Question 1

If a company manufactures a product in the home-country market as well as in foreign markets it is considered black marketing.

Accepted Answer

A) True 
 B)False  False

Question 2

How does "Switch Trading" work in global marketing? What is the advantage of the "switching mechanism"? Comment on the logistics and fees involved in this type of arrangement.

Accepted Answer

Switch trading is also called triangular trade and swap,since as the name indicates there is a switching arrangement.It is a mechanism that can be applied to barter or countertrade.In this arrangement,a third party steps into a simple barter or other countertrade arrangement when one of the parties is not willing to accept all the goods received in a transaction.The third party may be a professional switch trader,a switch trading house,or a bank.The switching mechanism provides a "secondary market" for countertraded or bartered goods and reduces the inflexibility inherent in barter and countertrade.Fees charged by switch traders range from 5 percent of market value for commodities to 30 percent for high-technology items.Switch traders develop their own networks of firms and personal contacts and are generally headquartered in Vienna,Amsterdam,Hamburg,or London.If a party to the original transaction anticipates that the products received in a barter or countertrade deal will be sold eventually at a discount by the switch trader,the common practice is to price the original products higher,build in "special charges" for port storage or consulting,or require shipment by the national carrier.

Question 3

The price of a six-pack of Heineken varies in price by as much as 50 percent depending on where it is sold due to all of the factors except:

Accepted Answer

A)  purchasing power parity.
B)  transportation costs.
C)  transaction costs.
D)  promotion.
E)  competition. D

Question 4

All other things being equal,a Boeing 787 costs the same worldwide.By contrast,beer,compact discs,and many other products that are available around the world are actually offered in markets that are national rather than global in nature.

Accepted Answer

A) True 
 B)False

Question 5

Gray market goods are trademarked products that are exported from one country to another and sold by authorized persons or organizations.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following does not contribute to price escalation in global marketing?

Accepted Answer

A)  shipping and insurance charges
B)  value added taxes (VAT) 
C)  different Incoterms as incentives
D)  duties and tariffs
E)  fluctuating exchange rates

Question 7

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?

Accepted Answer

A)  ethnocentric
B)  polycentric
C)  regiocentric
D)  geocentric
E)  extension pricing

Question 8

What is the difference between "F-Terms" and "C-Terms" category of Incoterms?

Accepted Answer

The answer of What is the difference between "F-Terms" and...

Question 9

Many countries took issue with the U.S.system of antidumping laws,in part because historically,the U.S.Commerce Department almost always ruled in favor of the U.S.company that filed the complaint.

Accepted Answer

A) True 
 B)False

Question 10

Transfer pricing is a term that applies to transactions between different divisions or units of the same company.

Accepted Answer

A) True 
 B)False

Question 11

Penetration prices often mean that the product may be sold at a loss for a certain period of time.

Accepted Answer

A) True 
 B)False

Question 12

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:

Accepted Answer

A)  switch trading.
B)  barter.
C)  offset.
D)  compensation trading.
E)  counterpurchase.

Question 13

Gray markets impose several costs or consequences on global marketers,which does not include:

Accepted Answer

A)  damage to channel relationships.
B)  dilution of exclusivity.
C)  free riding.
D)  reputation and legal liability.
E)  increased product demand.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

When a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained it is known as horizontal price fixing.

Accepted Answer

A) True 
 B)False

Question 16

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:

Accepted Answer

A)  barter.
B)  switch trading.
C)  gray market.
D)  offset.
E)  dumping.

Question 17

A first-time exporter is likely to use skimming pricing,so that the product may be sold at a profit for a certain length of time.

Accepted Answer

A) True 
 B)False

Question 18

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:

Accepted Answer

A)  gray market.
B)  price bundling.
C)  market skimming.
D)  razors and blades.
E)  cost-based.

Question 19

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?

Accepted Answer

The answer of In recent years,in light of the technological...

Question 20

Since hand carried wine bottles crossing the border from Hong Kong to China are taxed,entrepreneurial individuals hire "mules" to transport wine into the mainland.

Accepted Answer

A) True 
 B)False

Exam 11: Pricing Decisions

If a company manufactures a product in the home-country market as well as in foreign markets it is considered black marketing.

How does "Switch Trading" work in global marketing? What is the advantage of the "switching mechanism"? Comment on the logistics and fees involved in this type of arrangement.

The price of a six-pack of Heineken varies in price by as much as 50 percent depending on where it is sold due to all of the factors except:

All other things being equal,a Boeing 787 costs the same worldwide.By contrast,beer,compact discs,and many other products that are available around the world are actually offered in markets that are national rather than global in nature.

Gray market goods are trademarked products that are exported from one country to another and sold by authorized persons or organizations.

Which of the following does not contribute to price escalation in global marketing?

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?

What is the difference between "F-Terms" and "C-Terms" category of Incoterms?

Many countries took issue with the U.S.system of antidumping laws,in part because historically,the U.S.Commerce Department almost always ruled in favor of the U.S.company that filed the complaint.

Transfer pricing is a term that applies to transactions between different divisions or units of the same company.

Penetration prices often mean that the product may be sold at a loss for a certain period of time.

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:

Gray markets impose several costs or consequences on global marketers,which does not include:

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

When a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained it is known as horizontal price fixing.

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 first-time exporter is likely to use skimming pricing,so that the product may be sold at a profit for a certain length of time.

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:

Since hand carried wine bottles crossing the border from Hong Kong to China are taxed,entrepreneurial individuals hire "mules" to transport wine into the mainland.