intl marketing chapter 18

countertrade.

When Burger Boys an American fast-food company, wanted to market its burgers and fries in France, it was asked to import French mustard to the United States in return. This is an example of

Price quotations must specify the currency to be used, credit terms of the transaction, and documents required.

What is true of price quotations for international sale?

tariffs

What primary discriminatory tax must be taken into account in foreign competition?

price escalation

What results from the added costs incurred as a result of exporting products from one country to another?

Leasing helps guarantee better maintenance on overseas equipment.

What would be considered an advantage of leasing equipment rather than owning it?

Any contribution to fixed cost after variable costs are covered is profit to the company.

What characterizes the variable-cost pricing approach?

They specialize in trading goods acquired through barter arrangements.

What do barter houses do?

cartels

What is an example of a price-fixing arrangement most directly associated with international marketing?

The company sets prices to achieve specific objectives.

What is most likely to be true of a company that views prices as an active instrument of accomplishing marketing objectives?

restrict the amount a country will import

What is the function of a countervailing duty?

to reduce manufacturing costs

What is the most probable reason a manufacturer would choose to conduct its manufacturing operations in a third country?

unassembled goods may qualify for lower freight rates.

The costs of production may be lowered if a firm ships unassembled goods to a free trade zone (FTZ) in an importing country because

a reduction in the price escalation.

The creation of a free trade zone may lead to

cartel

A ________ exists when various companies producing similar products or services work together to control markets for the types of goods and services they produce.

penetration pricing

A ________ policy is used to stimulate market and sales growth by deliberately offering products at low prices.

minimum access volume

A ________, which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation.

letter of credit

A ________, which shifts the buyer's credit risk to the bank, is not a guarantee of payment to the seller. Rather, payment is tendered only if the seller complies exactly with its terms.

cash in advance

A company manufactures extremely specialized equipment for medical imaging. Because of its value, when the company exports this equipment overseas to hospitals, it generally requires ________, which is a nonrefundable deposit.

places a low priority on foreign business.

A company that views pricing as a static element in a business decision most probably

price skimming

A company uses ________ when the objective is to reach a segment of the market that is relatively price insensitive and thus willing to pay a premium price for the value received.

potential demand

A crucial problem confronting a seller in a countertrade negotiation is determining the ________ for the goods offered as payment.

labor costs may be lower in the importing country.

A marketer may face lower costs by shipping unassembled goods to a free trade zone (FTZ) in an importing country because

specific

A(n) ________ duty is a flat charge per physical unit imported.

letter of credit

A(n) ________ means that once the seller has accepted the credit, the buyer cannot alter it in any way without permission of the seller.

leasing

An important selling technique to alleviate high prices and capital shortages for capital equipment is the ________ system.

screwdriver

Assembly in the importing country is a way companies attempt to lower prices and avoid dumping charges. These assembly plants are known as ________ plants.

set the right price for the goods or services.

Assuming that an international marketer has produced the right product, used the proper channel of distribution, and promoted the goods correctly, the effort will fail if the international marketer fails to

duties are typically assessed at lower rates for unassembled goods.

By shipping unassembled goods to a free trade zone (FTZ) in an importing country, a marketer can typically lower costs because

full-cost

Companies that use ________ pricing insist that no unit of a similar product is different from any other unit in terms of cost and that each unit must bear its full share of the total fixed and variable cost.

price skimming.

Cosmeticon, a U.S.-based firm, has recently started exporting cosmetics to India. Cosmeticon has introduced a new range of mineral-based makeup products for the first time in the Indian market. As Cosmeticon has no competitors in this segment of the Indian cosmetics market, it has set a very high price for its products in order to reach the premium, price insensitive segment of the market. This is an example of

at a price below the cost of production.

Dumping has been defined as the situation in which a product is sold in the international market

demand in the home country is low.

Dumping in the world markets is most likely to increase when

the costs of production of the goods.

Firms that are unfamiliar with overseas marketing and firms that produce industrial goods orient their pricing solely on the basis of

countervailing

For ________ duties to be levied on a product, it must be shown that prices are lower in the importing country than in the exporting country and that producers in the importing country are being directly harmed by the dumping of the product.

parallel importing

Gift Group Inc., an importing organization in New York, buys perfume from a company in France for $13 a unit. Unknown to the French company, Gift Group sells this product in the United States for $19 a unit. This leads to a loss of revenue for the French company as it also sells its perfume in the United States but for a higher price of $22. What concept does this demonstrate??

price skimming

If the supply of a product in a market is limited, a company may follow a ________ approach to maximize revenue and to match demand to supply.

variable-cost

In ________ pricing, a firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets.

factoring

In ________, a company has an ongoing relationship with a bank that routinely buys its short-term accounts receivable at a discount.

keep prices low and raise brand value.

In a deflationary market, in order to win the trust of consumers, it is essential for a company to

forfaiting

In a(n) ________ transaction, the seller makes a one-time arrangement with a bank or other financial institution to take over responsibility for collecting the account receivable.

as an active instrument of accomplishing marketing objectives.

In general, price decisions are viewed in two ways: pricing as a static element in a business decision, and pricing

administered pricing

In general, the end goal of all ________ activities is to reduce the impact of price competition or eliminate it.

higher costs of exporting.

In most cases, the reason products cost relatively little in one country and cost more in another is the

ad valorem

Lower prices to the buyer may also mean lower tariffs, because most tariffs are levied on a(n) ________ basis.

variable-cost

Marianne's Chocolates sell well in the U.S. at a price of $24 per pound, and she has overproduced one kind of chocolate bar. Marianne has decided to see if she can sell them in Mexico, so she sets a price that is just over her cost. She figures if she makes even a little money, it would be worth it. Marianne is using ________ pricing.

cartel

OPEC is an example of a ________; it can control the price of oil by controlling the market.

not generally recommended when there is political unrest in the importer's country.

Sales on open accounts are

allows trade with countries short of hard currency.

The use of countertrade in international trade

the middleman markups are not standardized.

When a company exports a product from the United States to another country, the company is most likely to be unable to determine the ultimate price of a product if

raise the price of PCs.

When the Indian rupee depreciated against the U.S. dollar, PC manufacturers who were dependent on imported components had to either absorb the increased cost or

cost-plus

When the value of the dollar is weak relative to the buyer's currency, sellers usually use ________ pricing.

full-cost pricing

Which approach to pricing is most suitable when a company has high variable costs relative to its fixed costs?

bills of exchange

With ________, the seller assumes all risk until the actual dollars are received.

barter houses

________ are the primary outside source of aid for companies affected by the uncertainty of a countertrade.

Exclusive

________ distribution, a practice often used by companies to maintain high retail margins to encourage retailers to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing.

Ad valorem

________ duties are levied as a percentage of the value of the goods imported.

Open accounts

________ leave sellers in a position where most of the problems of international commercial finance work to their disadvantage.

Marginal-cost

________ pricing is a practical approach to use when a company has high fixed costs and unused production capacity.