ch 18

When Polar Inc., an American fast-food company, wanted to market its burgers and fries in France, it was asked to import French wine to the United States in return. This is an example of: A) countertrade. B) bargaining. C) buy-back. D) bribery. E) countervailing duties.

a

Which of the following is true of international currencies? A) All major currencies are floating freely relative to one another. B) Exchange rate volatility index can be used to accurately predict the value of any currency. C) The World Bank mandates a fixed exchange rate regime. D) The value of all currencies is set by the World Trade Organization. E) All currencies are fully backed by gold reserves.

a

In a(n) ________, the seller makes a one-time arrangement with a bank or other financial institution to take over responsibility for collecting the account receivable. A) factoring transaction B) forfaiting transaction C) open account D) cash-in-advance payment E) barter transaction

b

Lush Cosmetics Corp., a U.S.-based firm, has recently started exporting cosmetics to India. Lush has introduced a new range of mineral-based makeup products for the first time in the Indian market. As Lush 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 ________. A) penetration pricing policy B) price skimming C) cost-based pricing policy D) bundling E) psychological pricing policy

b

Which of the following characterizes the variable-cost pricing approach? A) This approach is suitable when a company has high variable costs relative to its fixed costs. B) In this approach, any contribution to fixed cost after variable costs are covered is profit to the company. C) In this approach, prices are often set on a cost-plus basis, that is, total costs plus a profit margin. D) This approach insists that each unit must bear its full share of the total fixed and variable cost. E) This approach insists that no unit of a similar product is different from any other unit in terms of cost.

b

________ are levied as a percentage of the value of the goods imported. A) Prohibitive duties B) Ad valorem duties C) Compound duties D) Specific duties E) Protective duties

b

________ are the primary outside source of aid for companies beset by the uncertainty of a countertrade. A) Trade unions B) Barter houses C) Satellite towns D) Swap centers E) Industry associations

b

An important selling technique to alleviate high prices and capital shortages for capital equipment is the ________. A) antidumping system B) rental system C) leasing system D) consignment system E) direct buy-back system

c

Assuming that an international marketer has produced the right product, used the proper channel of distribution, and promoted the goods correctly, the effort is most likely to fail if the international marketer fails to: A) inform the host government about all its marketing objectives. B) form a joint venture in order to sell the product. C) set the right price for the goods or services. D) work on a franchise basis in the country. E) set the import tariff for the goods or services.

c

Which of the following is true of free trade zones (FTZs)? A) An FTZ is, in essence, a taxable enclave and considered part of the country as far as import regulations are concerned. B) The utilization of FTZs typically increases taxes, duties, surcharges, and freight charges on imported goods. C) In an FTZ, payment of import duties is postponed until the product leaves the FTZ area and enters the host country. D) An FTZ benefits export companies but does not offer any advantages to an importer. E) FTZs operate throughout the world, replacing imported goods with domestic goods.

c

Companies following the ________ philosophy 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. A) fixed-cost pricing B) premium pricing C) demand-based pricing D) full-cost pricing E) variable-cost pricing

d

Drew's company imports materials and parts into a free trade zone (FTZ) within the United States and then has the finished products imported into the United States. Her company will most likely: A) have to pay tariffs based on the value of both the parts and the materials. B) incur higher labor costs than other domestic companies. C) have to pay tariffs based on the value of the raw materials when they leave the country. D) not have to pay tariffs on the products while they are in the FTZ. E) not be able to store finished goods in the FTZ

d

The use of countertrade in international trade: A) leads to a loss of revenue. B) is considered unethical. C) reduces a firm's competitive advantage. D) allows trade with countries short of hard currency. E) increases the tax liabilities of trading firms.

d

Which of the following is most likely to be true of a company that views prices as an active instrument of accomplishing marketing objectives? A) The company views its export sales as an insignificant source of revenue. B) The company follows market prices to achieve specific objectives. C) The company exports only excess inventory. D) The company sets prices to achieve specific objectives. E) The company places a low priority on foreign business

d

) ________ is a practical approach to pricing when a company has high fixed costs and unused production capacity. A) Demand-based pricing B) Premium pricing C) Full-cost pricing D) Cost-plus pricing E) Marginal-cost pricing

e

A ________, which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation. A) trigger price B) trigger volume C) market access opportunity D) substantial cause E) minimum access volume

e

A(n) ________ means that once the seller has accepted the credit, the buyer cannot alter it in any way without permission of the seller. A) open account B) sales agreement C) bill of regression D) bill of lading E) letter of credit

e

In ________, a firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets. A) full-cost pricing B) premium pricing C) fixed-cost pricing D) demand-based pricing E) variable-cost pricing

e

Which of the following is the most probable reason a manufacturer would choose to conduct its manufacturing operations in a third country? A) To reduce the credit risk of the seller B) To avoid antidumping duties C) To standardize middlemen margins D) To increase the capital-labor ratio E) To reduce manufacturing costs

e

With ________, the seller assumes all risk until the actual dollars are received. A) irrevocable letters of credit B) open accounts C) factoring agreements D) forfaiting contracts E) bills of exchange

e

Longer channels of distribution are more appropriate for keeping prices under control than shorter channels of distribution.

f

Sales on open accounts are recommended when shipping is hazardous.

f

The possibility of a parallel market occurs whenever price differences are less than the cost of transportation between two markets.

f

Leasing helps guarantee better maintenance and service on overseas equipment.

t

The portion of international business handled on a cash-in-advance basis is not large and this is typically used when credit is doubtful.

t