Deck 15: International Marketing Channels

Question 1

In the context of the distribution structure in Japan, it has been observed that Japanese consumers favor cheaper prices over personal service.

Answer 1

False
Explanation: The Japanese consumer contributes to the continuation of the traditional nature of the distribution system through frequent buying trips, small purchases, favoring personal service over price, and a proclivity for loyalty to brands perceived to be of high quality. Additionally, Japanese law gives the small retailer enormous advantage over the development of larger stores and competition.

Question 2

Agent middlemen work on commission and do not take title to the merchandise.

Answer 2

True
Explanation: Agent middlemen work on commission and arrange for sales in the foreign country but do not take title to the merchandise. By using agents, the manufacturer assumes trading risk but maintains the right to establish policy guidelines and prices and to require its agents to provide sales records and customer information.

Question 3

An export management company functions as a low-cost, independent marketing department with direct responsibility to the parent firm.

Answer 3

True
Explanation: Typically, the export management company (EMC) becomes an integral part of the marketing operations of its client companies. Working under the names of the manufacturers, the EMC functions as a low-cost, independent marketing department with direct responsibility to the parent firm. The working relationship is so close that customers are often unaware they are not dealing directly with the export department of the company.

Question 4

Traditional channels in developing countries evolved from economies with a strong dependence on imported manufactured goods.

Question 5

In a traditional distribution structure, distribution systems are national rather than local in scope.

Question 6

In the context of distribution patterns, wholesaling shows a greater diversity in its structure than does retailing.

Question 7

Merchant middlemen tend to be more controllable than agent middlemen because they take title to manufacturers' goods.

Question 8

The distribution process includes promotion of goods and services by sellers and resellers.

Question 9

A distinguishing characteristic of the Japanese distribution channel system is that it is controlled by a few small retailers found in the country.

Question 10

Domestic middlemen offer many advantages for companies with large international sales volume.

Question 11

The Japanese distribution structure is similar to the one found in the United States or in Europe.

Question 12

Domestic middlemen are most likely to be used when the marketer desires to minimize financial and management investment.

Question 13

In the context of retail patterns, direct marketing works well in affluent markets as well as in markets with underdeveloped distribution systems.

Question 14

In the context of the different kinds of middlemen, the WTO in 2003 ruled export management companies to be in violation of international trade rules.

Question 15

The distribution channel process includes all activities, beginning with the manufacturer and ending with the retailer.

Question 16

The behavior of channel members in the distribution process is the result of the interactions between the cultural environment and the marketing process.

Question 17

In an import-oriented distribution structure, supply often exceeds demand.

Question 18

As traditional channel structures are changing, importers and retailers are also becoming involved in new product development.

Question 19

In the context of distribution structures, one of Walmart's strengths is its ability to influence foreign governments.

Question 20

In the traditional distribution structure, independent agencies that provide facilitating functions are nonexistent or underdeveloped.

Question 21

Which of the following distribution structures is also known as a traditional distribution structure?

A) Export-oriented
B) Import-oriented
C) Manufacturer-oriented
D) Service-oriented
E) Customer-oriented

Question 22

Which of the following statements is true regarding an import-oriented distribution structure?

A) The importer-wholesaler traditionally performs most of the marketing functions.
B) The relationship between the importer and any middleman is similar to that found in a mass-marketing system.
C) Several independent agencies providing functions such as advertising, marketing research, financing are part of this distribution structure.
D) The idea of a channel as a chain of intermediaries performing specific activities is common.
E) This distribution system is national in scope.

Question 23

Channels of distribution often pose longevity problems.

Question 24

The Export Trading Company Act allows producers of similar products to form export trading companies.

Question 25

Which of the following statements is true of a traditional distribution structure?

A) The distribution system is national in scope.
B) The relationship between the importer and any middleman is similar to that found in a mass-marketing system.
C) The idea of a channel as a chain of intermediaries performing specific activities and each selling to a smaller unit beneath it until the chain reaches the ultimate consumer is common.
D) Independent agencies providing functions such as advertising, marketing research, and financing are part of this distribution structure.
E) The marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers.

Question 26

Ideally, a website should be translated into the languages of the target market.

Question 27

_____ has long been considered the most effective nontariff barrier to the Japanese market.

A) Population in Japan
B) Distribution in Japan
C) Culture in Japan
D) Import and export procedures in Japan
E) Intense competition in Japan

Question 28

In the United States, if a middleman is terminated, the company is required to pay 1 percent of the middleman's average annual compensation multiplied by the number of years the middleman served as a final settlement.

Question 29

Using foreign-country middlemen moves the manufacturer away from the market and the company becomes less involved with problems of language, physical distribution, communications, and financing.

Question 30

Legal advice is not necessary when entering distribution contracts with middlemen.

Question 31

A physical distribution system involves only the physical movement of goods.

Question 32

In a _____ distribution structure, an importer controls a fixed supply of goods and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers.

A) domestic
B) traditional
C) manufacturer-oriented
D) service
E) customer-oriented

Question 33

Which of the following characterizes the business philosophy of the Japanese distribution channels?

A) Loyalty
B) Direct sales
C) Fast delivery
D) Variety
E) Price competition

Question 34

Export management companies work under their own names.

Question 35

Which of the following statements is true of the Japanese market?

A) The costs of Japanese consumer goods are among the lowest in the world.
B) Manufacturers are independent of wholesalers for a multitude of services to other members of the distribution network.
C) The Japanese distribution structure supports long-term dealer-supplier relationships.
D) Japanese law favors the establishment of large retail stores.
E) Japanese consumers favor price over personal service.

Question 36

_____ are considered to be the foundation of the Japanese distribution system.

A) Consumers
B) Brokers
C) Manufacturers
D) Small retailers
E) Wholesalers

Question 37

In Japan, under the Large-Scale Retail Store Law, all proposals for new "large" stores were first judged by the _____.

A) Transport and Tourism Department
B) Internal Affairs and Business Council
C) Ministry of International Trade and Industry
D) Health and Welfare Committee
E) Local Retailers Union

Question 38

Trading companies provide the best means for intensive coverage of the market in Japan.

Question 39

Which of the following is true of the distribution process?

A) It does not involve the physical handling and distribution of goods.
B) It includes activities related to the promotion of goods and services.
C) The ownership title remains with the distributor even on completion of the transaction.
D) It includes buying and selling negotiations.
E) The behavior of channel members is not affected by the cultural environment.

Question 40

An e-vendor in a foreign market can generally ignore culture as an important variable because the commerce is being done via the Internet, which is culturally insensitive.

Question 41

_____ take title to manufacturers' goods and assume the trading risks.

A) Merchant middlemen
B) Brokers
C) Buying offices
D) Export agent
E) Agent middlemen

Question 42

A major disadvantage of _____ is that they can seldom afford to make the kind of market investment needed to establish deep distribution for products.

A) export management companies
B) trading companies
C) import associations
D) global retailers
E) complementary marketers

Question 43

Which of the following is the reason why global retailers like IKEA, Costco, Sears Roebuck, and Walmart are becoming major domestic middlemen for international markets?

A) They maintain their core marketing approaches while localizing the array of products, promotions, and other peripheral aspects of their operations.
B) They work under the names of the manufacturers and function as low-cost, independent marketing departments with direct responsibility to the parent firms.
C) They have minimum investment costs as they do not commit to investing in company personnel.
D) They serve as the producer's export department but have a short-term relationship, cover only one or two markets, and operate on a straight commission basis.
E) They offer reduction of export costs, demand expansion through promotion, trade barrier reduction, and improvement of trade terms through bilateral bargaining.

Question 44

A major goal of the Export Trading Company (ETC) Act was to:

A) allow U.S. companies to bypass tax laws with respect to international trading.
B) remove antitrust disincentives to export activities.
C) bypass trade barriers in foreign countries.
D) earn the highest possible profits in foreign countries.
E) combine export shipments within single containers.

Question 45

Home-country middlemen are also known as _____ middlemen.

A) area
B) local
C) merchant
D) domestic
E) regional

Question 46

Which of the following countries has the largest number of retailers?

A) United States
B) Argentina
C) China
D) Brazil
E) Japan

Question 47

Who are frequently criticized for not representing the best interests of a manufacturer?

A) Global wholesalers
B) Trading companies
C) Consumers
D) Merchant middlemen
E) Brokers

Question 48

Which of the following statements is true regarding merchant middlemen?

A) They represent the best interests of a manufacturer.
B) They can be controlled better than agent middlemen.
C) They assume trading risks.
D) They work on commission and arrange for sales in the foreign country.
E) They do not take title to manufacturers' goods.

Question 49

For companies seeking entrance into the complicated Japanese distribution system, _____ offer one of the easiest routes to success because they virtually control distribution through all levels of channels in Japan.

A) trade representatives
B) trading companies
C) brokers
D) export management companies
E) complementary marketers

Question 50

A disadvantage when using home-country middlemen as intermediaries in the distribution process is the:

A) large financial investment required.
B) limited control over the distribution process.
C) large managerial investments required.
D) limited number of retailers in the foreign country who can be reached.
E) large amount of commission.

Question 51

Which of the following statements is true regarding agent middlemen?

A) They take title to the merchandise.
B) They work on commission and arrange for sales in the foreign country.
C) Manufacturers cannot control them as much as they control merchant middlemen.
D) They do not represent the best interests of the manufacturer.
E) They assume trading risks.

Question 52

James Barker is the marketing manager of a firm with small international sales volume. He is looking for a middleman who can take responsibility for promotion of the company's products, credit arrangements, physical handling, and market research. Also, the middleman must be able to provide information on financial, patent, and licensing matters. In addition, the middleman should agree to work under the name of the firm. Which of the following types of middlemen would be the best choice for Mr. Barker if he wants to meet his objectives?

A) A manufacturer's export agent
B) An export merchant
C) A trade representative
D) An export management company
E) A complementary marketer

Question 53

The channel process includes all activities, beginning with the manufacturer and ending with the _____.

A) wholesaler
B) agent middlemen
C) merchant middlemen
D) retailer
E) final consumer

Question 54

Which of the following statements is true regarding an export management company (EMC)?

A) It acts as a middleman for firms with relatively large international sales volume.
B) It operates under its own name while providing services to another firm.
C) It does not have direct responsibility to the parent firm.
D) It acts as a middleman for firms willing to involve their own personnel in international functions.
E) It calls for minimum investment from the parent firm to get into international markets.

Question 55

In the context of distribution patterns, the rate of change in retailing around the world appears to be directly related to the _____.

A) literacy rate
B) rate of inflation
C) population growth
D) speed of economic development
E) currency exchange rate

Question 56

In the context of the different types of middlemen, which of the following is an example of a manufacturer's retail store?

A) Toys "R" Us
B) Walmart
C) Costco
D) Benetton
E) IKEA

Question 57

_____ is often the approach of choice in markets with insufficient or underdeveloped distribution systems.

A) Direct marketing
B) A big wholesale store
C) Internet selling
D) A discount house
E) Television advertising

Question 58

General Motors, _____, and DaimlerChrysler have created a single online site called Covisint for purchasing automotive parts from suppliers.

A) Toyota Motor Corporation
B) Honda Motor Company
C) Ford Motor Company
D) Nissan Motor Company
E) Tata Motors

Question 59

Which of the following has proved to be an important way to break the trade barrier imposed by the Japanese distribution system?

A) Direct sales through catalogs
B) Large wholesale stores
C) Street corner kiosks
D) Internet shopping
E) Television advertising

Question 60

Which of the following makes Walmart's transactions with suppliers highly efficient and lowers its cost of operations?

A) Clean business reputation
B) Internal Internet-based system
C) Ability to beat competitors
D) Outreach programs to placate small retailers
E) Ability to influence foreign governments

Question 61

In the context of the types of domestic middlemen, the WTO in 2003 ruled _____ to be in violation of international trade rules, thus starting a major trade dispute with the European Union.

A) foreign sales corporations
B) direct marketing partnerships
C) trading companies
D) export promotion companies
E) Webb-Pomerene export associations

Question 62

Which of the following arrangements is undertaken when a firm wants to keep its seasonal distribution channels functioning throughout the year?

A) Price skimming
B) Using the services of a trading company
C) Establishing a retail store
D) Using the services of an export management company
E) Complementary marketing

Question 63

The Webb-Pomerene Act of 1918 made it possible for American business firms to join forces in export activities without being subject to the _____.

A) Sherman Antitrust Act
B) Federal Communications Act
C) Trade Commission Act
D) Food, Drug, and Cosmetics Act
E) Robinson-Patman Act

Question 64

_____ is a subject area that should be on the checklist of criteria for evaluating middlemen servicing a market.

A) Flexibility
B) Hypersensitivity
C) Cultural empathy
D) Productivity
E) Breadth of knowledge

Question 65

A(n) _____ is a domestic middleman set up in a foreign country or U.S. possession that can obtain a corporate tax exemption on a portion of the earnings generated by the sale or lease of export property.

A) Webb-Pomerene export association
B) manufacturer's export agent
C) export management company
D) complementary marketer
E) foreign sales corporation

Question 66

A _____ provides a selling service for a manufacturer, has a short-term relationship, and operates on a straight commission basis.

A) manufacturers' retail store
B) trading company
C) global retailer
D) manufacturer's export agent
E) complementary marketer

Question 67

Which of the following factors affects the choice of distribution channels?

A) Distance from manufacturer
B) Language spoken in the target market
C) Available distribution intermediaries
D) Consumer literacy levels
E) Country's per capita income

Question 68

Which of the following is true of foreign sales corporations?

A) They are commonly called piggybackers.
B) They can only be related to a manufacturing parent and not an independent broker.
C) They virtually control distribution through all levels of channels in Japan.
D) They accumulate, transport, and distribute goods from many countries.
E) They can function as principal or commissioned agents.

Question 69

Which of the following is one of the highest costs of doing business in China?

A) Money required for the transportation of goods
B) Money required for obtaining appropriate permits
C) Cost of local advertising
D) Capital required to maintain effective distribution
E) Cost of customizing products for the Chinese market

Question 70

In which of the following modes of distribution in the foreign market will a company have to make maximum financial investment?

A) Export management companies
B) Trading companies
C) Export associations
D) Direct sales force
E) Complementary marketers

Question 71

One of the reasons that channels of distribution often pose longevity problems is that most middlemen _____.

A) do not maintain sufficient inventory to serve customers
B) lack product knowledge resulting in low sales volume
C) have little loyalty to their vendors
D) tend to slow down distribution to extract higher commissions
E) do not have sufficient knowledge of the target market

Question 72

Which of the following is a critical element associated with using a particular type of middleman?

A) Knowledge of the culture of the target market
B) Number of employees
C) Mode of transportation for moving goods
D) Influence over the target market
E) Cash-flow patterns

Question 73

Most middlemen have little loyalty to their vendors. They handle brands in good times when the line is making money but quickly reject such products within a season or a year if they fail to produce during that period. This is an example of problems associated with which of the following six Cs of distribution channel strategy?

A) Character
B) Continuity
C) Control
D) Cost
E) Capital requirement

Question 74

Complementary marketing is commonly known as _____.

A) backhauling
B) demand shifting
C) piggybacking
D) shape shifting
E) skimming

Question 75

In the context of factors affecting choice of channels, which of the following is one of the key elements in distribution decisions?

A) Selection of optimum container sizes
B) Volume discounts and rebates
C) Functions performed by middlemen
D) Local advertising modes
E) Target market culture

Question 76

Which of the following is one of the six Cs of distribution channel strategy?

A) Communication
B) Continuity
C) Capacity
D) Commission
E) Contribution

Question 77

Companies with marketing facilities or contacts in different countries with excess distribution capacity or a desire for a broader product line sometimes take on additional lines for international distribution. The formal name for such activities is _____.

A) skimming
B) backhauling
C) complementary marketing
D) export marketing
E) demand shifting

Question 78

Which of the following modes of distribution affords the most control over the distribution channels but often at a cost that is not practical?

A) Complementary marketers
B) Direct sales force
C) Export associations
D) Trading companies
E) Export management companies

Question 79

Which of the following is a type of domestic middleman?

A) Sole proprietors
B) Export management companies
C) Foreign distributors
D) Lessors
E) Joint ventures

Question 80

A(n) _____ is an individual agent middleman or an agent middleman firm providing a selling service for manufacturers that covers only one or two markets.

A) manufacturer's retail store
B) export management company
C) Webb-Pomerene export association
D) global retailer
E) manufacturer's export agent