Question 1

Barter may be used to reduce a country's foreign debt.

Accepted Answer

Bartering allows a country to trade goods or services instead of using cash, which may decrease the amount of foreign currency needed to repay debt.

Question 2

In variable-cost pricing,the firm is concerned only with the marginal or incremental cost of producing goods to be sold in overseas markets.

Accepted Answer

Variable-cost pricing is a pricing strategy where the firm considers only the variable or marginal cost of producing goods when setting prices for overseas markets. This means that the fixed costs such as rent, salaries, etc. are not considered in the pricing decision. The aim is to ensure that the firm covers its variable costs and earns a profit on the additional units sold overseas.

Question 3

One of the important reasons for manufacturing/assembling in a country's FTZ (free trade zone)is an attempt to reduce price escalation.

Accepted Answer

By manufacturing/assembling in a country's FTZ, companies can take advantage of lower taxes, reduced regulations, and access to cheaper labor and materials, which can help to reduce production costs and ultimately lead to lower prices for the end consumer.

Question 4

Exclusive distribution is often used to offset the effects of parallel importing.

Accepted Answer

Exclusive distribution, a practice often used by companies to maintain high retail margins to encourage retailers to provide extra service to customers, to stock large assortments, or to maintain the exclusive-quality image of a product, can create a favorable condition for parallel importing.

Question 5

One way to define the concept of dumping is to say that excess capacity has been cleared from the books of a manufacturer.

Accepted Answer

Dumping refers to the practice of selling goods in a foreign market at a lower price than in the domestic market, often below the cost of production or at a loss. It is a form of predatory pricing that can harm domestic producers and create unfair competition.

Question 6

One of the necessary ingredients in a parallel importing scheme is to have a freight forwarder who is willing to provide fake bills of lading to the original manufacturer.

Accepted Answer

The answer of One of the necessary ingredients in a...

Question 7

One of the export strategies that can be tried when the domestic currency is weak is to improve productivity and engage in vigorous cost reduction.

Accepted Answer

The answer of One of the export strategies that can...

Question 8

Full-cost pricing is a philosophy that insists one unit of a product is different from ensuing units and must,therefore,be priced differently.

Accepted Answer

Full-cost pricing involves setting a price that covers both variable and fixed costs, and it does not require each unit to be priced differently.

Question 9

Many global companies consider currency exchange rate swings to be a major pricing problem.

Accepted Answer

Currency exchange rate fluctuations can greatly affect a company's profitability, especially for those that operate in multiple countries with different currencies. This can lead to pricing challenges, as companies must adjust their prices to account for changes in exchange rates.

Question 10

A good way to describe price escalation is to define the term as being the added costs incurred as a result of exporting products from one country to another.

Accepted Answer

Excess profits exist in some international markets, but generally the cause of the disproportionate difference in price between the exporting country and the importing country, here termed price escalation, is the added costs incurred as a result of exporting products from one country to another.

Question 11

A company uses skimming pricing as an objective when it desires to reach a market segment that is relatively price insensitive and thus willing to pay a premium price for the value received.

Accepted Answer

Skimming pricing is a strategy in which a company sets a high price for a new product or service in order to target a market segment that is relatively price insensitive and willing to pay a premium price for the value received. As the product becomes more established in the market, the company may gradually lower the price to attract more price-sensitive customers.

Question 12

In a free trade zone,payment of import duties is postponed until the product leaves the free trade zone and enters the country.

Accepted Answer

In a free trade zone, import duties are postponed until the product leaves the free trade zone and enters the country, allowing for easier movement of goods between countries.

Question 13

One of the types of countertrade is barter.

Accepted Answer

Barter is a type of countertrade in which goods or services are exchanged for other goods or services without the use of money.

Question 14

A countervailing duty restricts the amount a country will import by declaring imports to not be in the best interest of the country that is importing.

Accepted Answer

A countervailing duty is a tariff imposed by an importing country on products that are subsidized by the exporting country and are being sold at lower prices. It is not necessarily used to restrict the amount of imports, but rather to make the imported products less competitive by increasing their prices.

Question 15

Countertrade includes for distinct transactions: retail,wholesale,producer,and government.

Accepted Answer

Countertrade refers to a range of barter-like transactions that facilitate the exchange of goods or services between countries. It can involve four main transaction types: government-to-government, producer-to-producer, wholesale, and retail. So the given statement is false as it did not mention government-to-government transaction.

Question 16

Companies that use pricing to achieve marketing objectives are engaged in static pricing.

Accepted Answer

If prices are viewed as an active instrument of accomplishing marketing objectives, the company sets prices (rather than following market prices) to achieve specific objectives, whether targeted returns on profit, targeted market shares, or some other specific goals.

Question 17

Setting the right price for a product can be the key to success or failure in the international marketplace.

Accepted Answer

The price is an important factor in determining the demand for a product in the international market. If the price is too high or too low, it can impact the sales and affect the profitability of the business. Therefore, setting the right price is crucial for the success of a product in the international market.

Question 18

Leasing helps to guarantee better maintenance and service on overseas equipment.

Accepted Answer

When equipment is leased, the leasing company typically requires regular maintenance and service to ensure the equipment remains in good condition. This can help to guarantee better maintenance and service on overseas equipment.

Question 19

Parallel imports develop when importers buy products from more than one country.

Accepted Answer

The possibility of a parallel market occurs whenever price differences are greater than the cost of transportation between two markets.

Question 20

By shipping unassembled goods to a free trade zone in an importing country,a marketer can lower costs in a variety of ways.One of these ways is that import taxes are completely skipped by following such a practice.

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. If labor costs are lower in the importing country, substantial savings may be realized in the final product cost. Ocean transportation rates are affected by weight and volume; thus unassembled goods may qualify for lower freight rates. If local content, such as packaging or component parts, can be used in the final assembly, tariffs may be further reduced.

Quiz 18: Pricing for International Markets