Deck 7: Emerging Markets, Developing Economies, and Advanced Economies

Question 1

Governments in developing economies often mismanage revenue and expenditures, which leads to additional economic issues.

Answer 1

True

Question 2

Foreign direct investment is high in developing economies despite the bureaucratic difficulties that many firms face.

Answer 2

False

Question 3

The transition economies of China and Russia have attracted FDI because of privatization.

Answer 3

True

Question 4

Demand for American-made automobiles and computers by the middle class in emerging markets constitute the majority of total U.S. exports.

Question 5

Emerging markets, such as Thailand, serve as manufacturing bases for MNEs seeking low-wage labor for manufacturing operations.

Question 6

Outsourcing enables foreign firms to increase efficiency and obtain competitive advantages.

Question 7

Per-capita GDP adjusted for purchasing power parity provides a less accurate estimate of an emerging market's potential than the per-capita GDP adjusted for market exchange rates.

Question 8

Political power parity is an often more revealing indicator than GDP in assessing an emerging market country.

Question 9

Adjusted per-capita GDP accurately represents the amount of products consumers can buy using their country's currency as it corresponds to their own standard of living.

Question 10

Russia's high standing as an emerging market stems from its low corruption ranking.

Question 11

In emerging markets, foreign firms benefit from the large number of well-qualified business partners available for networking and marketing purposes.

Question 12

Family conglomerates in the areas of construction, banking and manufacturing frequently dominate emerging market economies.

Question 13

Family conglomerates, as the name implies, means that a ruling family has controlling interest.

Question 14

A tender offer, or request for proposals, by an emerging market country are typically closed to foreign vendors.

Question 15

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

Question 16

Which of the following economies is typically characterized by stagnant productivity?

A) advanced economy
B) transition economy
C) developing economy
D) emerging markets

Question 17

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

Question 18

All of the following characterize emerging markets except ________.

A) centrally planned economy
B) high trade volume
C) expanding middle class
D) improved living conditions

Question 19

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 infrastructures
C) implement EU monetary and trade policies
D) compete for business against large EU nations

Question 20

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

Question 21

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

Question 22

All of the following are "frontier economies" except ________.

A) Turkey
B) Uraguay
C) United Arab Emirates
D) Estonia

Question 23

Which of the following BRIC nations has the highest number of companies in the Global 500?

A) China
B) Russia
C) Brazil
D) India

Question 24

Emerging markets are important in international business and trade due to their high representative percentage in which of the following categories?

A) middle-class population
B) energy usage
C) exports
D) FDI

Question 25

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 infrastructures
D) strong intellectual property laws

Question 26

South Africa exports _________, which is/are used in many industrial processes?

A) textiles
B) bauxite
C) oil
D) diamonds

Question 27

Outsourcing certain value-added activities with foreign suppliers is known as ________.

A) offshoring
B) global resourcing
C) privatization
D) subsidizing

Question 28

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

Question 29

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.

Question 30

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.

Question 31

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

Question 32

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

Question 33

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

Question 34

In purchasing power parity terms, which nation has the highest per-capita GDP?

A) Brazil
B) China
C) Turkey
D) South Korea

Question 35

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

Question 36

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.

Question 37

Computer software counterfeiting in an emerging market can have what negative effect?

A) withdrawal of MNEs
B) political instability
C) lack of transparency
D) discourage investment

Question 38

An emerging market's lack of transparency may suggest which of the following?

A) accountability
B) bureaucracy
C) corruption
D) expertise

Question 39

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

Question 40

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

Question 41

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.

Question 42

Which of the following is not a primary benefit of collaborating with a family conglomerate?

A) develop local contacts
B) prevent intellectual property theft
C) market access
D) government access

Question 43

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

Question 44

Class Reports
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.

-Which of the following would most likely be used in Jordan's report to describe the nature of the economy?

A) service-based
B) mulitparty
C) government-directed
D) manufacturing-based

Question 45

Class Reports
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.

-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

Question 46

Class Reports
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.

-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

Question 47

Economic Development Workshop
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.

-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, Japan, and the United States
D) The Netherlands, Sweden, and China

Question 48

Economic Development Workshop
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.

-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) Bangladesh, Nicaragua, and Zaire
C) Norway, Sweden, and Finland
D) Nepal, Cambodia, and Austria

Question 49

Economic Development Workshop
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.

-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, Italy, and New Zealand
C) Representatives from the U.S., China, and Belarus
D) Representatives from Portugal, Spain, and Cuba

Question 50

Vytel Communications
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.

-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?

Question 51

Vytel Communications
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.

-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.

Question 52

Vytel Communications
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.

-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?

Question 53

Maximus Motor Company
Maximus Motor Company is an automobile manufacturer based in the United Kingdom 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.

-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?

Question 54

Maximus Motor Company
Maximus Motor Company is an automobile manufacturer based in the United Kingdom 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.

-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 has issued a proposed purchase order for a fleet 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.

Question 55

Maximus Motor Company
Maximus Motor Company is an automobile manufacturer based in the United Kingdom 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.

-Which of the following will be most beneficial to Maximus if it builds a manufacturing facility in India, which is an emerging market with a large manufacturing base?

A) legal precedents
B) high-quality labor pool
C) government regulations
D) solid infrastructures

Question 56

In a short essay, provide examples of poor physical infrastructures.

Question 57

In a short essay, explain why emerging markets have grown at such a fast rate. What characteristics of emerging markets contribute to their success? Provide an example of a firm or industry that has been particularly successful in an emerging market.

Question 58

In a short essay, describe the four reasons why per-capita income is not always the best indicator of an emerging market's potential.

Question 59

In a short essay, explain what a family conglomerate is. Discuss the benefits that family conglomerates provide to foreign firms and describe examples of collaboration with them.

Question 60

In a short essay, describe the key factors that make a rising middle class an important driver in emerging market economies? Provide some representative examples.

Question 61

How do governments and bureaucracies in emerging markets impede and encourage foreign investment? Provide examples.