Emerging Markets
Exam Materials
Course Introduction
This course provides an in-depth examination of emerging markets, focusing on their economic, political, and social environments. Students will explore the characteristics that define emerging economies and analyze their role in the global economy. Topics include market entry strategies, the impact of globalization, financial systems, and the challenges and opportunities of doing business in regions such as Asia, Latin America, Africa, and Eastern Europe. Through case studies and real-world examples, the course equips students with the analytical tools necessary to assess risk, develop strategies, and make informed decisions in fast-growing, dynamic markets.
Recommended Textbook
International Business 9th Edition by Charles
W. L. Hill
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Page 2
Chapter 1: Globalization
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Sample Questions
Q1) Which of the following countries has been the largest recipient of foreign direct investment and received about $60 billion to $100 billion a year in inflows in 2004-2009?
A) Brazil
B) Russia
C) India
D) China
Answer: D
Q2) Explain the notion of the World Wide Web emerging as an equalizer.
Answer: In 1990,fewer than 1 million users were connected to the Internet.By 1995,the figure had risen to 50 million.By 2010 the Internet had 1.97 billion users.Viewed globally,the web is emerging as an equalizer.It rolls back some of the constraints of location,scale,and time zones.The web makes it much easier for buyers and sellers to find each other,wherever they may be located and whatever their size.It allows businesses,both small and large,to expand their global presence at a lower cost than ever before.It enables enterprises to coordinate and control a globally dispersed production system in a way that was not possible 20 years ago.
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Chapter 2: National Differences in Political Economy, and Legal Systems
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Sample Questions
Q1) Common law is primarily a moral rather than a commercial law and is intended to govern all aspects of life.
A)True
B)False
Answer: False
Q2) Violation of property rights done through legal mechanisms such as levying excessive taxation and requiring expensive licenses or permits from property holders is called ________.
A) private action
B) collective action
C) public action
D) copyright violation
Answer: C
Q3) In the 1970s,the United States passed the Foreign Corrupt Practices Act which requires all publicly traded companies,whether or not they are involved in international trade,to keep detailed records that would reveal whether a violation of the act has occurred.
A)True
B)False
Answer: True
Page 4
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Chapter 3: National Differences in Economic Development
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Q1) What is gross national income? Is it related to purchasing power parity?
Answer: A common measure of economic development is a country's gross national income (GNI)per head of population.GNI is regarded as a yardstick for the economic activity of a country; it measures the total annual income received by residents of a nation.GNI per person figures can be misleading because they don't consider differences in the cost of living.To account for differences in the cost of living,one can adjust GNI per capita by purchasing power.Referred to as a purchasing power parity (PPP)adjustment,it allows for a more direct comparison of living standards in different countries.
Q2) What is the philosophy of Amartya Sen?
Answer: Amartya Sen is a Nobel Prize-winning economist who has argued that economic development should be assessed less by material output measures such as GNI per capita and more by the capabilities and opportunities that people enjoy.According to Sen,development should be seen as a process of expanding the real freedoms that people experience.
Q3) Economic freedom necessarily equates with political freedom.
A)True
B)False
Answer: False
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Chapter 4: Differences in Culture
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Sample Questions
Q1) The term social strata refers to the extent to which individuals can move out of the strata into which they were born.
A)True
B)False
Q2) Norms refer to:
A) the social rules and guidelines that prescribe appropriate behavior in particular situations.
B) a system of values that are shared among a group of people.
C) the routine conventions of everyday life.
D) abstract ideas about what a group believes to be good, right, and desirable.
Q3) Describe the four dimensions of culture as identified by Geert Hofstede.
Q4) A major difference between Buddhism and Hinduism is that unlike Hinduism,Buddhism:
A) does not support the cast system.
B) emphasizes wealth creation.
C) promotes blind loyalty to employers.
D) supports extreme ascetic behavior.
Q5) What are the determinants of culture?
Q6) What are the economic implications of the caste system supported by Hinduism?
Q7) Discuss why the stratification of a society is important to business.
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Chapter 5: Ethics, corporate Social Responsibility, and Sustainability
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Q1) What is the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?
Q2) Identify the INCORRECT statement about environmental regulations.
A) Environmental regulations are often lacking in developing nations.
B) Environmental regulations are similar across developed and developing nations.
C) Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, etc.
D) Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical issues.
Q3) The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as:
A) moral relativism.
B) noblesse oblige.
C) ethical dilemma.
D) social responsibility.
Q4) What is the veil of ignorance? Why is it important to business?
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Chapter 6: International Trade Theory
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Q1) Do you think a new trade theorist would stress the role of luck and entrepreneurship? Explain.
Q2) What will happen,according to Paul Samuelson's critique,if a rich country enters into a free trade agreement with a poor country?
A) Both the countries will incur losses due to the exchanges between them.
B) The productivity of the poor country will decline rapidly.
C) The poor country will rapidly improve its productivity.
D) Both the countries will garner benefits from the exchanges between them.
Q3) Explain the concept of free trade.
Q4) Which of the following is the main principle of mercantilism?
A) Protection of domestic industries is not essential for a nation's welfare.
B) Government intervention is not required in global trade.
C) Countries should encourage absolute free trade.
D) It is in a country's best interests to maintain a trade surplus.
Q5) Porter's theory of national competitive advantage recommends unrestricted free trade between countries.
A)True
B)False
Q6) Explain how the rivalry within an industry affects international competence.
Page 8
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Chapter 7: Government Policy and International Trade
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Q1) Discuss the establishment of GATT.What was GATT's objective?
Q2) The "millennium round" ended in 1999 with:
A) a successful record on agricultural products.
B) a new agenda for the next round focusing on financial services.
C) no agreement on the reduction of barriers to cross-border trade and investment.
D) a decision to avoid FDI.
Q3) During the 1980s and early 1990s,the world trading system erected by the GATT gained momentum as protectionist demands generally decreased across the world.
A)True
B)False
Q4) What is dumping? How do governments respond to charges of dumping?
Q5) What are the drawbacks of government intervention?
Q6) Antidumping policies vary drastically from country to country.
A)True
B)False
Q7) Explain how trade barriers affect a firm's strategy.
Q8) What is strategic trade policy? Provide an example.
Page 9
Q9) What is Paul Krugman's position on strategic trade policy?
Q10) Discuss the Buy America Act and its connection with local content requirements.
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Chapter 8: Foreign Direct Investment
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Q1) An aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by,for example,offering subsidies to foreign MNEs in the form of tax breaks or grants.
A)True
B)False
Q2) According to the _____ view of FDI,MNEs extract profits from the host country and take them to their home country,giving nothing of value to the host country in exchange.
A) imperialist
B) conservative
C) free market
D) radical
Q3) The majority of cross-border investment in the developed world is in the form of greenfield investments rather than mergers and acquisitions.
A)True
B)False
Q4) Rivals rarely imitate what a firm does in an oligopoly.
A)True
B)False
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Page 10
Chapter 9: Regional Trade Pacts Give the Mexican Auto
Industry an Edge
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Q1) A central reason for the establishment of the EU was the devastation of Western Europe during two world wars and the desire for a lasting peace.
A)True
B)False
Q2) Since its establishment,the euro has had a stable trading history.
A)True
B)False
Q3) Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement.
A)True
B)False
Q4) Debate the ratification of the North American Free Trade Agreement.
Q5) What prompted the formation of the European Union?
Q6) Compare and contrast a free trade area and a common market.Provide examples.
Q7) Discuss the economic case for economic integration.How does it relate to trade theory?
Page 11
Q8) The European Union is an example of a perfect economic union.
A)True
B)False
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Chapter 10: The Foreign Exchange Market
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Sample Questions
Q1) If a country has an externally convertible currency,neither residents nor nonresidents are allowed to convert it into a foreign currency.
A)True
B)False
Q2) Discuss the nature of the foreign exchange market.How fast has it been growing? Where are the most important trading centers?
Q3) According to the law of one price,if the exchange rate between the British pound and the dollar is £1 = $1.50,a shirt that retails for $120 in New York should sell for _____ in London.
A) £180
B) £50
C) £60
D) £80
Q4) Explain PPP.Use an example to show how PPP can help explain exchange rates.
Q5) The risk that arises from volatile changes in exchange rates is known as foreign exchange risk.
A)True
B)False
Q6) Compare and contrast the Fisher Effect and the International Fisher Effect.
Page 13
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Chapter 11: The International Monetary System
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Q1) Gold par value refers to the _____.
A) ratio of price of gold in a currency to price of gold in U.S. dollars
B) amount of a currency needed to purchase one ounce of gold
C) ratio of price of gold in a currency to price of gold in euros
D) amount of gold required to equal the reference currency that a nation is using
Q2) Which of the following statements is true of pegged exchange rates?
A) A pegged exchange rate allows a country's currency to be determined by market forces.
B) A pegged exchange rate weakens the monetary discipline of a country.
C) Pegged exchange rates are popular among many of the world's smaller nations.
D) Adopting a pegged exchange rate regime increases inflationary pressures in a country.
Q3) Which of the following arguments is against the use of fixed exchange rates?
A) Monetary discipline is the most important determinant of a strong economy.
B) Each country has the freedom to choose its own inflation rate.
C) Market speculation can cause fluctuations in exchange rates.
D) Governments are likely to expand the monetary supply far too rapidly due to political pressures.
Q4) Describe the different exchange rate policies that are in practice today.
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Chapter 12: The Global Capital Market
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Sample Questions
Q1) Market makers are _____.
A) financial service companies that connect investors and borrowers
B) nonbank financial institutions who want to invest money
C) high net worth individuals with surplus cash to reinvest
D) those who want to borrow money including individuals, companies, and governments
Q2) Companies receive a higher interest rate on deposits and pay less for loans when using the Eurocurrency market.
A)True
B)False
Q3) A Eurocurrency is the currency used by the countries of the European Union.
A)True
B)False
Q4) Eurobonds are _____.
A) denominated in the currency of the country in which they are issued
B) normally underwritten by an international syndicate of banks
C) denominated in a currency that is accepted by the European Union
D) are sold outside the borrower's county with reference to the originating currency
Q5) What are the drawbacks of the Eurocurrency market?
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Chapter 13: The Strategy of International Business
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Q1) Support activities are always less important than the primary activities in achieving a competitive advantage.
A)True
B)False
Q2) What are the four basic strategies that firms use to compete in international markets?
Q3) The customer is able to garner the benefit of the consumer surplus because one firm is competing with other firms for the customer's business,so the firm must charge a lower price than it could if it were a monopoly supplier.
A)True
B)False
Q4) A strategy that focuses on increasing the attractiveness of a product is referred to as a(n):
A) differentiation strategy.
B) low cost strategy.
C) effectiveness strategy.
D) efficiency strategy.
Q5) What is the difference between profitability and profit growth?
Q6) Explain the concept of location economies.
Page 16
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Chapter 14: The Organization of International Business
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Q1) A firm that needs greater flexibility should choose _____ for its decision-making.
A) horizontal differentiation
B) decentralization
C) localization strategy
D) control systems
Q2) What type of firms favor the worldwide area structure and why? What are the disadvantages of this type of structure?
Q3) Explain the five reasons why a firm should decentralize its decision-making.
Q4) In a company using cultural controls,employees' behavior is closely monitored and controlled through direct supervision.
A)True
B)False
Q5) What are output controls?
Q6) Norms are abstract ideas about what a group believes to be good,right,and desirable.
A)True
B)False
Q7) Explain organizational structure.
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Chapter 15: Entry Strategy and Strategic Alliances
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Q1) Firms entering markets where there are no incumbent competitors to be acquired should choose:
A) greenfield investments.
B) joint ventures.
C) acquisitions.
D) takeovers.
Q2) Franchising enables a firm to quickly build a global presence.
A)True
B)False
Q3) If a firm's core competency is based on control over proprietary technological know-how,_____ and _____ arrangements should be avoided if possible to minimize the risk of losing control over that technology.
A) licensing; joint-venture
B) wholly owned subsidiary; exporting
C) turnkey contracts; exporting
D) exporting; joint-venture
Q4) Imagine that you are meeting with your superiors to discuss entering a foreign market.Your boss has asked you to analyze a joint venture prospect.Why might you tell your boss that the joint venture is not a good idea?
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Chapter 16: Exporting, importing, and Countertrade
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Q1) A _____ is payable on presentation to the drawee.
A) bill of lading
B) time draft
C) sight draft
D) letter of credit
Q2) Japan's great trading houses are called Samurai houses.
A)True
B)False
Q3) _____ is an alternative means of structuring an international sale when conventional means of payment are difficult,costly,or nonexistent.
A) Floating exchange system
B) Countertrade
C) Letter of credit trade
D) Fixed exchange system
Q4) Poor understanding of competitive conditions in the foreign market is a common problem facing exporters.
A)True
B)False
Q5) What type of firms are most likely to engage in countertrade? Why?
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Chapter 17: Global Production and Supply Chain Management
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Q1) Describe the major arguments put forth by Edward Deming.
Q2) The benefits of making all or part of a product in-house is minimal when highly specialized assets are involved.
A)True
B)False
Q3) Make-or-buy decisions are decisions that concern the components to be used in a production process.
A)True
B)False
Q4) The objectives of logistics are to manage a firm's global supply chain at the lowest possible cost and in a way that best serves customer needs.
A)True
B)False
Q5) The minimum efficient scale of production is high when fixed costs are low.
A)True
B)False
Q6) Explain how the concept of production efficiency has changed with the rise of flexible manufacturing technologies.
Page 20
Q7) Explain specialized assets with an example.
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Chapter 18: Global Marketing and Rd
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Q1) A company that depends on mass media advertising to communicate its marketing message to potential consumers is using a push strategy.
A)True
B)False
Q2) What is channel length? What is the most important determinant of channel length?
Mention two factors that shorten channel length.
Q3) For a product development team to function effectively and meet all its development milestones,the team should be composed of at least one member from each key function.
A)True
B)False
Q4) When a firm emphasizes personal selling rather than mass media advertising in the promotional mix,the firm is using a:
A) standardized strategy.
B) pull strategy.
C) push strategy.
D) localized strategy.
Q5) Define market segmentation.What is its goal?
Q6) What is Theodore Levitt's contribution to international business?
Page 21
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Chapter 19: Global Human Resource Management
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Q1) An organization's norms and value systems are known as its corporate culture.
A)True
B)False
Q2) Describe the notion of management development programs as a tool for increasing the overall skill levels of managers.What is the goal of this type of program?
Q3) Which of the following is a concern of organized labor regarding multinational firms?
A) A company can counter a union's bargaining power with the power to move production to another country.
B) An international business will keep low-skilled tasks in its home country and farm out only highly skilled tasks to foreign plants.
C) An international business can attempt to import employment practices and contractual agreements from its host-country.
D) A multinational company is more likely to receive government support in the case of hostile labor relations.
Q4) HRM professionals have a critically important strategic role.
A)True
B)False
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22
Chapter 20: Accounting and Finance in the International Business
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Q1) What are the advantages of using royalties and fees to move money across borders?
Q2) Studies have shown that a country's relative inflation rates and changes in exchange rates are not related to each other.
A)True
B)False
Q3) Multilateral netting is used majorly to _____.
A) reduce the number of transactions between subsidiaries
B) avail tax credit from governments
C) establish a tax treaty amongst multiple countries
D) to reduce the fixed costs of establishing a subsidiary
Q4) Payment of dividends is an uncommon method of transferring funds from foreign subsidiaries to the parent company.
A)True
B)False
Q5) A fee is compensation for professional services or expertise supplied to a foreign subsidiary by the parent company or another subsidiary.
A)True
B)False
Page 23
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