Chapter 11

72. 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

a. barter

73. Which of the following forms of countertrade does NOT require use of money or credit between parties: a. barter b. switch trading c. offset d. compensation trading e. none of the above

a. barter

54. 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

a. ethnocentric

59. 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

a. ethnocentric

57. Which of the following pricing strategies recognizes both local market differences and the importance of headquarters input into pricing decisions: a. ethnocentric pricing b. polycentric pricing c. geocentric pricing d. rigid cost-based pricing e. extension pricing

a. ethnocentric pricing

52. In July 2001, the euro's value relative to the dollar was about €1.00 = $0.85. By November 2007 the euro had strengthened to €1.00 = $1.47. 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

a. raise prices in dollars

45. Excelsior Corp. launches a new hand-held personal digital assistant (PDA) for busy corporate executives. The initial retail price is set at $699. One year later, in an effort to reach a broader market, the price is lowered to $299. Which of the following describes the pricing strategies used by Excelsior Corp: a. skimming strategy followed by penetration strategy b. penetration strategy followed by cost based strategy c. penetration strategy followed by skimming strategy d. penetration strategy only e. skimming strategy only

a. skimming strategy followed by penetration strategy

76. 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

a. switch trader

78. Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries: a. Procter & Gamble b. Bell Helicopter Textron c. Nokia d. Mercedes-Benz e. Coca-Cola

b. Bell Helicopter Textron

71. In the 1970s and 1980s, the arrangement by which PepsiCo received payment for soft drink products sold to the Soviet Union was: a. switch trading b. barter c. offset d. compensation trading e. counterpurchase

b. barter

79. 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 percent 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

b. counterfeiters in countries such as Turkey, South Korea, & Italy

55. 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

b. polycentric pricing

41. Which pricing strategy would be most appropriate for a marketer of luxury designer brands: a. gray market b. skimming c. penetration d. market holding e. cost based

b. skimming

42. 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 market b. skimming c. penetration d. market holding e. cost based

b. skimming

80. 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 with 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 Wal-Mart will no longer be able to sell Givenchy c. Costco and Wal-Mart will be able to sell Givenchy with authorization d. Gray marketers will be able to market with authorization e. Discount drugstore cannot market a product resembling Givenchy's perfumes

c. Costco and Wal-Mart will be able to sell Givenchy with authorization

60. 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

c. gray marketing

74. Which type of countertrade arrangement is required by governments seeking to reduce the budgetary impact of expenditures for defense or telecommunications: a. barter b. switch trading c. offset d. compensation trading e. none of the above

c. offset

43. Which pricing strategy did Sony use when launching the Walkman personal stereo: a. gray marketing b. skimming c. penetration d. market holding e. cost based

c. penetration

51. Which of the following does not contribute to price escalation in global marketing: a. shipping and insurance charges b. value added taxes (VAT) c. product differentiation d. duties and tariffs e. fluctuating exchange rates

c. product differentiation

63. Following the 1997 currency crisis in Asia, which American industry appealed to President Clinton for protection from foreign producers that were allegedly "dumping" products in the United States: a. auto industry b. computer industry c. steel industry d. photo products industry e. restaurant industry

c. steel industry

67. "Cost-based," "market-based," and "negotiated" are three approaches to: a. dumping b. gray marketing c. transfer pricing d. price skimming e. counter trade

c. transfer pricing

68. Recent trade data indicate 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. dumping b. gray marketing c. transfer pricing d. price skimming e. price fixing

c. transfer pricing

69. 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."

d. "Countertrade" is a blanket term that refers to several different types of business transactions.

56. 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

d. Mercedes

77. 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

d. compensation trading

62. In the early 1990s, the U.S. International Trade Commission ruled that several Japanese manufacturers were selling active-matrix flat panel display screens in the U.S. at less than fair value and thereby injuring the sole U.S. producer of similar screens. The ITC's ruling concerned: a. black marketing b. market skimming c. gray marketing d. dumping e. licensing

d. dumping

64. 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

d. dumping

61. 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. countertrade b. market holding c. price escalation d. gray market e. market skimming

d. gray market

75. To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing agreed to purchase products from the UK whose value was equivalent to 130 percent 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

d. offset

49. A manufacturer attempting to set prices for its products in export markets must realize that CAF, VAT, duties, and distributor margins all lead to: a. currency devaluations b. dumping charges c. market skimming d. price escalation e. market penetration

d. price escalation

65. Germany's Bayer Group was fined millions of dollars to settle a lawsuit alleging it had conspired with ArcherDanielsMidland and other global companies to set prices for an enzyme used in animal feeds. What was the issue in this lawsuit: a. price skimming b. market penetration c. price bundling d. price fixing e. dumping

d. price fixing

66. In the late 1990s, the U.S. Justice Department fined two European pharmaceutical companies hundreds of millions of dollars for conspiring to suppress competition and set high prices for vitamin supplements marketed in the United States. What was the issue in this lawsuit: a. price skimming b. market penetration c. price bundling d. price fixing e. transfer pricing

d. price fixing

44. Hewlett-Packard is the world's leading marketer of inkjet printers. H-P's printers are priced very low and margins are slim; by contrast, the company enjoys significant margins on sales of replacement ink cartridges. This approach is sometimes known as ____________ pricing. a. gray market b. price bundling c. market skimming d. razors and blades e. cost-based

d. razors and blades

53. 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 features. 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.

d. shift sourcing outside home country market.

46. 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

e. all of the above

50. 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

e. all of the above

48. Which of the following Incoterms apply to all modes of transportation: a. ex-works b. FAS c. delivered duty paid d. FOB e. both a and c

e. both a and c

47. Which pricing strategy has the advantage of being simple to calculate but the disadvantage of ignoring demand and competitive conditions: a. gray marketing b. skimming c. penetration d. market holding e. cost based

e. cost based

70. 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

e. countertrade

58. 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

e. none of the above would be taken into account by a company using ethnocentric pricing