DISCUSSION QUESTIONS
2-1. The seven criteria for describing a nation’s economy introduced at the beginning of this
chapter can be combined in a number of different ways. For example, the United States can be
characterized as follows:
Type of economy: Advanced industrial state
Type of government: Democracy with a multi-party system
dynamism
Use the seven criteria found on pp. 32 to develop a profile of one of the BRICS nations, or any
2-2. Why are Brazil, Russia, India, China, and South Africa (BRICS) highlighted in this chapter?
Identify the current stage of economic development for each BRICS nation.
Experts predict that the BRICS nations will be key players in global trade even as their
track records on human rights, environmental protections and other issues come under
2-3. Turn to the Index of Economic Freedom (Table 2-3) and identify where the BRICS nations
are ranked. How should Global Marketers use the Index as a guide to global market
opportunities?
Brazil, Russia, India, and China fall within the “Mostly Unfree” category. This indicates
that, while the index and what it stands for are certainly important to marketers, they are
2-4. The Heritage Foundation’s Index of Economic Freedom is not the only ranking that assesses
countries in terms of successful economic policies. For example, the World Economic Forum
(WEF; www. weformum.org) publishes an annual Global Competitiveness Report; in the 2014-
2015 report, the United States ranks third, according to the WEF’s metrics. By contrast, Sweden
was in 10th place. According to the Index of Economic Freedom’s rankings the United States and
Sweden are in 12th and 23rd place, respectively. Why are the rankings so different? What
criteria does each index consider?
The Heritage foundation measures trade policy, taxation policy, government consumption
of economic output, monetary policy, capital flows and foreign investment, banking
On the other hand, the World Economic Forum, according to their website, states: “The
World Economic Forum is an independent, international organization incorporated as a
economic progress is not feasible. Our vision for the World Economic Forum is threefold.
Clearly, the WEF assigns a great deal of value to measuring the values and social
2-5. When the first edition of this textbook was published in 1996, the World Bank defined “low-
income country” as one with per capita income of less than $501. In 2003, when the third
edition of Global Marketing appeared, “low income” was defined as $785 or less in per capita
income. As shown in Table 2-4 of this chapter, $ 1,045 is the current “low income” threshold.
The other stages of development have been revised upward in a similar manner. How do you
explain the upward trend in the definition of income categories during the past 20 years?
The economic systems of countries are constantly developing and changes happen
rapidly. The percentage of the world’s GNI for low-income countries is now at a record
2-6. A friend is distressed to learn that America’s merchandise trade deficit hit a record $ 700
billion in 2013. You want to cheer your friend up by demonstrating that the trade picture is not as
bleak as it sounds. What do you say?
The overall trade balance reflects merchandise as well as services trade as reported in
The United States is a major service trader. As shown in Table 2-5, U.S. services exports
2-7. India is not included in the Big Mac Index. Can you explain why? Using the following
data, compute the price of a Big Mac in Norway, Thailand, and Mexico. What is the equivalent
price in dollars ? Is it higher or lower than the U.S. price? How much is the kroner (or
baht or peso) over– or under valued?
Norway price: Kroner 45; exchange rate 6.25/$1
In India the Big Mac is made of chicken, not beef. The Big Mac is also not that popular in
Thailand Baht and the Mexico Peso are bother undervalued.
CASES
Case 2 -1: Venezuela after Chavez: The Case for Economic Freedom
Overview: Although the Soviet Union is long gone, there are still plenty of examples of countries
where government leaders attempt to control the economy. Venezuela is a case in point.
Venezuela’s rich oil reserves provided resources for Chavez to rally popular support with voters.
Chavez died in 2013 and by 2015, with oil prices plummeting; Venezuela faced an economic
2-8. President Chavez held office for 14 years, despite all the shortages in Venezuela’s economy.
How do you explain this?
Chavez had a strong disdain for American politicians and told Venezuelans that “US
2-9. Many Venezuelans proclaim themselves to be “Chavistas,” despite the country’s problems.
How do you explain this?
Student answers will vary.
2-10. Can Venezuela afford to maintain its Petrocaribe program of subsidized oil exports?
cannot continue this program.
Case 2-2: A Day in the Life of a Contracts Analyst at Cargill
Overview: Glynis Gallagher works as a contracts analyst at Cargill Risk Management based in
Minnesota. Cargill is a truly global company: With operations in more than 60 countries, it
markets food, agriculture, financial, and industrial products and services to customers
worldwide. Revenues totaled $ 134.9 billion in 2014, making Cargill the largest privately owned
company in the United States. Gallaghers business unit works with customers to provide
commodities hedges through swaps and structured products. The commodities in question are
often agricultural commodities including grains like corn, wheat, and soybeans, as well as beef
and other animal proteins.
Discussion Questions
2-11. What knowledge and skills are required to be successful as a credit risk analyst?
Gallagher’s degree in marketing also included courses in math and finance. She
.
2-12. What do you think is the best part of Gallagher’s job? The most challenging part?
Student answers will vary.
2-13. If you were in Gallagher’s position, what would your next career move be?
Student answers will vary.