international marketing ch. 11

question

Which of the following is true about proper use of the term “countertrade”?
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“Countertrade” is a blanket term that refers to several different types of business transactions.
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The most general term for the global phenomenon involving reciprocal business interactions between parties in various countries is known as:
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countertrade.
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One of the highest profile companies, PepsiCo, which has done business in the Soviet and post-Soviet market for decades, has used this form of countertrade:
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barter.
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The direct exchange of goods or services between parties in lieu of monetary payment is known as:
answer

barter
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Which of the following forms of countertrade does not require use of money or credit between parties?
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barter
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Which type of countertrade arrangement is required by governments seeking to reduce the budgetary impact of expenditures for defense or telecommunications?
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offset
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Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If World Corp. signs a second contract agreeing to take partial payment for the plant in the form of lumber products produced at the plant, it is engaging in:
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compensation trading.
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When one of the parties to a barter transaction is not willing to accept the goods included in the transaction, that party is likely to utilize the services of a:
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switch trader.
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For years, Mercedes-Benz utilized a ________ pricing strategy; however, this created an opportunity for Toyota to introduce its luxury Lexus line and undercut Mercedes.
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skimming
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If the manufacturer of a sophisticated new consumer electronics product determines that many target consumers qualify as “innovators” and “early adopters” with relatively inelastic demand curves, the company should use the ________ pricing strategy.
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skimming
question

Two automakers that have joined the race to bring low-cost cars to the emerging Indian market are:
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Tata and Nissan.
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When Sony introduced the first consumer VCRs in the 1970s, the retail price exceeded $1,000. Within a few years, the price dropped well below $500. This is an example of:
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skimming strategy.
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Historically, many companies that used the ________ for pricing were located in the Pacific Rim.
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penetration strategy
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A market ________ pricing strategy calls for setting price levels that are low enough to quickly build market share.
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penetration
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In India, consumers do not like to be locked in to long-term contracts, and Apple distributes its iPhone exclusively through stores operated by Airtel, an Indian carrier, and Vodaphone. This pricing is an example of:
answer

razors and blades.
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A firm without much export experience uses the rigid cost-based pricing method. Which of the following considerations is the exporter ignoring?
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A) Is the price competitive in view of local market conditions? B) Does the price reflect the product’s quality? C) Will authorities in export markets view the price as reasonable or exploitative? D) Does the price take antidumping laws into consideration? E) all of the above Answer: E
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As a starting point, firms that comply with Western cost-accounting principles typically use the pricing method known as:
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full absorption cost.
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Which pricing strategy has the advantage of being simple to calculate but has the disadvantage of ignoring demand and competitive conditions?
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cost-based
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All of the following activities must be performed when goods cross international boundaries except:
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using the cost-based pricing method.
question

Mexican customers generally carry small coins. To keep prices of shampoo and detergent below 11 or 12 pesos, Procter & Gamble is using which method of pricing?
answer

target costing
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A manufacturer attempting to set prices for its products in export markets must realize that CIF, VAT, and distributor markup all lead to:
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price escalation.
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The following activities must be performed when goods cross international boundaries except:
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receiving payments.
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If a distributor’s margins are based on the “landed” price of an import shipment, they will be based on:
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A) ex-works price. B) transportation costs. C) insurance costs. D) VAT. E) all of the above Answer: E
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All import charges are assessed against the
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landed price
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Which of the following does not contribute to price escalation in global marketing?
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different Incoterms as incentives
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Which of the following would not be used by an exporter with a weak home-country currency?
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Shift sourcing outside home-country market.
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If a company’s home currency strengthens, it is:
answer

an unfavorable turn of events for the typical exporter.
question

Suppose a company selling in various country markets makes statements such as “we know what the customer wants, and he or she will have to pay for it.” This is an indication of a(n) ________ approach to setting prices.
answer

ethnocentric
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If company managers decide to set the export price for a particular product at an amount equivalent to the home-country price, they would be using which approach to pricing?
answer

ethnocentric
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Which of the following would not be taken into account by a company using an ethnocentric approach to pricing decisions?
answer

A) the possibility of implementing a penetration strategy B) profitable price points that could be tied to local sourcing as opposed to home-country sourcing C) integration of price with other marketing mix elements D) factors unique to individual country markets E) None of the above would be taken into account by a company using ethnocentric pricing. Answer: E
question

According to a recent study of European industrial exporters, companies that utilized independent distributors would be most likely to utilize:
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polycentric pricing.
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Which automaker was described as using an ethnocentric approach to setting prices in the United States?
answer

Mercedes
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Parallel importing occurs when companies employ a(n) ________ multinational pricing policy that calls for setting different prices in different country markets.
answer

polycentric
question

The unauthorized distribution of trademarked goods to exploit price differentials in world markets is known as:
answer

gray marketing.
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When Tag Heuer, a marketer of luxury watches, takes out newspaper ads urging consumers to purchase Tag Heuer products from authorized dealers only, the company is most likely attempting to combat the ________ problem.
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gray market
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Gray markets impose several costs or consequences on global marketers, which does not include:
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ncrease product demand
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If a company sells products in export markets at prices that are below fair market value and that can harm producers in the export market that company may be accused of:
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dumping.
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Givenchy and Christian Dior’s Dune fragrance are two of the luxury perfume brands that are sometimes diverted from authorized channels for sale at mass-retail outlets. This practice is referred to as:
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gray market.
question

In the Uruguay round of GATT negotiations, many countries took issue with the U.S. system of laws, in part because historically the U.S. Commerce Department almost always ruled in favor of the U.S. company that filed the complaint. This was related to the laws pertaining to:
answer

dumping.
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For positive proof that dumping has occurred in the United States, both ________ and injury must be demonstrated
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price discrimination
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________ occurs when a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained.
answer

Vertical price fixing
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________ is derived from the price required to be competitive in the global marketplace.
answer

Market-based transfer price
question

“Cost-based,” “market-based,” and “negotiated” are three approaches to:
answer

transfer pricing.

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