MKTG 4280 Ch. 18 McGraw-Hill Connect

Identify an accurate statement about leasing in international markets.

It is an important approach to selling capital equipment in foreign markets.

The advantage of dollar drafts for a seller is that they _____.

can be discounted for instant payment at a bank

A(n) ______ is involved in setting prices of its members' common products, distributing profits and assigning market territories.

cartel

When several companies manufacturing similar goods cooperate to control the markets for their products, they have formed a(n) _______

cartel

The form of payment that places an unwanted burden on the customer is a(n) _____ arrangement.

cash in advance

One technique that companies use to recoup from inflation pressure and price controls is to _____.

charge for additional services

If products are sold below their cost of production, those products are ______ on foreign markets.

dumped

Which of the following occurs when a company sells goods in a foreign market below the price of the same goods in the domestic market?

dumping

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

variable-cost pricing

When a firm is concerned only with the minimal or incremental cost of producing goods to be sold in foreign markets, it often uses _____.

variable-cost pricing

Uncontrolled causes of the escalated price of exported goods confine the sale of a product to _____.

wealthy customers, who are insensitive to the price of a product

Select the two ways of viewing pricing.

- As a static element in a business decision - As an active instrument of accomplishing marketing objectives

Identify the ways in which governments control pricing in their countries. (Check all that apply.)

- By setting price ceilings and floors - By granting subsidies - By establishing margins

Select the criteria under which companies may make sales on open accounts. (Check all that apply.)

- For customers with exceptional credit standings - For subsidiaries of the seller

Identify the reasons why many producers don't know the final price of a product. (Check all that apply.)

- Lack of standardized middlemen profits - Diverse channels

Identify typical reasons why marketers can lower their costs by shipping unassembled goods to a free trade zone (FTZ) in an importing country. (Select all that apply.)

- Lower tariffs on unassembled goods - Lower labor costs in the importing country

Which of the following methods allow manufacturers reduce the cost of production? (Select all that apply.)

- Manufacturing goods in a country that supplies cheap skilled labor - Eliminating expensive functional features

Identify the circumstances under which an exporting company would deny sale of products to its customers on credit. (Check all that apply.)

- Restrictions within a buyer's country delaying payment indefinitely - Exporter chooses not to sell the products on credit terms

Which of the following are problems associated with countertrading?

- uncertain potential demand for goods offered in payment - insufficient time to carry out market analysis

An attempt to establish prices for an entire market is _____ pricing.

Administered

Identify an accurate statement about using variable costs in pricing.

Companies view any foreign sales as bonus sales.

Which of the following statements is true about electronic currencies?

Electronic currencies are expected to replace existing hard national currencies.

Identify an accurate statement about administered pricing.

Its legality varies among countries.

When price differences are greater than the cost of transportation between two markets, the possibility of a occurs. (Enter one word in each blank.)

Parallel Market OR Gray Market

True or false: Exporters always rely on standardized middleman profit margins to mark up the prices of exported commodities.

Reason: This statement is false. Exporters must rely on experience and marketing research to ascertain middleman costs to effectively mark up prices of exported commodities.

True or false: Price escalation is the result of excess profits that exist in international markets.

Reason: This statement is false. While excess profits exist in some international markets, the reason for price escalation is the cost of exporting products from one country to another.

True or false: Assessing which markets will require countertrades will on its own enhance a marketer's competitive position.

Reason: This statement is false.Assessing which markets will require countertrades as well as other markets factors such as social customs and legal requirements, will enhance a marketer's competitive position.

True or false: Classification criteria vary across countries; therefore, a thorough investigation of tariff schedules and classification criteria often results in lower tariffs.

Reason: This statement is true. Classification criteria vary across countries. Therefore, a thorough investigation of tariff schedules and classification criteria can result in lower tariffs.

Which of the following pricing approaches allows companies to reach a market segment that is relatively price insensitive and willing to pay a premium price for the value received?

Skimming

Match the type of tariff (in the left column) with the correct description (in the right column). Instructions

Specific duty = A flat charge per physical unit imported Ad valorem duty = Levied as a percentage of the value of the imported goods Compound duty = Levied as a sum of a flat charge per physical unit and a percentage of the imported good's value

An increase in forward hedging during international trade can be attributed to the absence of ______.

a relatively stable currency

Dollar drafts can be discounted for immediate payment at a bank only after they are _____.

accepted by the buyer

One way a government can control prices is to _____.

act as a selling monopoly

Unlike letters of credit, dollar drafts _____.

are drawn by a seller on a buyer and presented to the seller's bank

In countertrading negotiation, one major problem is _____.

ascertaining the value of goods being offered as payment

The Internet is expected to enable an online electronic barter economy by _____.

complementing and expanding real-world barter exchanges

When the value of a seller's currency is weak compared to the buyer's currency, companies usually use ______.

cost-plus pricing

A pricing tool that international marketers can use to create a competitive advantage is ______.

countertrading

The idea behind exporting companies restricting the supply of products to meet only local requirements is that

countries should just be able to match their citizens' demand with supply.

Companies in European countries sometimes compete with imports of their own products at lower prices because of _____.

different taxes and competitive price structures

Anne's Diadem is a multinational jewelry giant that exports its goods to the country of Elwonia. The economy in Elwonia is undergoing a deflationary spell. To prosper during deflation, Anne's Diadem must _____.

discount its prices to gain more customers

All types of import taxes and tariffs function to

discriminate against all overseas goods.

Price escalation refers to the _____.

disproportionate price difference in two countries engaged in trade with each other

Free trade zones (FTZs) enable price control by _____.

exempting duty on overhead costs

A financing technique for situations in which a company lacks large cash reserves to finance its customers is _____.

forfaiting

Two challenges that can lead to the failure of a business if the seller is unable to offer long-term financing options to customers are _____.

inconvertible currencies and cash-short customers

To be successful in a deflationary market, an exporter must _____.

increase brand value while keeping prices low

Price escalation is a tricky situation because _____.

it can rocket upward once it begins

The _______ is an important selling technique to reduce high prices and capital shortages for capital equipment or high-priced durable goods.

leasing system

After cash in advance, _____ provide the most protection for a seller because they guarantee the payment of dollars to the seller on presenting appropriate shipping documents.

letters of credit

The types of documentation required for a sale, the currency to be utilized, and the credit terms are specified in _____.

price quotations

Match the view of pricing (in the left column) with the correct description (in the right column).

pricing as an active instrument = the company sets prices to achieve specific goals, including targeted returns on profit and targeted sales volumes pricing as a static element = the company places a low priority on foreign business, exports only excess inventory, and does not view its export sales as active contributions to sales volume

The price quotation and contract should define _____.

quality and quantity

Companies exporting goods attempt to lower tariffs on their goods by _____.

reclassifying them under categories that charge lower duties

Manufacturers can minimize price escalation by

reducing the general quality of the product.

After their initial efforts were halted by European authorities, some industries now try to curb parallel trade by _____.

restricting the supply of products to meet the local requirements

The _____ assumes all the risk of receiving the payment with bills of exchange.

seller

Letters of credit are advantageous for a seller because they _____.

shift the risk of a buyer's payment to a bank that issues them

Reducing or eliminating middleman mark-ups can lower distribution costs due to ______.

shorter channels

Cumulative value-added taxes provide incentives for ______.

shorter distribution channels

When a company's objective is to reach the part of the market that is somewhat price insensitive and willing to pay a premium, it uses _____.

skimming

Exporting companies may inflate selling prices of exported products because _____.

the companies are affected by inflation and price regulations that are not under its control

Exports accelerate when

the currency of the exporting country is weaker than the currency of an importing country.

Open account transactions tend to be rare in foreign trade because _____.

they are disadvantageous to sellers

If long-term contracts do not carefully consider exchange rates, then companies provide ______.

unintentional discounts