Answer to Question 1
TRUE
Answer to Question 2
Firms that wish to do business in emerging markets face certain risks. First, emerging markets can be politically unstable. The absence of reliable or consistent governance from recognized government authorities adds to business costs, increases risks, and reduces managers' ability to forecast business conditions. Political instability is associated with corruption and weak legal frameworks that discourage inward investment and the development of a reliable business environment.
Second, emerging markets tend to have a weak intellectual property rights framework. Even when they exist, laws that safeguard intellectual property rights may not be enforced, or the judicial process may be painfully slow.
Third, the presence of bureaucracy, red tape, and lack of transparency present formidable challenges to doing business in emerging markets. Burdensome administrative rules and excessive requirements for licenses, approvals, and paperwork all delay business activities. Excessive bureaucracy is usually associated with lack of transparency, suggesting that legal and political systems may not be open and accountable to the public. Bribery, kickbacks, and extortion, especially in the public sector, cause difficulty for managers. Where anti-corruption laws are weak, managers may be tempted to offer bribes to ensure the success of business deals.
Moreover, in advanced economies, high-quality roads, drainage systems, sewers, and electrical utilities are taken for granted. However, in emerging markets, such basic infrastructure is often lacking.
To enter emerging markets successfully, firms can adopt the following strategies:
1. customize offerings to unique emerging market needs,
2. partner with family conglomerates,