Chapter 2: The Emerging Global Environment

1. Which two of these are characteristic of an emerging country?

Low income per capita Growing middle class Centrally planned, state-owned economy Highly developed infrastructure and educational investment  

2. What is the ‘middle-class effect’?

The increase in purchasing power of the urban population The increase in the number of university graduates The conflict between ‘bourgeoisie’ and ‘proletariat’ The number of middle-class people increases faster than economic growth The market for branded products is growing fast  

3. Among the following, which two measures are not part of the ‘Washington Consensus’ (choose all that apply)?

Privatization of state-owned enterprises Establishment of a democratic regime Liberalization of inflow of foreign direct investment Introduction of a progressive income tax system Deregulation to abolish entry barriers or restrictions on competition  

4. Which of these is not a characteristic of the ‘institutional void’?

Inefficient judicial system Corruption Centralization of power Influence of religion on government  

5. What are the results of ‘bottom of the pyramid’ strategies (choose all three that apply)?

Products are of lower quality Products are built to last Products are fitted to local conditions Value pricing is based on differentiation and segmentation There is little or no advertising budget  

6. What characteristics do conglomerates find significant in emerging economies (choose all three that apply)?

Illiquidity of capital markets Scarcity of financial and (qualified) human resources Presence of charismatic leaders Privileged access to licenses for business partners affiliated to government De-nationalization of state-owned enterprises  

7. Offshoring and offsourcing in emerging countries can be disadvantageous. Which are the two most important factors?

‘Market failures’ Risk of supply chain disruption Local and regional political risks Lack of customer proximity  

8. What characterizes the initial competitive strategy of emerging market global champions (choose all three that apply)?

Concentration on protected home market Use of corrupt practices Acquisition of technology from abroad Good knowledge of local environment Using ethnic and family networks