Emerging Markets Management
Practice Questions
Course Introduction
Emerging Markets Management explores the unique challenges and opportunities associated with doing business in rapidly developing economies across the globe. This course examines the economic, political, and cultural environments of emerging markets, and analyzes strategies for market entry, growth, and risk mitigation. Students will learn how multinational firms adapt to institutional differences, manage cross-border operations, and capitalize on innovation and entrepreneurship in markets characterized by volatility and potential. Case studies and real-world examples provide practical insights into navigating regulatory frameworks, competitive dynamics, and sustainable development within these fast-evolving regions.
Recommended Textbook
International Business 9th Edition by
Charles W. L. Hill
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Page 2
Chapter 1: Globalization
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Q1) NAFTA was passed only after:
A) China agreed to establish a higher minimum wage.
B) the U.S. agreed to limit the number of jobs that could be outsourced.
C) Mexico committed to tougher enforcement of environmental protection regulations.
D) Canada committed to establish new limits on FDI.
Answer: C
Q2) Which of the following statements is true about an international business?
A) An international business needs to invest directly in operations in other countries.
B) An international business needs to have homogenous practices across countries.
C) An international business can be managed in the same way that a domestic business is managed.
D) An international business must find ways to work within the limits imposed by government intervention.
Answer: D
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Chapter 2: National Differences in Political Economy, and Legal Systems
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Q1) In a command economy,enterprises have little incentive to control costs and be efficient,because they cannot go out of business.
A)True
B)False
Answer: True
Q2) Discuss individualism.Explain the key positions of the philosophy,it roots,and its role in the modern economy.
Answer: Individualism refers to a philosophy that an individual should have freedom in his/her economic and political pursuits.Accordingly,the philosophy stresses that the interests of the individual should take precedence over the interests of the state.Individualism can be traced to the ancient Greek philosopher Aristotle who argued that individual diversity and private ownership are desirable.Aristotle's philosophy was refined by David Hume,Adam Smith,and John Stuart Mill in the 1700s and 1800s,and more recently by Milton Friedman,Friedrich von Hayek,and James Buchanan.Today,individualism translates into an advocacy for democratic political systems and free market economies.
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Chapter 3: National Differences in Economic Development
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Q1) Peruvian development economist Hernando de Soto has argued that the chronic inability of property owners to establish legal title to the property they own is a key problem for innovation,and entrepreneurial activity in developing nations.
A)True
B)False
Answer: True
Q2) Which of the following helps in adjusting GNI such that it accounts for the differences in the cost of living?
A) Purchasing power parity (PPP) adjustment
B) Human Development Index
C) Debt to GNI ratio
D) Consumer Price Index
Answer: A
Q3) For privatization to work,it must also be accompanied by a more general deregulation and opening of the economy.
A)True
B)False
Answer: True
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Chapter 4: Differences in Culture
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Q1) _____ are social conventions concerning things such as the appropriate dress code in a particular situation,good social manners,eating with the correct utensils,neighborly behavior,and the like.
A) Values
B) Beliefs
C) Mores
D) Folkways
Q2) Upon meeting a foreign business executive,a Japanese executive will hold his business card in both hands and bow while presenting the card to the foreigner.This is an example of ritual behavior.
A)True
B)False
Q3) What are the implications of cultural differences for international businesses?
Q4) Which of the following statements about values and norms of a culture is NOT true?
A) The values and norms of a society do not emerge fully formed.
B) The values and norms of a society are the evolutionary product of a number of factors.
C) The values and norms of a society are influenced by religion.
D) The values and norms of a society do not influence social structure.
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Chapter 5: Ethics, corporate Social Responsibility, and Sustainability
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Q1) Building an organization culture that places a high value on ethical behavior requires incentive and reward systems.
A)True
B)False
Q2) The Friedman doctrine is the belief that ethics are nothing more than a reflection of culture and therefore,a firm should adopt the ethics of the culture in which it is operating.
A)True
B)False
Q3) The Foreign Corrupt Practices Act originally allowed "facilitating payments" to secure contracts that would not otherwise be secured.
A)True
B)False
Q4) What is a code of ethics?
Q5) Companies can strengthen the moral courage of employees by committing themselves to not retaliate against employees who exercise moral courage.
A)True
B)False
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Chapter 6: International Trade Theory
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Q1) Some of the arguments made by the product life-cycle theory seems ethnocentric and increasingly dated when viewed from an Asian or European perspective.
A)True
B)False
Q2) Diminishing returns show that it is feasible for a country to specialize to the degree suggested by the simple Ricardian model.
A)True
B)False
Q3) The Heckscher-Ohlin theory argues that the pattern of international trade is determined by differences in factor endowments.
A)True
B)False
Q4) Economies of scale are unit cost reductions associated with a large scale of output.
A)True
B)False
Q5) What are the sources of economies of scale?
Q6) Explain how the principle of diminishing returns weakens the Ricardian model.
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Page 8
Chapter 7: Government Policy and International Trade
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Q1) TRIPS regulations oblige WTO members to all of the following EXCEPT:
A) grant and enforce patents lasting at least 20 years.
B) grant and enforce copyrights lasting 50 years.
C) comply with the rules within five years in the case of rich countries.
D) comply with the rules within 10 years in the case of the poorest countries.
Q2) Discuss the economic reasons for government intervention in markets.
Q3) 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.
Q4) The Buy America Act specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price disadvantage.
A)True
B)False
Q5) Tariffs on industrial goods remain higher than tariffs on services.
A)True
B)False
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Chapter 8: Foreign Direct Investment
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Q1) Why do many economists favor internalization theory as an explanation for FDI compared to Knickerbocker's theory?
Q2) A French wind power company gives an Indonesian company the right to produce and sell wind turbines in return for a royalty fee on every unit sold.Which business practice is this an example of?
A) Acquisition
B) Licensing
C) Exporting
D) Greenfield investment
Q3) Which of the following is a home-country policy aimed at limiting outward FDI flow?
A) Taxing domestic companies' foreign earnings at a higher rate than their domestic earnings
B) Implementation of government-backed insurance programs to cover major types of foreign investment risk
C) Eliminating double taxation of foreign income
D) Persuading host countries to relax their restrictions on inbound FDI
Q4) Describe the situations when licensing is not a good option for a firm.
Q5) What is an oligopoly? Discuss the impact of interdependence in an oligopoly.
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Chapter 9: Regional Trade Pacts Give the Mexican Auto
Industry an Edge
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Q1) Explain how MERCOSUR has changed over time.What are the implications of these changes?
Q2) The European Union is an example of a perfect economic union.
A)True
B)False
Q3) Some economists have expressed concerns that the benefits of regional integration have been touted while the costs have been ignored.Explain the view of these economists.
Q4) In a(n)_____,similarities in the underlying structure of economic activity make it feasible to adopt a single currency and use a single exchange rate as an instrument of macroeconomic policy.
A) optimal currency area
B) unified economic area
C) uniform currency zone
D) monetary zone
Q5) What is the political case for integration? How did political arguments influence the establishment of the European Union?
Q6) Debate the ratification of the North American Free Trade Agreement.
Q7) What are the five levels of economic integration? Briefly describe each form.
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Chapter 10: The Foreign Exchange Market
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Q1) Assume that the interest rate on borrowings in Japan is 1 percent,while the interest rate on deposits in Australian banks is 5 percent.A trader borrows in yen and then converts the money into Australian dollars and deposits it in an Australian bank to make a 4 percent margin.Which type of trade is this an example of?
A) Swing trade
B) Carry trade
C) Channel trade
D) Price action trade
Q2) A lag strategy involves attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate and paying foreign currency payables before they are due when a currency is expected to appreciate.
A)True
B)False
Q3) Technical analysis draws on economic theory to construct sophisticated econometric models for predicting exchange rate movements.
A)True
B)False
Q4) Explain the notion of economic exposure.How can economic exposure be minimized?
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Chapter 11: The International Monetary System
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Q1) Advocates of a floating exchange rate regime argue that removal of the obligation to maintain exchange rate parity would restore monetary control to a government.
A)True
B)False
Q2) Most of the loans issued by the IMF are unconditional loans.
A)True
B)False
Q3) What is gold standard? What was the major advantage of the system?
Q4) Which of the following will help a company hedge against currency fluctuations?
A) Finding a large supplier to supply all the raw materials
B) In-house manufacturing of raw materials
C) Basing business in a single country
D) Dispersing production to different geographic locations
Q5) Present the common arguments that favor fixed exchange rates.
Q6) Explain the floating exchange rate regime.Give examples.
Q7) The Asian economic crisis was caused by high inflation rates.
A)True
B)False
Q8) Discuss the significance of the Jamaica Agreement.
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Chapter 12: The Global Capital Market
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Q1) Financial services is an information-intensive industry.
A)True
B)False
Q2) Global capital market often lack information about the fundamental quality of foreign investments.
A)True
B)False
Q3) _____ can inject risk into foreign currency borrowing.
A) Movements in exchange rates
B) Use of fixed-exchange rates
C) Issue of domestic bonds
D) Use of pegged exchange rates
Q4) What are the financial advantages that make the Eurocurrency market attractive to both depositors and borrowers?
Q5) The cost of capital is the _____.
A) interest received on investments made by the company
B) price of borrowing money
C) difference between cost of inputs and outputs
D) total value of raw materials that a company uses
Q6) Explain Eurobonds with an example.
Page 14
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Chapter 13: The Strategy of International Business
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Q1) _____ activities are basically concerned with creating the product,marketing and delivering the product to buyers,and providing support and after-sales service.
A) Support
B) Subordinate
C) Ancillary
D) Primary
Q2) As competition intensifies,global standardization strategies and transnational strategies tend to become less viable,and managers need to orientate their companies toward either an international strategy or a localization strategy.
A)True
B)False
Q3) Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as:
A) factor economies.
B) production economies.
C) location economies.
D) value creation economies.
Q4) What is strategy? How does strategy relate to a firm's profitability?
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Page 15
Chapter 14: The Organization of International Business
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Q1) What type of firms favor the worldwide area structure and why? What are the disadvantages of this type of structure?
Q2) Bureaucratic control involves personal contact with subordinates.
A)True B)False
Q3) Why should a firm centralize its decision-making?
Q4) What are the three dimensions of organizational structure?
Q5) The choice between centralization and decentralization is not absolute.
A)True
B)False
Q6) A manager receives a bonus because the national operating subsidiary,that she is in charge of,exceeds its performance target.This is an example of an incentive. A)True B)False
Q7) Explain organizational structure.
Q8) Regardless of a firm's domestic structure,its international division tends to be organized on economy.
A)True B)False
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Chapter 15: Entry Strategy and Strategic Alliances
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Q1) An arrangement whereby a firm grants the right of intangible property to another entity for a specified time period in exchange for royalties is a(n)_____ agreement.
A) turnkey
B) licensing
C) greenfield
D) acquisition
Q2) If a high-tech firm sets up operations in a foreign country to profit from a core competency in technological know-how,which of the following entry strategy is best?
A) joint ventures
B) licensing
C) wholly owned subsidiaries
D) turnkey contacts
Q3) Define licensing agreements.What are the advantages of this mode of international expansion?
Q4) Discuss the trade-offs associated with large-scale entry versus small-scale entry.
Q5) Why do acquisitions fail?
Q6) Draw a distinction between firms based on their core competency.
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Page 17
Chapter 16: Exporting, importing, and Countertrade
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Q1) In a(n)_____,one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale and this party can fulfill the obligation with any firm in the country to which the sale is being made.
A) switch trade
B) offset
C) barter
D) buyback
Q2) Counterpurchase occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.
A)True
B)False
Q3) A _____ is payable on presentation to the drawee.
A) bill of lading
B) time draft
C) sight draft
D) letter of credit
Q4) A time draft is payable on presentation to the drawee
A)True
B)False
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Chapter 17: Global Production and Supply Chain Management
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Q1) Make-or-buy decisions are decisions about _____.
A) the components to be used in manufacturing process
B) procuring raw materials for a production process
C) procuring the capital equipments for production
D) whether or not to outsource value creation activities
Q2) The minimum efficient scale of production is high when fixed costs are low.
A)True
B)False
Q3) Which of the following statements is true of Web-based EDI systems?
A) Web-based EDI systems are more expensive than proprietary solutions.
B) Small firms will not be able to make use of Web-based EDI systems
C) Web-based systems are much easier to install compared to proprietary solutions.
D) Most Web-based systems are implemented to support proprietary solutions.
Q4) Vertical integration refers to _____.
A) outsourcing production to a low-cost based company
B) making all or part of a product in-house
C) using multiple suppliers to procure raw materials
D) procuring raw materials or products from a single supplier
Q5) What is logistics? Discuss the relationship between production and logistics.
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Chapter 18: Global Marketing and Rd
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Q1) Explain briefly the regulatory influences on pricing.
Q2) A firm that depends more on mass media advertising to communicate the marketing message to potential consumers is using a:
A) pull strategy.
B) push strategy.
C) standardized strategy.
D) localized strategy.
Q3) The set of choices the firm offers to its targeted markets is known as the marketing mix.
A)True
B)False
Q4) The entry of large discount superstores such as Tesco and Carrefour have shortened channel length in some countries.
A)True
B)False
Q5) Countries with fragmented retail systems tend to have long channels of distribution.
A)True
B)False
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Chapter 19: Global Human Resource Management
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Q1) The international trade secretariats (ITS)have had virtually no real success.Which of the following is NOT a cause of the ITS's ineffectiveness?
A) National unions compete with each other to attract investment from international businesses.
B) The structure and ideology of unions tend to vary significantly from country to country.
C) Organized labor has had only limited success in its efforts to get national and international bodies to regulate multinationals.
D) The codes of conduct developed by International Labor Organization and the Organization for Economic Cooperation and Development prevented the ITSs from exercising absolute power.
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) An expatriate needs to have language fluency to show willingness to communicate.
A)True
B)False
Q4) What is cultural toughness?
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Chapter 20: Accounting and Finance in the International Business
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Q1) A European subsidiary of a U.S.firm will usually prepare its budgets in Euro.
A)True
B)False
Q2) Lessard and Lorange recommend that firms use the projected spot exchange rate to translate both the budget and performance figures into the corporate currency.
A)True
B)False
Q3) Which of the following is a country in which banks emerged as the main providers of capital to enterprises?
A) United States
B) Britain
C) Philippines
D) Switzerland
Q4) The governments of some countries require or prefer foreign multinationals to finance projects in their country by local debt financing or local sales of equity.
A)True
B)False
Q5) Explain the three types of decisions in international business.
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