Exam 11: Pricing Decisions

Companies using "rigid cost-plus pricing" set prices with adjustments to reflect market conditions outside the home country.

In some instances, deregulation represents a quid pro quo that will allow German companies wider access to other country markets.

To win sales in important markets such as China, global companies can face demands for offsets even when transactions do not involve military procurement.

In recent years, in light of the technological developments, many exporters have been forced to finance international transactions by taking full or partial payment in some form other than money.A number of alternative forms of payments known as countertrade are widely used.How does a countertrade transaction work? How do barter transactions differ from offset?

"Market skimming" is a strategy that uses low prices as a competitive weapon to gain market position.

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?

In Brazil, where the inflation rate was high during the late 1980s, individual unit pricing rather than shelf pricing became the norm.

Procter & Gamble encountered strict price controls in Venezuela in the late 1980s.This showed that when selective controls are imposed, foreign companies are more vulnerable to control than local ones.

For years, Mercedes-Benz utilized a ________ pricing strategy; however, this created an opportunity for Toyota to introduce its luxury Lexus line and undercut Mercedes.

Within the eurozone, "price transparency" means that buyers will be able to comparison shop easily because goods are priced in euros as opposed to marks, francs, or lira.

Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25% 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.

In the United States, Levi Strauss & Company has to face competitive behavior since J.C.Penney and Sears are both aggressively marketing their own brands.

In "geocentric pricing" approach, a company fixes a single price worldwide and allows subsidiaries or local distributors to make independent pricing decisions.

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:

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:

"Export price escalation" is the increase in the initial selling price of goods traded across borders.

If a Lexus car is priced in U.S.dollars and sold at the dollar converted price in Indian rupees, what sorts of problems can be expected? What is the difference between ethnocentric, polycentric and geocentric pricing?

If a distributor's margins are based on the "landed" price of an import shipment, they will be based on:

Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries?

Toyota buys on a regular basis from its subsidiaries.How is the pricing of different products handled? What is the significance of such transactions in global marketing?