PyraTex’s chief financial officer is concerned that opening a plant in

QUESTION

PyraTex’s chief financial officer is concerned that opening a plant in Vietnam to sell its products there might not be profitable.

He argues this point on the basis of his belief that emerging markets are not worth selling to and that more-established markets are always preferable ones in which to do business. Which of the following, if true, most weakens his argument?
A) Emerging markets tend to have especially volatile economies.
B) Many emerging markets are growing quickly and present opportunities to meet untapped demands.
C) PyraTex’s products are niche products.
D) PyraTex’s products are inexpensive to produce.
E) Emerging markets typically have few trade restrictions.

ANSWER

Answer: B
Explanation: B) For a market to be emerging does not mean that it has limited potential for successfully doing business in it. On the contrary, it means that it is growing quickly so that it is particularly likely to have demands that are not being served, such as for everyday products like those that PyraTex makes. Choice A strengthens the argument to avoid doing business in emerging markets, due to their unpredictable swings between growth and recession. Choices C, D, and E are not relevant to the concern about whether an emerging market will have enough demand for the company’s products.