Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

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

Accepted Answer

A) True 
 B)False  True

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

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...

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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?

Accepted Answer

A)  price skimming
B)  market penetration
C)  price bundling
D)  price fixing
E)  dumping

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  gray market
B)  skimming
C)  penetration
D)  market holding
E)  cost-based

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

A)  dumping
B)  gray marketing
C)  transfer pricing
D)  price skimming
E)  price fixing

Question 12

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.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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:

Accepted Answer

A)  barter.
B)  switch trading.
C)  offset.
D)  compensation trading.
E)  a hybrid countertrade arrangement.

Question 15

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:

Accepted Answer

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 drugstores cannot market a product resembling Givenchy's perfumes.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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?

Accepted Answer

The answer of If a Lexus car is priced in...

Question 18

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

Accepted Answer

A)  ex-works price.
B)  transportation costs.
C)  insurance costs.
D)  VAT.
E)  all of the above

Question 19

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

Accepted Answer

A)  Procter & Gamble
B)  Bell Helicopter Textron
C)  Nokia
D)  Mercedes-Benz
E)  Coca-Cola

Question 20

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?

Accepted Answer

The answer of Toyota buys on a regular basis from...

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.

"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:

"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?