Question 1

An important selling technique to alleviate high prices and capital shortages for capital equipment is the _____ system.

Accepted Answer

An important selling technique to alleviate high prices and capital shortages for capital equipment or high-priced durable goods is the leasing system.

Question 2

Countertrade is often used by international marketers to gain entry into a country. PepsiCo used this strategy when it agreed to:

Accepted Answer

One of the earliest barter arrangements occurred between Russia and PepsiCo before the ruble was convertible and before most companies were trading with Russia. PepsiCo wanted to beat Coca-Cola into the Russian market. The only way possible was for PepsiCo to be willing to accept vodka (sold under the brand name Stolichnaya) from Russia and bottled wines (sold under the brand name of Premiat) from Romania to finance Pepsi bottling plants in those countries. From all indications, this arrangement was very profitable for Russia, Romania, and PepsiCo.

Question 3

Identify a way by which a company can lower costs by shipping unassembled goods to an FTZ in an importing country.

Accepted Answer

By shipping unassembled goods to an FTZ in an importing country, a marketer can lower costs in a variety of ways: If labor costs are lower in the importing country, substantial savings may be realized in the final product cost.

Question 4

When PepsiCo first began to market Pepsi Cola in Russia, it was asked to accept an equal amount of Russian vodka as payment in return for permission to sell Pepsi Cola. The formal name for this trading strategy is called:

Accepted Answer

Countertrade is a pricing tool that every international marketer must be ready to Countertrading and its place in international marketing practices must be ready to employ, and the willingness to accept a countertrade will often give the company a competitive advantage.

Question 5

What do barter houses do?

Accepted Answer

Barter houses specialize in trading goods acquired through barter arrangements and are the primary outside source of aid for companies beset by the uncertainty of a countertrade.

Question 6

Which of the following is true about free trade zones (FTZs)?

Accepted Answer

More than 300 FTZs operate throughout the world, storing or processing imported goods. An FTZ is, in essence, a tax-free enclave and not considered part of the country as far as import regulations are concerned. When an item leaves an FTZ and is imported officially into the host country of the FTZ, all duties and regulations are imposed. Utilizing FTZs can to some extent control price escalation resulting from the layers of taxes, duties, surcharges, freight charges, and so forth.

Question 7

What is the function of a countervailing duty?

Accepted Answer

A countervailing duty or minimum access volume (MAV), which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation.

Question 8

Which of the following is a way that a company can lower costs by shipping unassembled goods to an FTZ in an importing country?

Accepted Answer

By shipping unassembled goods to an FTZ in an importing country, a marketer can lower costs in a variety of ways: Tariffs may be lower because duties are typically assessed at a lower rate for unassembled versus assembled goods.

Question 9

The crucial problem confronting a seller in a countertrade negotiation is determining the value of and _____ for the goods offered.

Accepted Answer

The crucial problem confronting a seller in a countertrade negotiation is determining the value of and potential demand for the goods offered.

Question 10

Assembly in the importing country is a way companies attempt to lower prices and avoid dumping charges. These assembly plants are known as _____ plants.

Accepted Answer

Assembly in the importing country is a way companies attempt to lower prices and avoid dumping charges. However, these screwdriver plants, as they are often called, are subject to dumping charges if the price differentials reflect more than the cost savings that result from assembly in the importing country.

Question 11

In general, the end goal of all _____ pricing activities is to reduce the impact of price competition or eliminate it.

Accepted Answer

In general, the end goal of all administered pricing activities is to reduce the impact of price competition or eliminate it.

Question 12

One approach to defining the pricing policy of dumping is to say that it is a case where a product is sold in the international arena:

Accepted Answer

Various economists define dumping differently. One approach classifies international shipments as dumped if the products are sold below their cost of production.

Question 13

_____ are the primary outside source of aid for companies beset by the uncertainty of a countertrade.

Accepted Answer

Barter houses specialize in trading goods acquired through barter arrangements and are the primary outside source of aid for companies beset by the uncertainty of a countertrade.

Question 14

A company can lower costs by shipping unassembled goods to an FTZ in an importing country through which of the following ways?

Accepted Answer

By shipping unassembled goods to an FTZ in an importing country, a marketer can lower costs in a variety of ways: Ocean transportation rates are affected by weight and volume; thus unassembled goods may qualify for lower freight rates.

Question 15

A ____, which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation.

Accepted Answer

A countervailing duty or minimum access volume (MAV), which restricts the amount a country will import, may be imposed on foreign goods benefiting from subsidies, whether in production, export, or transportation.

Question 16

For _____ duties to be invoked, it must be shown that prices are lower in the importing country than in the exporting country and that producers in the importing country are being directly harmed by the dumping.

Accepted Answer

For countervailing duties to be invoked, it must be shown that prices are lower in the importing country than in the exporting country and that producers in the importing country are being directly harmed by the dumping.

Question 17

Which of the following would be considered to be an advantage of leasing rather than owning?

Accepted Answer

Just as contracts for domestic and overseas leasing arrangements are similar, so are the basic motivations and the shortcomings. For example, leasing helps guarantee better maintenance and service on overseas equipment.

Question 18

If a company is willing to accept countertrade in a foreign market, it often gives the company a:

Accepted Answer

Countertrade is a pricing tool that every international marketer must be ready to employ, and the willingness to accept a countertrade will often give the company a competitive advantage.

Question 19

The United States and _____ have been the most ardent users of antidumping duties.

Accepted Answer

The United States and European Union have been the most ardent users of antidumping duties.

Question 20

In a classic case of dumping, prices are _____ in the home-country market and _____ in foreign markets.

Accepted Answer

In a classic case of dumping, prices are maintained in the home-country market and reduced in foreign markets.

Quiz 18: Pricing for International Markets