Question 1

The fair trade system attempts to intervene directly on both market and nonmarket issues by coordinating the flow of consumer revenue to participating producers.

Accepted Answer

False

Question 2

One concern with the fair trade concept was whether retailers would charge such a large price premium that demand would be suppressed.

Accepted Answer

This was a concern expressed about the fair trade concept, as the higher price may be a barrier for consumers to purchase the products.

Question 3

Culture can be important, not only shaping the opportunities and risks in a country but also for the likelihood that a company can implement its market strategy.

Accepted Answer

Culture can play a significant role in shaping the behavior, attitudes, and expectations of customers, employees, and stakeholders in a particular country. Companies need to take into account cultural differences and adjust their market strategy accordingly to increase the chances of success.

Question 4

The immediate source of many risks is the weak rule of law in a country.

Accepted Answer

Weak rule of law can result in lack of proper regulations, enforcement, and accountability, leading to various risks such as corruption, crime, and insecurity.

Question 5

The fair trade movement started in the United States in 1988.

Accepted Answer

The fair trade movement started in the Netherlands in the 1960s before spreading to other European countries and eventually to the United States in the 1990s.

Question 6

Banco Compartamos is am example of microfinance institution.

Accepted Answer

Banco Compartamos is a microfinance institution based in Mexico that provides financial services to low-income people and microentrepreneurs.

Question 7

Transparency International's Corruption Perceptions Index (CPI) pertains to the corruption in a country or the demand side of corruption.

Accepted Answer

Transparency International's Corruption Perceptions Index (CPI) measures the perceived level of corruption in a country and is therefore related to the demand side of corruption.

Question 8

Microfinance is independent of nonmarket risks.

Accepted Answer

Microfinance institutions are still susceptible to nonmarket risks such as political instability, natural disasters, and economic downturns. These risks can impact the ability of borrowers to repay their loans and can also affect the financial stability of the microfinance institution.

Question 9

Emerging market countries face financial restrictions, price controls, and regulatory risks when doing business in developed countries.

Accepted Answer

The statement is reversed. Developed countries impose financial restrictions, price controls, and regulatory risks on emerging market countries when they do business in their markets.

Question 10

The fair trade movement was begun to improve the lives of poor farmers and workers trapped by market conditions.

Accepted Answer

The fair trade movement was indeed started to improve the lives of poor farmers and workers by providing them with fair wages and better working conditions. It also aims to promote sustainability and social responsibility in global trade.

Question 11

The study of the nonmarket environment of an emerging market country involves assessment of labor market, demand and supply relations, and investigation of the competitiveness of incumbent companies.

Accepted Answer

The study of the nonmarket environment involves assessing political, legal, and social factors, not the labor market, demand and supply relations, or the competitiveness of incumbent companies, which are part of the market environment.

Question 12

It is clear that the customers at the bottom of the pyramid, those who lived on less than $2 a day, are highly profitable.

Accepted Answer

It is unlikely that customers who live on less than $2 a day would be highly profitable as they have very limited purchasing power.

Question 13

The principles of nonmarket strategy for operating in democracies cannot simply be transported to emerging markets, particularly for countries that are not democratic and where the rule of law is weak.

Accepted Answer

Nonmarket strategies that work in democratic countries may not work in non-democratic emerging markets with weak rule of law. Different strategies are required for different contexts.

Question 14

To use a country to export goods to better developed countries and markets requires foreign markets to be closed, which if generally the case in developing countries.

Accepted Answer

The statement is incorrect. Developing countries often have open markets for foreign trade, as they rely on exporting goods to generate economic growth. However, they may face challenges such as trade barriers and competition from established market players.

Question 15

Business groups as well as individual companies have weaker incentives to interact with government when it controls markets, lets contracts, and regulates business activity.

Accepted Answer

Business groups and individual companies actually have stronger incentives to interact with government when it controls markets, lets contracts, and regulates business activity. This is because government policies and regulations can directly impact their business operations and profits. Therefore, businesses are more inclined to engage with government in order to influence policies and regulations that would be favorable to them.

Question 16

The source of all the revolutions in the Middle East was to seek democracy.

Accepted Answer

While seeking democracy was a significant factor in many Middle Eastern revolutions, especially during the Arab Spring, it was not the sole source. Other factors included economic grievances, corruption, unemployment, and the desire for greater social freedoms.

Question 17

Assessment measures developed for countries and the growth of political consultancies help draw conclusions about a country before business can be established.

Accepted Answer

The answer of Assessment measures developed for countries and the...

Question 18

At the level of an individual firm, successful participation in a domestic market requires specific knowledge of that market so as to apply the firm's expertise.

Accepted Answer

Successful participation in a domestic market requires knowledge of that market so that the firm can apply its expertise effectively.

Question 19

Rule of law can override politics and political ties when doing business in emerging market countries.

Accepted Answer

In many emerging market countries, politics and political connections can significantly influence business operations and legal outcomes, often overriding the principles of rule of law.

Question 20

Microfinance, in its modern version, was introduced by Muhammad Yunus, a Bangladeshi economist.

Accepted Answer

Microfinance, as we know it today, was pioneered by Muhammad Yunus in the 1970s in Bangladesh. He founded Grameen Bank, which provided small loans to impoverished individuals, particularly women, to help them start their own businesses and improve their economic situation.

Quiz 17: Emerging Markets