-cost labor pool C) government regulations D) solid infrastructure

B) low-cost labor pool

51) Which of the following characteristics best equip new emerging market MNEs to compete against MNEs that have long-term experience in the global market? A) brand recognition, large market share, and skilled workers B) low-cost labor, family conglomerates, and government support C) market research, customer service, and brand loyalty D) government funding, high wages, and value-chain diversification

B) low-cost labor, family conglomerates, and government support

30) Which of the following is one of the reasons that emerging markets act as manufacturing bases for global MNEs? A) minimal trade restrictions B) low-wage, skilled labor pool C) well-developed infrastructure D) strong intellectual property laws

B) low-wage, skilled labor pool

Class Reports (Scenario) Professor Middleton has divided the students in his international business class into three groups. Each group has been assigned the task of presenting an overview of a major country group and outlining its distinguishing characteristics. Three students have been selected as group leaders: Jordan, Elaine, and Andrei. Jordan's group will discuss advanced economies. Elaine's group will address the characteristics of developing economies. Andrei's groups will focus on emerging markets. 57) Which of the following would most likely be used in Andrei's report to describe trade barriers? A) moderate to high B) rapidly liberalizing C) minimal D) highly liberal

B) rapidly liberalizing

26) Which of the following entry methods is especially appealing to foreign firms entering the markets of transition economies? A) joint ventures with local businesses B) the purchase of former state enterprises C) collaborative ventures within blocs D) exporting and importing products

B) the purchase of former state enterprises

46) All of the following are typical characteristics of family conglomerates except ________. A) highly diversified B) wholly owned or controlled by the government C) known in South Korea as chaebols D) easier access to capital than most firms

B) wholly owned or controlled by the government

38) If the GDP per capita of Country A is adjusted for purchasing power parity (PPP), the country's revised GDP is higher than that of the United States. Which of the following could be the GDP of Country A, adjusted for PPP? A) $46,500 B) $39,700 C) $49,300 D) $47,000

C) $49,300

Economic Development Workshop (Scenario) Members of 50 different countries attend a workshop on economic development hosted by an international organization based in Geneva, Switzerland. Attendees of the workshop learn about techniques designed to assist countries in expanding their degree of economic development. 58) Certain attendees at the workshop represent three countries with the highest degree of economic development. These attendees are from which of the following countries? A) Japan, Brazil, and France B) Canada, the United States, and Mexico C) Australia, Britain, and the United States D) The Netherlands, Sweden, and China

C) Australia, Britain, and the United States

Vytel Communications (Scenario) Vytel Communications is a U.S.-based telecommunications company that is considering doing business in Argentina. Vytel managers hire a consulting firm to investigate the risks and benefits related to doing business in Argentina. The consulting firm identifies a number of challenges that might prohibit Vytel from entering Argentina. In addition, the consultants conduct surveys which indicate a demand for Vytel's products and services. 63) Which of the following should be considered by the consulting firm before recommending that Vytel should do business in Argentina? A) What other emerging markets are dominated by family conglomerates? B) What has been the historical economic effect of family conglomerates in Argentina? C) Do family conglomerates control the telecommunications industry in Argentina? D) What benefits and loans are received by family conglomerates in Argentina?

C) Do family conglomerates control the telecommunications industry in Argentina?

53) Which of the following best summarizes the argument in favor of microfinance? A) Microfinance ultimately leads to greater tax revenues for national governments. B) Microfinance don't need to be paid back in the event the borrower goes bankrupt. C) Microfinance allows the underprivileged to create businesses and improve their lives. D) Microfinance alleviates the pressure on MNEs to support developing economies

C) Microfinance allows the underprivileged to create businesses and improve their lives.

Vytel Communications (Scenario) Vytel Communications is a U.S.-based telecommunications company that is considering doing business in Argentina. Vytel managers hire a consulting firm to investigate the risks and benefits related to doing business in Argentina. The consulting firm identifies a number of challenges that might prohibit Vytel from entering Argentina. In addition, the consultants conduct surveys which indicate a demand for Vytel's products and services. 61) Which of the following questions would be most important for the consulting firm to evaluate when making a recommendation to Vytel about doing business in Argentina? A) What is the likelihood that one of the Argentina-based firms will relocate operations? B) Would the lower cost of outsourcing offset any financial setbacks for Vytel? C) Will government regulations significantly impede Vytel's ability to make profits? D) What benefits have been gained in the past by Vytel using foreign distributors?

C) Will government regulations significantly impede Vytel's ability to make profits?

44) An emerging market's lack of transparency may suggest which of the following? A) accountability B) bureaucracy C) corruption D) expertise

C) corruption

21) Which of the following economies is typically characterized by stagnant productivity? A) advanced economy B) transition economy C) developing economy D) emerging markets

C) developing economy

24) When Bulgaria and Romania joined the EU they improved their economies because they had to do which of the following? A) attain additional government subsidies B) modify their political infrastructure C) implement EU monetary and trade policies D) compete for business against large EU nations

C) implement EU monetary and trade policies

45) Which of the following is a benefit to foreign firms that form alliances with local companies in emerging markets? A) protection against bribery B) more rapid customs clearance C) information about the local market D) strategies for exporting goods

C) information about the local market

Class Reports (Scenario) Professor Middleton has divided the students in his international business class into three groups. Each group has been assigned the task of presenting an overview of a major country group and outlining its distinguishing characteristics. Three students have been selected as group leaders: Jordan, Elaine, and Andrei. Jordan's group will discuss advanced economies. Elaine's group will address the characteristics of developing economies. Andrei's groups will focus on emerging markets. 56) Which of the following would most likely be used in Elaine's report to describe discretionary income? A) high B) rising C) low D) moderate

C) low

19) All of the following are typical characteristics of advanced economies except ________. A) democratic governments B) capitalist economies C) medium trade volume D) few trade restrictions

C) medium trade volume

50) Which of the following terms is used to refer to a government entity's request for bids from suppliers? A) quotes B) estimates C) tenders D) microloans

C) tenders

Maximus Motor Company (Scenario) Maximus Motor Company is a British automobile manufacturer that builds high-end luxury cars for sale around the world. Maximus managers recognize they are missing opportunities in emerging markets, such as India, which have an increasing number of middle-class people ready to purchase affordable cars. Competitors have entered the Indian market and have experienced significant profits over the last two years. Maximus managers have been assigned the task of determining the best strategy for Maximus to do business in India. 65) Which of the following questions would be most important for Maximus managers to consider in determining the best entry strategy for the automaker? A) What other firms have partnered with family conglomerates? B) How often do Indians use their cars and for what purpose? C) What type of automobile should Maximus manufacture in India? D) How would Maximus benefit from partnering with a family conglomerate?

D) How would Maximus benefit from partnering with a family conglomerate?

Vytel Communications (Scenario) Vytel Communications is a U.S.-based telecommunications company that is considering doing business in Argentina. Vytel managers hire a consulting firm to investigate the risks and benefits related to doing business in Argentina. The consulting firm identifies a number of challenges that might prohibit Vytel from entering Argentina. In addition, the consultants conduct surveys which indicate a demand for Vytel's products and services. 62) Which of the following most likely supports the consulting firm's recommendation that Vytel should not do business in Argentina? A) Government bureaucracy is limited and does not impose excessive delays. B) Qualified suppliers and distributors are readily available and eager to work. C) Import restrictions do not apply to the telecommunications industry. D) In the past, intellectual property rights claims have not been prosecuted.

D) In the past, intellectual property rights claims have not been prosecuted.

43) Computer software counterfeiting is especially prevalent in which of the following emerging markets? A) Mexico B) Japan C) Bolivia D) Indonesia

D) Indonesia

40) In purchasing power parity terms, which nation has the highest per-capita GDP? A) Brazil B) China C) Turkey D) South Korea

D) South Korea

52) All of the following characterize the Grameen Bank except ________. A) over 2,500 branch banks B) provides small loans C) started in India in 1974 D) concept of the Gates Foundation

D) concept of the Gates Foundation

17) Nations having the poorest infrastructures and lowest personal incomes are called ________. A) developed countries B) newly industrialized countries C) emerging markets D) developing countries

D) developing countries

31) South Korea has become a global leader in which of the following industries? A) textiles B) automobiles C) pharmaceuticals D) electronics

D) electronics

48) Which of the following best explains the growth of family conglomerates in emerging markets? A) domestic investment B) foreign investment C) competitive market D) government protection

D) government protection

20) Which of the following is typically correlated with developing economies? A) large elderly population B) few natural resources C) lack of cultural history D) poor education systems

D) poor education systems

25) Transition economies are characterized by which of the following? A) competition within the economic bloc B) imposition of new trade barriers C) development of transportation systems D) privatization of state-owned industries

D) privatization of state-owned industries