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Chapter Seventeen:
Emerging Markets
True/False Questions:
1) More than half of the world’s population lives in emerging market countries..
2) Ninety percent of the world’s population growth will be in emerging market
countries over the next thirty years.
3) Emerging market countries are all alike, so making generalizations is easy..
4) The principles of nonmarket strategy for operating in democracies cannot simply
be transported to emerging markets..
5) Opportunities for successful participation in an emerging markets economy
depend not only on the characteristics of the particular markets in which a firm
would participate but also on the characteristics of the country..
6) According to the Freedom House classification of individual freedoms,
Azerbaijan would be a country that is at the bottom of the “Not Free” group.
7) Hong Kong and Singapore had the highest scores in the Heritage Foundation/Wall
Street Journal Index of Economic Freedom.
8) According to the Index of Economic Freedom, “A systematic analysis of the 10
freedoms has demonstrated again this year that economic freedom is the key to
creating an environment that allows a vicious cycle of entrepreneurship,
innovation, and sustained economic growth and development to flourish.”
9) The 2008 Index of Economic Freedom covered 257 countries.
10) Corruption has a corrosive effect on a country and its people.
11) Corruption distorts social activity.
12) Corruption is typically hard to observe, difficult to measure, and hard to eradicate.
13) The best known measure of the extent of corruption in a country is the Index of
Economic Freedom.
14) Transparency International’s Corruption Perceptions Index (CPI) is based on
objective data.
15) In 2007, the United States headed the list of Transparency International’s
Corruption Perceptions Index as the least corrupt country.
16) Zimbabwe was one of the countries that scored very low on CountryWatch’s
political risk index..
17) In CountryWatch’s political risk index, economic risk is one of the criteria used.
18) Venezuela came last in IMD of Switzerland’s assessment of competitiveness of
countries.
19) Culture can be important, not only shaping the opportunities and risks in a country
but also for the likelihood that a company can implement its market strategy.
20) Lincoln Electric found that its system of piece-rate compensation worked well
only in India and Poland.
21) Opportunities in emerging markets are of two basic types.
22) One type of opportunity in emerging markets is to use a country to export goods
to better developed countries and markets.
23) According to McKinsey & Co., India’s middle class is projected to increase from
50 million to 125 million by 2025.
24) A firm with superior know-how can also acquire a local firm supplying the
domestic market and operate it more efficiently or better serve the market.
25) Most of the emerging market countries share the same opposition to genetically
modified (GM) agriculture found in much of Europe.
26) The traditional business approach to addressing problems of poverty and illness
involved voluntary donations to those in need.
27) The fair trade movement was begun to improve the lives of poor farmers and
workers trapped by nonmarket conditions.
28) The fair trade system attempts to intervene directly on both the demand and
supply sides of the market by coordinating the flow of consumer revenue to
participating producers.
29) The fair trade movement began in the U.S. in 1988.
30) Whole Foods Markets participates in the fair trade program.
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Multiple Choice Questions:
31) What percent of the world’s population lives in emerging market countries?
a) 65
b) 50
c) 60
32) What percent of the world’s population growth is expected from emerging market
countries over the next thirty years?
a) 60
b) 70
c) 80
33) Which one of these countries fell in the “Not Free” group in Freedom House’s
index of individual freedoms?
a) Chile
b) Peru
c) Brazil
d) Turkmenistan
34) Which of these countries had the highest score in the Heritage Foundation/Wall
Street Journal Index of Economic Freedom?
a) United States
b) United Kingdom
c) Hong Kong
d) Germany
35) Which one of these was NOT considered in developing the Heritage
Foundation/Wall Street Journal Index of Economic Freedom?:
a) Business freedom
b) Government size
c) property rights
d) All of the above were considered
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36) _______ has a corrosive effect on a country and its people
a) Corruption
b) Bilateral trade
c) Exports
d) Imports
37) In this chapter the CPI is an acronym for
a) Consumer Price Index
b) Consumer Perceptions Index
c) Corruption Perceptions Index
d) Corruption Preference Index
38) In 2007, the country that headed TI’s CPI list was
a) Denmark
b) United States
c) Australia
d) Canada
39) Which country had the highest score in CountryWatch’s index of political risk?
a) Austria
b) United States
c) Australia
d) Germany
40) Which country led in overall competitiveness in IMD’s assessment?
a) Germany
b) Australia
c) United Kingdom
d) United States
41) In the case of Lincoln Electric, which were the two countries where its piece-rate
compensation approach worked?
a) China and Poland
b) Singapore and Hong Kong
c) Australia and New Zealand
d) Germany and France
42) About how many consumers are there at the “bottom of the pyramid?”
a) 200 million
b) 100 million
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c) 250 million
d) 4 billion
43) The fair trade movement was begun to improve the lives of poor farmers and
workers trapped by _____ conditions.
a) political
b) social
c) nonmarket
d) market
44) The fair trade system attempts to intervene directly on both the ____ and the ____
sides of the market.
a) production, distribution
b) branded, non-branded
c) demand, supply
d) regulated, unregulated
45) The fair trade movement began in
a) Australia
b) the United Kingdom
c) the United States
d) the Netherlands
46) How many wings did the fair trade system have?
a) 1
b) 2
c) 3
d) 4
47) Which of the following companies does NOT participate in the fair trade
program?
a) Dunkin Donuts
b) Procter & Gamble
c) Whole Foods Markets
d) Kraft
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48) Which of the following statements are true about risks in emerging markets?
a) Risks are greater in magnitude in emerging markets
b) Foreign risks arise from a broader range of factors than do domestic risks
c) Risks can depend on the country of origin
d) All of the above
49) Which one of the following is NOT a factor in assessing foreign risks?
a) Business practices
b) Ethnic differences
c) Religious differences
d) Ideology differences
50) Which one of the following is NOT a type of risk in emerging markets?
a) Political megalomania
b) Price control
c) Coups
d) Business competition
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Essay and Review Questions:
1) You are the newly appointed VP of International Markets for a consumer products
organization. Write a brief note identifying the attractiveness as well as
challenges of moving into emerging markets for the company.
2) Examine the factors used in developing various indices – individual freedoms,
competitiveness, etc. — and state whether you agree or disagree with the factors
used.
3) Discuss the topic of international trade from the perspective of emerging markets.
4) Was Whole Foods Market right in not participating in the fair trade program?
5) What were the key issues in the Tesco PLC in India case?
6) Assume that you are working for a large conglomerate and your organization is
looking at getting into microfinance. Using the Social Entrepreneurship: Banco
Compartamos case, make an argument either for or against microfinance as a
business opportunity.
7) Select a country in the emerging markets and prepare a detailed risk assessment of
the country.
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