MKT 320 CH 11
23) 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:A) skimming strategy.B) penetration strategy.C) cost-based strategy.D) price ceiling strategy.E) transfer pricing strategy.
Answer: A
47) When the seller has agreed to deliver the goods to the buyer at the place the buyer names in the country of import, with all costs, including duties paid is referred to as: A) DDP. B) FCA. C) FAS. D) FOB. E) CIF.
Answer: A
67) All of the listed advantages are for "extension or ethnocentric" pricing strategy except: A) it does not respond to the competitive and market conditions of each national market. B) it calls for the per-unit price of an item to be the same all over the world. C) it is extremely simple since it does not require information on market condition. D) it does not require competitive conditions for implementation. E) the importer must absorb freight and import duties.
Answer: A
25) A market ________ pricing strategy calls for setting price levels that are low enough to quickly build market share.A) grayB) skimmingC) penetration D) holding E) cost-based
Answer: C
77) The unauthorized distribution of trademarked goods to exploit price differentials in world markets is known as:A) market skimming.B) black marketing.C) gray marketing.D) dumping. E) licensing.
Answer: C
86) 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:A) black marketing.B) market skimming.C) gray marketing.D) dumping.E) licensing.
Answer: D
87) For positive proof that dumping has occurred in the United States, both ________ and injury must be demonstrated.A) black marketingB) market skimmingC) gray marketingD) price discriminationE) price fixing
Answer: D
45) If a distributor's margins are based on the "landed" price of an import shipment, they will be based on: A) ex-works price.B) transportation costs.C) insurance costs.D) VAT. E) all of the above
Answer: E
46) All import charges are assessed against the A) ex-works price.B) rigid cost-plus price.C) estimated future cost priceD) flexible cost-plus priceE) landed price
Answer: E
10) 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: A) switch trader.B) Foreign Trade Organization.C) Foreign Sales Corporation.D) Mittelstand owner.E) broker.
Answer: A
5) The direct exchange of goods or services between parties in lieu of monetary payment is known as:A) barter.B) switch trading.C) offset.D) compensation trading. E) counterpurchase.
Answer: A
54) In July 2001, the euro's value relative to the dollar was about €1.00 = $0.85. By November 2009, the euro had strengthened to €1.00 = $1.48. In February 2012, one euro was equal to $1.33 and in August 2015 €1.00 = $0.99 All other things being equal, if a European-based global company wants to preserve margins for goods exported to the U.S. market, the company should:A) raise prices in dollars.B) switch to cost-based pricing.C) adopt a policy of market penetration pricing.D) reduce prices in dollars.E) use skimming pricing.
Answer: A
6) Which of the following forms of countertrade does not require use of money or credit between parties?A) barterB) switch tradingC) offsetD) compensation tradingE) none of the above
Answer: A
66) 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. A) ethnocentric B) polycentric C) regiocentric D) geocentric E) adaptation
Answer: A
68) 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? A) ethnocentric B) polycentric C) regiocentric D) geocentric E) extension pricing
Answer: A
94) ________ is derived from the price required to be competitive in the global marketplace. A) Market-based transfer priceB) Cost-based transfer priceC) Negotiated transfer priceD) Horizontal priceE) Vertical price
Answer: A
1) Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries?A) Procter & GambleB) Bell Helicopter TextronC) NokiaD) Mercedes-BenzE) Coca-Cola
Answer: B
11) Despite the high expenses associated with operating elegant stores and purchasing advertising space in upscale magazines, the premium retail prices that luxury goods like Louis Vuitton command translate into handsome profits. The Louis Vuitton brand alone accounts for 60% of LVMH's operating profit. On the other hand, Louis Vuitton spends $10 million annually battling: A) EU regulations.B) counterfeiters in countries such as Turkey, South Korea, & Italy.C) competitors in European countries.D) suppliers of needed materials.E) export freight and taxes.
Answer: B
20) For years, Mercedes-Benz utilized a ________ pricing strategy; however, this created an opportunity for Toyota to introduce its luxury Lexus line and undercut Mercedes.A) gray marketB) skimmingC) penetrationD) market holdingE) cost-based
Answer: B
21) 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.A) gray marketB) skimmingC) penetrationD) market holdingE) cost-based
Answer: B
24) Historically, many companies that used the ________ for pricing were located in the Pacific Rim. A) skimming strategyB) penetration strategyC) cost-based strategyD) price ceiling strategyE) transfer pricing strategy
Answer: B
28) 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? A) price bundlingB) target costingC) cost-plus approachD) export price costing E) cost-based pricing
Answer: B
4) 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:A) switch trading.B) barter.C) offset.D) compensation trading.E) counterpurchase.
Answer: B
55) If a company's home currency strengthens, it is:A) a favorable turn of events for the typical exporter.B) an unfavorable turn of events for the typical exporter.C) a favorable turn of events since the revenues increase in home currency.D) an unfavorable turn of events for exporter's home country.E) neither favorable nor unfavorable turn of events for the typical exporter.
Answer: B
70) According to a recent study of European industrial exporters, companies that utilized independent distributors would be most likely to utilize: A) ethnocentric pricing. B) polycentric pricing. C) regiocentric pricing. D) geocentric pricing. E) extension pricing.
Answer: B
76) Parallel importing occurs when companies employ a(n) ________ multinational pricing policy that calls for setting different prices in different country markets. A) ethnocentric B) polycentric C) regiocentric D) geocentric E) extension
Answer: B
22) Two automakers that have joined the race to bring low-cost cars to the emerging Indian market are: A) Mercedes and Lexus.B) Toyota and Ford.C) Tata and Nissan.D) Tata and Toyota.E) Nissan and Toyota.
Answer: C
31) All of the following activities must be performed when goods cross international boundaries except: A) obtaining currency permit, if required.B) packaging goods for export.C) using the cost-based pricing method.D) arranging for ocean freight and preparation.E) obtaining marine insurance and certificate of the policy.
Answer: C
32) All of the following basic consideration questions are important for those whose responsibility includes setting prices on goods that cross borders except:A) Does the price reflect the product's quality?B) Is the price competitive given local market conditions?C) Does the local market use target costing?D) Should prices differ with market segment?E) Do the foreign country's dumping laws pose a problem?
Answer: C
48) Which of the following does not contribute to price escalation in global marketing? A) shipping and insurance charges B) value added taxes (VAT) C) different Incoterms as incentives D) duties and tariffs E) fluctuating exchange rates
Answer: C
7) Which type of countertrade arrangement is required by governments seeking to reduce the budgetary impact of expenditures for defense or telecommunications?A) barterB) switch tradingC) offsetD) compensation tradingE) none of the above
Answer: C
81) 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:A) barter.B) switch trading.C) gray market.D) offset.E) dumping.
Answer: C
82) Luxury good marketers found a new way to combat gray market imports into the United States. In March 1995, the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount drugstore chain from selling Givenchy perfume without permission. The distinctive packaging of the perfume is also protected by the U.S. copyright law. The ruling implies that:A) Givenchy can only be sold in copyrighted packages.B) Costco and Walmart will no longer be able to sell Givenchy.C) Costco and Walmart will be able to sell Givenchy with authorization.D) gray marketers will be able to market with authorization.E) discount drugstores cannot market a product resembling Givenchy's perfumes.
Answer: C
91) ________ occurs when a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained.A) Horizontal price fixingB) DumpingC) Vertical price fixingD) Gray marketingE) Black marketing
Answer: C
98) "Cost-based," "market-based," and "negotiated" are three approaches to:A) dumping.B) gray marketing.C) transfer pricing.D) price skimming.E) counter trade.
Answer: C
99) Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25 percent of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries. This situation underscores the importance of ________ in global marketing.A) dumpingB) gray marketingC) transfer pricingD) price skimmingE) price fixing
Answer: C
2) Which of the following is true about proper use of the term "countertrade"?A) The term "countertrade" is interchangeable with "offsets."B) The term "countertrade" is interchangeable with "barter."C) The term "countertrade" is interchangeable with "counterpurchase."D) "Countertrade" is a blanket term that refers to several different types of business transactions.E) The term "countertrade" is interchangeable with "dumping."
Answer: D
26) 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: A) gray market.B) price bundling.C) market skimming.D) razors and blades.E) cost-based.
Answer: D
33) A manufacturer attempting to set prices for its products in export markets must realize that CIF, VAT, and distributor markup all lead to: A) currency devaluations.B) dumping charges.C) market skimming.D) price escalation.E) market penetration.
Answer: D
49) Which of the following would not be used by an exporter with a weak home-country currency? A) Expand product line and add more costly feature. B) Speed repatriation of foreign-earned income. C) Buy advertising, insurance, and other services in home-country market. D) Shift sourcing outside home-country market. E) Exploit marketing opportunities in all markets.
Answer: D
56) The country which has the highest rates of value added tax (VAT) in the European Union is: A) Germany.B) Italy.C) France.D) Denmark.E) Switzerland.
Answer: D
71) Which automaker was described as using an ethnocentric approach to setting prices in the United States? A) Toyota B) Nissan C) Volkswagen D) Mercedes E) Lexus
Answer: D
78) 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.A) countertradeB) market holdingC) price escalationD) gray market E) market skimming
Answer: D
8) To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing agreed to purchase products from the United Kingdom whose value was equivalent to 130% of the contract. This type of pricing arrangement, which is common when the customer is a foreign government and the product has military applications, is known as:A) barter.B) switch trading.C) compensation trading.D) offset.E) dumping.
Answer: D
80) 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:A) market skimming. B) using offsets. C) pursuing artificially high margins. D) dumping. E) gray marketing.
Answer: D
9) 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:A) barter.B) switch trading.C) offset.D) compensation trading.E) a hybrid countertrade arrangement.
Answer: D
92) Germany's Bayer Group was fined millions of dollars to settle a lawsuit alleging it had conspired with Archer Daniels Midland and other global companies to set prices for an enzyme used in animal feeds. What was the issue in this lawsuit? A) price skimmingB) market penetrationC) price bundlingD) price fixingE) dumping
Answer: D
93) Nintendo was fined nearly $150 million after it was determined that the video game company had colluded with European distributors. The distributors in countries with lower retail prices had agreed not to sell to retailers in countries with high prices. This is a classic example of: A) price skimming.B) market penetration.C) price bundling.D) price fixing.E) transfer pricing.
Answer: D
27) A firm without much export experience uses the rigid cost-based pricing method. Which of the following considerations is the exporter ignoring?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
29) As a starting point, firms that comply with Western cost-accounting principles typically use the pricing method known as:A) price bundling.B) target costing.C) cost-plus pricing.D) export price costing.E) full absorption cost.
Answer: E
3) The most general term for the global phenomenon involving reciprocal business interactions between parties in various countries is known as: A) switch trading.B) barter.C) offset.D) compensation trading.E) countertrade.
Answer: E
30) Which pricing strategy has the advantage of being simple to calculate but has the disadvantage of ignoring demand and competitive conditions? A) gray marketingB) skimmingC) penetrationD) market holdingE) cost-based
Answer: E
34) The following activities must be performed when goods cross international boundaries except: A) obtaining currency permit.B) packing goods for export.C) transporting the goods.D) preparing a land bill of lading.E) receiving payments.
Answer: E
69) Which of the following would not be taken into account by a company using an ethnocentric approach to pricing decisions? 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
79) Gray markets impose several costs or consequences on global marketers, which does not include: A) damage to channel relationships.B) dilution of exclusivity.C) free ridingD) reputation and legal liability.E) increase product demand
Answer: E
