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Chapter 09 - Emerging Markets

Chapter 09 Emerging Markets

True / False Questions 1. (p. 246) The transfer of public-sector enterprises to the private sector creates opportunities for international marketers. TRUE

Difficulty: Easy Type: Comprehension

2. (p. 246) The standard for making profit is the single most important environmental element to which the foreign marketer must adjust the marketing task. FALSE

Difficulty: Hard Type: Comprehension

3. (p. 247) The current level of economic development within a country dictates the kind and degree of market potential that exists. TRUE

Difficulty: Moderate Type: Comprehension

4. (p. 247) The expansion of military interventions around the world is one of the factors changing the way countries trade and prosper in the 21st century. FALSE

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

5. (p. 247) Capital development is generally understood to mean an increase in national production results that increase in the average per capita gross domestic product. FALSE
Difficulty: Hard Type: Application

6. (p. 247) In the United Nations' stages of economic development, the first group is MDCs (more-developed countries). TRUE

Difficulty: Easy Type: Knowledge

7. (p. 247) With respect to the United Nations' stages of economic development, the most advanced stage is one described as industrialized countries with high per capita incomes. TRUE

Difficulty: Easy Type: Knowledge

8. (p. 247-248) A good illustration of a MDC (more-developed country) is Peru. FALSE

Difficulty: Moderate Type: Application

9. (p. 247) Countries characterized as being industrially underdeveloped, agrarian, a subsistence society with rural populations, an extremely low per capita income level, and has little world trade involvement, the country would be classified as a LDC (less-developed country). FALSE

Difficulty: Hard Type: Application

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Chapter 09 - Emerging Markets

10. (p. 248) One of the "Four Tigers" of Southeast Asia is South Korea. TRUE
Difficulty: Moderate Type: Application

11. (p. 250) One of the factors that exists that helps a NIC (newly industrializing country) to experience economic growth is economic and legal reforms. TRUE

Difficulty: Moderate Type: Comprehension

12. (p. 252) Industrialization is the fundamental objective of most developing countries. TRUE

Difficulty: Easy Type: Comprehension

13. (p. 253) Examples of infrastructure include automobiles, bicycles, motorcycles, and motorboats. FALSE

Difficulty: Moderate Type: Comprehension

14. (p. 254, Exhibit 9.2) Miles (or kilometers) of roads, rail lines, numbers of vehicles, mobile phones, and personal computers are indicators of a country's external market structure. FALSE

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

15. (p. 254) Countries begin to lose economic development ground when their infrastructure cannot support an expanding population and economy. TRUE
Difficulty: Easy Type: Comprehension

16. (p. 258) If modern and traditional sectors within a country's economy coexist alongside one another, the correct term for this phenomenon would be bi-economic. FALSE

Difficulty: Easy Type: Application

17. (p. 256) With respect to marketing in a developing country, a marketing program cannot superimpose a sophisticated strategy but must be keyed to each situation and provide for optimum utility given a specific set of circumstances. TRUE

Difficulty: Moderate Type: Knowledge

18. (p. 257, Exhibit 9.3) The beginning stage of the marketing process is called manufacturing. FALSE

Difficulty: Easy Type: Comprehension

19. (p. 257, Exhibit 9.3) An entrepreneurial commercial society is based on agriculture and raw materials production and has achieved a level of surplus where the surplus can be sold. TRUE

Difficulty: Moderate Type: Application

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Chapter 09 - Emerging Markets

20. (p. 257, Exhibit 9.3) The United States economy from 1950 to the present has been described as one where the primary orientation is marketing. TRUE
Difficulty: Easy Type: Application

21. (p. 259, Exhibit 9.4) The leisure consumption of Japan is approximately three times as great as the leisure consumption of Brazil. FALSE

Difficulty: Moderate Type: Application

22. (p. 263) What is occurring in the BEMs is analogous to the situation after World War II when tremendous demand was created during the reconstruction of Europe. TRUE

Difficulty: Moderate Type: Application

23. (p. 262) Big emerging markets share common traits. One of the traits common to BEMs is that they have significant populations. TRUE

Difficulty: Easy Type: Application

24. (p. 262) Mexico, China, and Turkey are considered to be BEM (Big Emerging Markets) countries. TRUE

Difficulty: Moderate Type: Comprehensive

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Chapter 09 - Emerging Markets

25. (p. 264-265) A key to economic development in Eastern Europe has been the ability to adopt advertising techniques used in the West. FALSE
Difficulty: Moderate Type: Application

26. (p. 265) South America has been the fastest-growing area in the world for the past three decades. FALSE

Difficulty: Easy Type: Application

27. (p. 266) The "Four Tigers" are represented by Hong Kong, South Korea, Singapore, and Taiwan. TRUE

Difficulty: Easy Type: Application

28. (p. 267) In formal terms, Hong Kong is listed as a SAR (special administrative region) of China. TRUE

Difficulty: Moderate Type: Application

29. (p. 271) Consumers in countries with low per capita incomes show remarkable resourcefulness in finding ways to buy what really matters to them. TRUE

Difficulty: Moderate Type: Application

Multiple Choice Questions

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Chapter 09 - Emerging Markets

30. (p. 246) Which of the following is NOT one of the factors changing the way countries trade and prosper in the twenty-first century? A. The transition from socialist to market-driven economies. B. Liberalization of trade and investment policies in developing countries. C. The transfer of public-sector enterprises to the private sector. D. The rapid development of regional market alliances. E. The expansion of military interventions around the world.
Difficulty: Hard Type: Application

31. (p. 246) The __________ level of a country is the single most important environmental element to which the foreign marketer must adjust the marketing task. A. political stability B. entrepreneurial C. economic D. technology E. literacy

Difficulty: Moderate Type: Comprehension

32. (p. 247) The current level of economic development within a country: A. determines the economic models to be used in countries' universities and colleges. B. solidifies the mindset of the economic minister of any country to be traded with. C. dictates the kind and degree of market potential that exists. D. constrains the ability to exchange currency. E. indicates its degree of social progress.

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

33. (p. 247) ___________ development is generally understood to mean an increase in national production that results in an increase in the average per capita gross domestic product (GDP). A. Market B. Export C. Import D. Economic E. Supply
Difficulty: Moderate Type: Application

34. (p. 247) _____________, as commonly defined today, tends to mean rapid economic growth and increases in consumer demand. A. Economic development B. Market development C. Supply development D. Export development E. Import development

Difficulty: Moderate Type: Application

35. (p. 247) __________ classifies a country's stage of economic development as three categories of its level of industrialization. A. The U.S. Department of Commerce B. John Maynard Keynes C. Arthur Laffer D. The United Nations E. The World Trade Organization

Difficulty: Easy Type: Knowledge

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Chapter 09 - Emerging Markets

36. (p. 247) The United Nations stages of economic development has been criticized because it __________. A. no longer seems relevant in the rapidly industrializing world B. accepts contributions from more developed countries C. duplicates the European Union stages of economic development D. contains too many categories E. serves as a resource for the World Bank
Difficulty: Moderate Type: Comprehension

37. (p. 247) Considering the United Nations' stages of economic development presented in the text for classifying countries with respect to levels of industrialization, if a country is industrially underdeveloped, agrarian, subsistence society with rural populations, extremely low per capita income levels, the country is in which of the following groups? A. PDCs (parallel-developed countries) B. LLDCs (least-developed countries) C. LDCs (less-developed countries) D. NICs (newly industrialized countries) E. RGCs (rapid-growth countries)

Difficulty: Moderate Type: Comprehension

38. (p. 247) Considering the United Nations' stages of economic development presented in the text for classifying countries with respect to levels of industrialization, if a country is an industrialized country with high per capita income, the country is in which of the following groups? A. PDCs (parallel-developed countries) B. LLDCs (least-developed countries) C. MDCs (more-developed countries) D. NICs (newly industrialized countries) E. RGCs (rapid-growth countries)

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

39. (p. 247) Considering the United Nations' stages of economic development presented in the text for classifying countries with respect to levels of industrialization, if a country is an industrially developing country just entering world trade with relatively low per capita income, the country is in which of the following groups? A. PDCs (parallel-developed countries) B. LLDCs (least-developed countries) C. LDCs (less-developed countries) D. NICs (newly industrialized countries) E. MDCs (more-developed countries)
Difficulty: Moderate Type: Comprehension

40. (p. 248 & Exhibit 9.1) Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs are typically referred to as: A. LLDCs (least-developed countries) B. KDCs (kinetically-developing countries) C. PDCs (parallel-developed countries) D. NICs (newly industrialized countries) E. RGCs (rapid-growth countries)

Difficulty: Hard Type: Comprehension

41. (p. 247) Most newly industrialized countries (NICs) have moved away from restrictive trade practices and instituted significant free market reforms. As a result these countries have: A. attracted both trade and foreign direct investment. B. overcome environmental damages caused by lack of development. C. reduced population pressures through labor outsourcing. D. joined the United Nations' economic development referral council. E. taken measures to protect their cultures and traditions.

Difficulty: Hard Type: Comprehension

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Chapter 09 - Emerging Markets

42. (p. 247) Which of the following countries would carry the label MDC (more-developed countries)? A. Canada B. England C. France D. Germany E. all of the above
Difficulty: Easy Type: Application

43. (p. 247) Countries classified LLDC (least-developed countries) would be industrially underdeveloped, agrarian, subsistence societies with rural populations, extremely low per capita income levels, and would have _____________ world trade involvement. A. only petroleum products B. significant C. little D. substantial E. service-oriented

Difficulty: Moderate Type: Application

44. (p. 247) According to information presented in the text, Chile, Brazil, Mexico, and South Korea don't exactly fit as MDCs (more-developed countries) or LDCs (less-developed countries). A new category applies to these countries. Which of the following would be most appropriate? A. LLDCs (least-developed countries) B. KDCs (kinetically-developing countries) C. PDCs (parallel-developed countries) D. NICs (newly industrialized countries) E. RGCs (rapid-growth countries)

Difficulty: Moderate Type: Application

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Chapter 09 - Emerging Markets

45. (p. 248) Which of the following countries WOULD NOT be classified as one of the "Four Tigers" of Southeast Asia? A. South Korea B. Taiwan C. the Philippines D. Hong Kong E. Singapore
Difficulty: Moderate Type: Application

46. (p. 250) All of the following factors are cited as being reasons that NICs (newly industrializing countries) have had such remarkable success EXCEPT: A. political stability. B. economic and legal reforms. C. development of mass media advertising. D. outward orientation. E. entrepreneurship.

Difficulty: Moderate Type: Comprehension

47. (p. 250) If a NIC (newly industrializing country) had the characteristic of increasing the production for the domestic market and export markets with increases in efficiencies and continual differentiation of exports from competition as its focus, the country would be using which of the following factors as a component for growth? A. economic and legal reforms B. privatization C. an outward orientation D. entrepreneurship E. factors of production

Difficulty: Moderate Type: Application

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Chapter 09 - Emerging Markets

48. (p. 248-249) These four countries began their industrialization as assemblers of products for U.S. and Japanese companites. A. Argentina, India, Vietnam, and Poland B. Turkey, Brazil, Columbia, and Mexico C. South Africa, China, South Korea, and Hong Kong D. Spain, Kenya, Singapore, and Taiwan E. South Korea, Taiwan, Hong Kong, and Singapore
Difficulty: Moderate Type: Knowledge

49. (p. 250) When countries sell off state-owned enterprises, it usually results in a: A. surge in domestic savings to spend. B. decline in productivity throughout the private sector. C. release of capital to invest elsewhere. D. change in political leadership which often reduces social tension. E. increase in unemployment rate.

Difficulty: Moderate Type: Application

50. (p. 251) The Internet accelerated the process of economic growth by speeding up the diffusion of ____________ to emerging economies. A. political propaganda B. cell phones C. PDAs D. new technologies E. simulated consumption

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

51. (p. 251) The Internet facilitates ________________, a fundamental underpinning for economic development. A. psychological dialogue B. anthropological change C. social cohesiveness D. political ideas E. education
Difficulty: Hard Type: Comprehension

52. (p. 252) The IT revolution is not limited to broad, long-range economic goals but can have an almost immediate impact on the __________ of an emerging country. A. poorest inhabitants B. export trade C. per capita GNP D. international visibility E. tourism

Difficulty: Hard Type: Comprehension

53. (p. 252) Which of the following would be characterized as being the fundamental objective of most developing countries? A. Entrepreneurship B. Industrialization C. Conservation of resources D. Enabling a strong home land defense force E. Establishing a strong agricultural system

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

54. (p. 253) Paved roads, railroads, and energy supplies are illustrations of a country's: A. supply system. B. labor support system. C. infrastructure. D. extrastructure. E. microenvironment.
Difficulty: Moderate Type: Application

55. (p. 253) Countries begin to lose economic development ground when their ___________ cannot support an expanding population and economy. A. source remediation technology B. infrastructure C. cultural arts D. statistical discrepancy accounting E. currency conversion ratio

Difficulty: Hard Type: Application

56. (p. 254) Economic planners are often more ___________ oriented than __________ oriented. A. production; marketing B. private; public C. profit; policy D. system; subject E. logistically; symbolically

Difficulty: Easy Type: Application

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Chapter 09 - Emerging Markets

57. (p. 254) According to a case made by the text, economic planners with a national goal of growth should be more concerned with the efficiency of __________ than with the other choices mentioned. A. production B. investment C. finance D. distribution E. advertising
Difficulty: Moderate Type: Application

58. (p. 255) __________ is an economy's arbitrator between productive capacity and consumer demand. A. Management B. Marketing C. Public relations D. Operations procedures E. Economics

Difficulty: Easy Type: Comprehension

59. (p. 256) The level of market development roughly parallels the stages of: A. the product life cycle. B. the adoption curve. C. a production cycle. D. marketing mix application. E. economic development.

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

60. (p. 256) Estimating demand potential in less-developed countries involves myriad challenges. Most of the difficulty arises from the __________. A. coexistence of three distinct kinds of markets in each country. B. problems of collecting reliable market data. C. superimposition of sophisticated marketing strategies. D. high currency rate of exchange. E. lack of rural electric power.
Difficulty: Moderate Type: Application

61. (p. 256) Morris Mayer has found it difficult to accurately estimate market potential in Mexico. He has observed that while Mexico has had rapid technological growth and production that can certainly be classified as modern, it also has certain traditional sectors in the rural parts of the country that are at best primitive. This situation is best described as one arising from the __________. A. coexistence of three distinct kinds of markets in each country. B. problems of collecting reliable market data. C. superimposition of sophisticated marketing strategies. D. high currency rate of exchange. E. lack of rural electric powering one of economic.

Difficulty: Easy Type: Application

62. (p. 257, Exhibit 9.3) With respect to the evolution of the marketing process, which of the following stages would be considered to be the most fundamental stage (first stage) of the process? A. marketing B. regionalism C. manufacturing D. agricultural and raw materials E. entrepreneurship

Difficulty: Easy Type: Comprehension

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Chapter 09 - Emerging Markets

63. (p. 257, Exhibit 9.3) If a country was primarily dominated by nomadic or hunting tribes, which of the following stages of the marketing process would most likely be used to describe the country? A. marketing B. regionalism C. manufacturing D. agricultural and raw materials E. entrepreneurship
Difficulty: Moderate Type: Application

64. (p. 257, Exhibit 9.3) According to the evolution of the marketing process, mass production first came to the United States during which of the following time periods? A. 1885-1914 B. 1776-1785 C. 1805-1830 D. 1915-1929 E. 1950-present

Difficulty: Hard Type: Application

65. (p. 257, Exhibit 9.3) Which of the following best characterizes the United States today with respect to the evolution of the marketing process? A. mass production B. commercial--transition C. cottage industry D. surplus commodity product E. mass distribution

Difficulty: Moderate Type: Application

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Chapter 09 - Emerging Markets

66. (p. 257, Exhibit 9.3) With respect to the evolution of the marketing process, the United States is best characterized today as to its primary orientation as being a nation whose focus is on: A. entrepreneurial/commercial. B. entrepreneurial/financial. C. production and finance. D. marketing. E. public relations and advertising.
Difficulty: Hard Type: Application

67. (p. 259) All of the following are categories in Exhibit 9.4, Consumption Patterns in Selected Countries EXCEPT __________. A. Food B. Clothing C. Taxes D. Transportation E. Leisure

Difficulty: Easy Type: Knowledge

68. (p. 258) __________ of many developing countries are simultaneously at many stages. A. Automobile technology B. Marketing structures C. Technical education D. Social structures E. Financial agencies

Difficulty: Moderate Type: Knowledge

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Chapter 09 - Emerging Markets

69. (p. 260) The companies that invest in developing markets _______________ will benefit in the future. A. when it is difficult and initially unprofitable B. after the process of growth has begun C. where there are many competitors D. at the request of the poorest citizens E. assume high risks and gamble that they
Difficulty: Easy Type: Application

70. (p. 262) In the language of international marketing, BEM stands for: A. business, e-commerce, and marketing. B. business units and economic models. C. big emerging markets. D. bilingual economic microcosms. E. bilateral enhanced marketing.

Difficulty: Moderate Type: Application

71. (p. 262) Big emerging markets (BEMs) share a number of important traits. All of the following would be among those traits EXCEPT: A. they principally export labor and raw resources. B. they are all physically large. C. they have significant populations. D. they are "regional economic drivers." E. they are of major political importance within their regions.

Difficulty: Hard Type: Application

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Chapter 09 - Emerging Markets

72. (p. 262) If a market is characterized as being physically large, has significant population, is a regional economic driver, and has undertaken significant programs of economic reform, the market is classified as a(n): A. cottage industry market. B. less developed market. C. entrepreneurial market. D. agrarian market. E. big emerging market.
Difficulty: Moderate Type: Application

73. (p. 262) According to the text, which of the following countries may warrant inclusion as a BEM (big emerging country)? A. Poland B. Brazil C. Guatemala D. Mexico E. Venezuela

Difficulty: Moderate Type: Application

74. (p. 263) What is happening in BEMs today is analogous to what happened in: A. Saudi Arabia in the 1800s. B. India during the British Empire period. C. Russia after the fall of the czar. D. Europe after World War II. E. no prior happening; it is unique in economic development history.

Difficulty: Easy Type: Comprehension

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Chapter 09 - Emerging Markets

75. (p. 264-265) Of the former Soviet bloc nations of Eastern Europe, the Czech Republic seems to be doing the best in reshaping itself in terms of: A. returning to pre-occupation political and market structures. B. offering alternative economic development to Asian partners. C. adapting to realigned Russian economic partnerships. D. adopting a model of privatization, free market system and capitalism E. the transition from capitalism to socialism.
Difficulty: Moderate Type: Application

76. (p. 265) The former Soviet-controlled Eastern European countries that did not move to market economies: A. permitted Western experts to run their economies for them. B. have experienced the fastest rates of economic growth in the region. C. substituted domestic capital for foreign investment. D. permitted bureaucrats from communist days to delay and derail reforms. E. adhered to the principles of Soviet-style state-controlled economies.

Difficulty: Easy Type: Comprehension

77. (p. 265) According to the text, of the Baltic States, Estonia has made the most of its split from the former Soviet Union and exceeds its neighbors in production and economic reform because Estonia did all of the following EXCEPT: A. established domestic export controls. B. dropped the ruble as its currency. C. privatized companies and land. D. let struggling banks fail. E. adopted a free trade policy.

Difficulty: Hard Type: Comprehension

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Chapter 09 - Emerging Markets

78. (p. 266) The text describes China as having a dual economic system. This refers to China's _______________ and _______________ tenets. A. market-driven; supply-side driven B. egalitarian; unitarian C. socialist; capitalist D. aristocratic; democratic E. internal; external
Difficulty: Easy Type: Application

79. (p. 266) Miles Daniels has heard that if his company is to succeed in Asia it must be willing to trade with one or more of the Four Tigers. All of the following are part of the group of countries known as the Four Tigers EXCEPT: A. Hong Kong. B. South Korea. C. Australia. D. Singapore. E. Taiwan.

Difficulty: Easy Type: Comprehension

80. (p. 267) The rule of governing law that most accurately describes the relationship between Hong Kong and China is: A. "let the buyer beware." B. "he who has the might makes the right." C. "trade will not supersede the people." D. "communist wealth." E. "one country, two systems."

Difficulty: Moderate Type: Application

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Chapter 09 - Emerging Markets

81. (p. 268) With regards to Taiwan and China, the talks on One China include establishing "three direct links" referring to: A. education, emancipation, and equity B. religion, culture, and marketing C. systems, energy, and advertising D. sports, education, and environmental E. transportation, trade, and communications.
Difficulty: Moderate Type: Application

Fill in the Blank Questions 82. (p. 246) According to the text, a pattern of economic growth and global trade appears to be emerging among three multinational market regions that comprise the major trading blocs of Europe, Asia, and the __________. Americas

Difficulty: Moderate Type: Knowledge

83. (p. 247) In a dynamic economy with rapidly changing consumption patterns __________ is constantly faced with the challenge of detecting and providing for new levels of consumption. marketing

Difficulty: Easy Type: Knowledge

84. (p. 247) __________ is generally understood to mean an increase in national production that results in an increase in the average per capita gross domestic product (GDP). Economic development

Difficulty: Easy Type: Knowledge

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Chapter 09 - Emerging Markets

85. (p. 247) __________, as commonly defined today, tends to mean rapid economic growth and increases in consumer demand. Economic development
Difficulty: Easy Type: Knowledge

86. (p. 247) Countries like Canada, England, France, and Germany are called MDCs. MDC stands for ______________. more-developed countries

Difficulty: Moderate Type: Application

87. (p. 247) Agrarian, industrially underdeveloped, subsistence societies with rural populations are called LLDCs. LLDC stands for ___________. least-developed countries

Difficulty: Hard Type: Application

88. (p. 247-248) Countries like Chile, Brazil, Mexico, and South Korea attract trade and foreign direct investment. These countries are called ________________ or NICs. newly industrialized countries

Difficulty: Moderate Type: Application

89. (p. 252) _____________ is the fundamental objective of most developing countries. Industrialization

Difficulty: Easy Type: Comprehension

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Chapter 09 - Emerging Markets

90. (p. 252) With respect to economic development in developing countries, economic growth is measured not solely in economic goals but also in __________. social achievement
Difficulty: Hard Type: Comprehension

91. (p. 253) _____________ represents those types of capital goods that serve the activities of many industries. Infrastructure

Difficulty: Hard Type: Comprehension

92. (p. 254) Economic planners are frequently more _____________ than marketing oriented. production oriented

Difficulty: Easy Type: Application

93. (p. 255) ___________ is an economy's arbitrator between productive capacity and consumer demand. Marketing

Difficulty: Moderate Type: Comprehension

94. (p. 257, Exhibit 9.3) With respect to the evolution of the marketing process, the United States economy is currently in a substage of the marketing stage called __________ distribution. mass

Difficulty: Easy Type: Comprehension

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Chapter 09 - Emerging Markets

95. (p. 270) Behind China, __________ is the most populated country in the world. India
Difficulty: Moderate Type: Application

96. (p. 262) According to the text, this Middle East nation has been identified as a BEM (big emerging market) and that nation is ____________. Egypt

Difficulty: Moderate Type: Application

97. (p. 265) ___________ has been the fastest-growing economic area of the world for the past three decades. Asia

Difficulty: Easy Type: Application

98. (p. 266) The Four Tigers consist of ____________, ______________, ____________, and _________. Hong Kong; Singapore; South Korea; Taiwan

Difficulty: Moderate Type: Application

99. (p. 270) The United States' decision to lift the embargo against ___________ has resulted in the rapid expansion of this economy. The country has now been designated as a BEM (big emerging market) by the U.S. Department of Commerce. Vietnam

Difficulty: Moderate Type: Comprehension

Essay Questions

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Chapter 09 - Emerging Markets

100. (p. 247) According to the text, economic development presents a two-sided challenge. What is that challenge? First, a study of the general aspects of economic development is necessary to gain empathy regarding the economic climate within developing countries. Second, the state of economic development must be studied with respect to market potential, including the present economic level and the economy's growth potential.

Difficulty: Moderate Type: Comprehension

101. (p. 247) What does the term economic development mean? Economic development is generally understood to mean an increase in national production that results in an increase in the average per capita gross domestic product (GDP).

Difficulty: Moderate Type: Application

102. (p. 260-261) Briefly describe and explain the concept of Bottom-of-the-Pyramid Markets (BOPMs). C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets -- bottom-of-the-pyramid markets (BOPMs) -- consisting of the 4 billion people across the globe with annual incomes of less than $1,200. These markets are not necessarily defined by national borders but rather by the pockets of poverty across countries. Prahalad's basic point is that these consumers have been relatively ignored by international marketers because of misconceptions about their lack of resources (both money and technology) and the lack of appropriateness of products and services usually developed for more affluent consumers.

Difficulty: Moderate Type: Comprehension

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Chapter 09 - Emerging Markets

103. (p. 247-249) Characterize the scheme that characterizes countries as being MDCs, LDCs, or LLDCs. Explain each abbreviation and give an example of a country that might fit in the category. MDCs (more-developed countries) are industrialized countries with high per capita incomes, such as Canada or the United States. LDCs (less-developed countries) are industrially developing countries just entering world trade, have relatively low per capita incomes, and are characterized by many Asian and Latin American countries. LLDCs (least-developed countries) are industrially underdeveloped, agrarian, subsistence societies with rural populations, extremely low per capita income levels, and little world trade. Most are found in Central Asia and parts of Asia.

Difficulty: Hard Type: Comprehension

104. (p. 253-254) Describe and characterize the term infrastructure. Why is it important to world trade? One indicator of economic development is the extent of social overhead capital, or infrastructure, within the economy. Infrastructure represents those types of capital goods that serve the activities of many industries. Examples would include roads, railroads, seaports, et cetera. For more information see pages 253-254.

Difficulty: Moderate Type: Application

105. (p. 258-259) Explain the coexistence of three distinct markets in developing countries. Estimating market potential in less developed countries involves additional challenges. Most of the difficulty arises from the coexistence of three distinct kinds markets in each country: (1) the traditional rural/agricultural sector, (2) the modern urban/high-income sector, and (3) the often very large transitional sector usually represented by low-income urban slums. The modern sector is centered in the capital city and has jet airports, international hotels, new factories, and an expanding Westernized middle class. The traditional rural sector tends to work in the countryside, as it has for centuries. Directly juxtaposed to the modern sector, the transitional sector contains those moving from the country to the large cities.

Difficulty: Easy Type: Application

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Chapter 09 - Emerging Markets

106. (p. 262-263) BEMs (big emerging markets) share a number of important traits. List and briefly comment on four of those common traits. The traits are: (a) are all physically large, (b) have significant populations, (c) represent considerable markets for a wide range of products, (d) have strong rates of growth or the potential for significant growth, (e) have undertaken significant programs of economic reform, (f) are of major political importance within their regions, (g) are "regional economic drivers", and (h) will engender further expansion in neighboring markets as they grow. Additional information can be found on page 262-263.

Difficulty: Moderate Type: Comprehension

107. (p. 265-266) Mark Swift is in the process of deciding whether to make a major commitment or not in the Asian market. If Mark decides to expand into this market it will commit his company for at least ten years. Write a one to two paragraph summary of why Mark should expand into Asia. You may cite product or industry successes to support your contention. Students are free to construct their own paragraphs. There is ample information found on pages 265-266 to support the expansion case. Asia has been the fastest-growing area (even with the financial downturn experienced in the 90s) in for the past three decades. Students might also describe the Four Tigers and their success stories to support their case. If you would like to add additional parameters, please do so.

Difficulty: Moderate Type: Application

108. (p. 270-271) Assume the role of an American businessman or woman who is considering moving a business venture to Vietnam or South Africa. Discuss why or why not this might be wise move. Students are free to create in this question, however, the text supplies ample evidence that both Vietnam and South Africa are going to be huge markets in the future. The U.S. Department of Commerce recently designated both markets to be BEMs with respect to U.S. trade. See information in the text on pages 270-271 and facts in Exhibit 9.13 for further information to support such a case.

Difficulty: Hard Type: Application

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