Answer to Question 1
Many emerging market economies are dominated by large, family-owned rather than publicly owned businesses. A family conglomerate (FC) is a large, highly diversified company that is privately owned. FCs operate in industries ranging from banking to construction to manufacturing. They control the majority of economic activity and employment in emerging markets like South Korea, where they are called chaebols; in India, where they are called business houses; in Latin America, where they are called grupos; and in Turkey, where they are called holding companies.A typical FC may hold the largest market share in each of several industries in its home country.
The origin and growth of FCs are partly attributable to their special relationships with the government, which often protects FCs by providing subsidies, loans, tax incentives, and market entry barriers to competitors. FCs provide huge tax revenues and facilitate national economic development, which explains why governments are so eager to support them.
For foreign firms that want to do business in emerging markets, FCs can make valuable venture partners. By collaborating with an FC, the foreign firm can: (1.) reduce the risks, time, and capital requirements of entering target markets; (2.) develop helpful relationships with governments and other key, local players; (3.) target market opportunities more rapidly and effectively; (4.) overcome infrastructure-related hurdles; and (5.) leverage FC's resources and local contacts.
Answer to Question 2
D