63. 8 questions associated with target costing: Does the price reflect the product's quality?

Is the price competitive given local market conditions?

Should the firm pursue market penetration, market skimming, osome other pricing objective?
What type of discount (trade, cash, quantity) and allowance (advertising, trade-off) should the firm offer its international customers?
Should prices differ with market segment?
What pricing options are available if the firm's costs increase or decrease? Is demand in the international market elastic or inelastic?
Are the firm's prices likely to be viewed by the host-country government as reasonable or exploitative?
Do the foreign country's dumping laws pose a problem?
88. additional considerations for exporting: Governmental policies
Marketing concerns
Logistical considerations
Distribution issues
91. advantages and disadvantages international licensing: Advantages
Low financial risks
Low-cost way to assess market potential
Avoid tariffs, NTBs, restrictions on foreign investment
Licensee provides knowledge of local markets
Disadvantages
Limited market opportunities/profits
Dependence on licensee
Potential conflicts with licensee
Possibility of creating future competitor
96. advantages and disadvantages of international contract manufacturing: Advantages
Low financial risks
Minimize resources devoted to manufacturing
Focus firm's resources on other elements of the value chain
Disadvantages
Reduced control (may affect quality, delivery schedules, etc.)
Reduce learning potential
Potential public relations problems
93. advantages and disadvantages of international franchising: Advantages
Low financial risks
Low-cost way to assess market potential
Avoid tariffs, NTBs, restrictions on foreign investment
Maintain more control than with licensing
Franchisee provides knowledge of local market
Disadvantages
Limited market opportunities/profits
Dependence on franchisee
Potential conflicts with franchisee
Possibility of creating future competitor
98. advantages and disadvantages of international management contracts, turnkey projects and foreign direct investment:
Advantages
Focus firm's resources on its area of expertise
Minimal financial exposure
Disadvantages
Potential returns limited by contract expertise
May unintentionally transfer proprietary knowledge and techniques to contractee
54. advantages of regional trade agreements: More people to trade with, small population markets become more favorable
14. arbitrage: resale in a second market in order to profit from a price discrepancy
15. arbitrage of goods and arbitrage of money: Arbitrage of Goods, people buy the good in the market offering the lower price and resell it
in the market offering the higher price
Arbitrage of Money, seek to profit from small differences in the price of foreign exchange in different markets
International Marketing
Study online at quizlet.com/_34klw
73. assessing pricing environment: Currency fluctuations
Inflationary environment
Government controls, subsidies, regulations
Competitive behavior
Sourcing
83. assessing the new market opportunities: Product-market dimensions
Major product-market differences
Structural characteristics of national market
Competitor analysis
Potential target markets
Relevant trends
Explanation of change
Success factors
Strategic options
66. Be able to list and explain the various incoterms.: Ex-worksseller places goods at the disposal of the buyer at the time specified in
the contract; buyer takes delivery at the premises of the seller and bears all risks and expenses from that point on.
Delivery duty paidseller agrees to deliver the goods to the buyer at the place he or she names in the country of import with all costs,
including duties, paid.
FAS (free alongside ship) named port of destinationseller places goods alongside the vessel or other mode of transport and pays all
charges up to that point
FOB (free on board)seller's responsibility does not end until goods have actually been placed aboard ship
CIF (cost, insurance, freight) named port of destinationrisk of loss or damage of goods is transferred to buyer once goods have passed the
ship's rail
CFR (cost and freight)seller is not responsible at any point outside of factory
112. broad based media, horizontal media and vertical media: Broad-based media
business Week, The Wall Street Journal
Horizontal media
focus on a particular marketing task
(Purchasing World)
Vertical media
focus on a particular market or industry (Trucker World)
23. causes of Asian financial crisis: Interest rates in the United States went up. People took their money from Asia to put it in the United
States (Previously rates were low). Poor regulations in Asian markets. Instability and over interconnectedness within the Asian financial
markets.
61. companion products: Products whose sale is dependent upon the sale of primary product
114. components of personal selling: Salesperson' has the ability
to adapt to the customer and
the selling situation.
Salesperson must have a
thorough knowledge of the
product or service
109. components of the promotional mix: Advertising
Any form of non-personal communication
Personal Selling
The use of person-to-person communication
Publicity
Non-paid, commercially significant news
Sales Promotion
Direct inducements of extra value or incentives
Sponsorship
Promoting interests of company by association
95. contract manufacturing: used by firms, both large and small, that outsource most or all of their manufacturing needs to other
companies. This strategy reduces the financial and human resources firms need to devote to the physical production of their products.
41. controling for unfair trade practices: The Department of Commerce transfers confirmed cases of unfair trading to the U.S.
International Trade Commission, If a majority of the six ITC commissioners decide that U.S. producers have suffered "material injury," the
ITC will impose duties on the offending imports to counteract the unfair trade practice
43. Controlling unfair trad: Countervailing duties
Anti-dumping regulation
100. the core, tangible and augmented products: The Core Product
a product or services that is essentially the same as that of competitors.
The Tangible Product
a product or service that is differentiated composition, origin, or tangible features from competing products.
The Augmented Product
a product or service which is serviced after the sale and carries a warrantee from the producer, producing a continuing relationship with the
seller.
24. countries involved in the currency crisis: Indonesia, South Korea, Taiwan, Singapore, Malaysia
105. country of origin considerations: Organizational capabilities
Is it worth it
Can we afford not to do it
Can a specific return-on-investment (ROI) be attained
Quality, price, and user perceptons
Warranties
Managerial talent?
104. country of origin effects: a product may have a strong effect on consumer perceptions and biases about foreign products
2. demand for Yen: derived from foreigners' demand for Japanese products
86. direct and indirect forms of exporting?: Indirect exporting occurs when a firm sells its product to a domestic customer, which in turn
exports the product, in either its original form or a modified form
Direct exporting occurs through sales to customerseither distributors or end-userslocated outside the firm's home country
116. direct marketing: Is intended to elicit immediate and measurable responses to direct-response advertising, telemarketing, and direct
selling.
4. Direct quote: Price of the foreign currency in terms of the home currency
55. disadvantages of regional trade agreements: Kills small suppliers
80. dumping: Sale of an imported product at a price lower than that normally charged in a domestic market or country of origin
44. dumping: Selling at a price in a foreign market that is below production costs
30. Economic development programs: diversify economies to reduce the impact of, a bad harvest or falling prices for the dominant export
through export promotion or import substitution
51. economic integration: A free trade area
A customs union = external trade policies toward nonmembers.
common market = eliminate barriers that inhibit the movement of factors of production
economic union= coordinate economic policies
political union = the complete political as well as economic integration of two or more countries
67. environmental influences on pricing: Currency fluctuations
Inflationary environment
Government controls, subsidies, regulations
Competitive behavior
Sourcing
19. Eurocurrency market: currency on deposit outside in banks worldwide
26. example of a grey market: RCA in Canada
68. examples of government regulations, controls and subsidies: Dumping legislation
Resale price maintenance legislation
Price ceilings
General reviews of price levels
47. exceptions to mfn: developing countries and regional arrangements
78. exporter strategies when there is a weak or strong currency position: Go naked
Buy currency forward
Buy currency future
Buy currency option
Acquire offsetting asset
101. factors encouraging standardization and adaptation: FACTORS ENCOURAGING STANDARDIZATION
Economies of scale in production
Economies in product R&D
Economies in marketing
"Shrinking" of the world marketplace/economic integration
Global competitions
FACTORS ENCOURAGING ADAPTATION
Differing use conditions
Government and regulatory influences
Differing consumer behavior patterns
Local competition
True to the marketing concept
1. foreign exchange: a commodity that consists of currencies issued by countries other than one's own
82. foreign market analysis: Assess alternative markets
Evaluate the respective costs, benefits, and risks of entering each
Select those that hold the most potential for entry or expansion
85. forms of exporting?: Indirect exports
Direct exports
Intracorperate transfers
64. forms of target costing: Cost based pricing
Full absorption method
Rigid cost-plus pricing
Flexible cost plus pricing.
53. fortress Europe: A large movement to have one immigration policy across the Europe Union
9. Forward discount: Depreciation
7. forward market: Consists of foreign exchange transactions that are to occur sometime in the future
8. Forward premium: Appreciation
27. free and fair trade: Free trade implies that the national government exerts minimal influence on the exporting and importing decisions
of private firms and individuals
Fair trade suggests that the national government should ensure exports receive an equitable share of foreign markets and that imports are
controlled to minimize losses of jobs and market share
45. GATT: Developed as part of the Havana, Cuba, conference in 1947
Provided forum for trade ministers to discuss barriers to international trade, goal was to promote a free and competitive international
trading environment benefiting efficient producers by sponsoring multilateral negotiations to reduce tariffs, quotas, and other nontariff
barriers
71. gray market issues: Dilution of exclusivity
Free riding
Damage to channel relationships
Undermining segmented pricing schemes
99. Greenfield strategy: Best site
Modern facilities
Economic development incentives
Clean slate
25. grey market: Buying/selling a products legally, but through unauthorized channels of distribution
11. hard and soft currency: Hard currency is easily convertible anywhere in the world
Soft currency is not easily exchangeable
18. how international banks establish themselves overseas: subsidiary bank- separately incorporated from the parent
branch bank- not separately incorporated
affiliated bank- overseas operation with part ownership in conjunction with a local or foreign partner.
76. incoterms: Ex-worksseller places goods at the disposal of the buyer at the time specified in the contract; buyer takes delivery at the
premises of the seller and bears all risks and expenses from that point on
Delivery duty paidseller agrees to deliver the goods to the buyer at the place he or she names in the country of import with all costs,
including duties, paid
FAS (free alongside ship) named port of destinationseller places goods alongside the vessel or other mode of transport and pays all
charges up to that point
FOB (free on board)seller's responsibility does not end until goods have actually been placed aboard ship
CIF (cost, insurance, freight) named port of destinationrisk of loss or damage of goods is transferred to buyer once goods have passed the
ship's rail
CFR (cost and freight)seller is not responsible at any point outside of factory
5. Indirect quote: Price of the home currency in terms of the foreign currency
28. industry level arguments: National defense
Infant industry
Maintenance of existing jobs
Strategic trade
31. Industry policy: The national government identifies key domestic industries critical to the country's future economic growth and then
formulates programs that promote their competitiveness
20. international bond market: Major source of debt financing for governments, International organizations, and Larger firms
92. international franchising: the franchisee, to operate a business under the name of another, called the franchisor, in return for a fee.
Basic Issues:
Does a differential advantage exist in the domestic market?
Are these success factors transferable to foreign locations?
Has franchising been a successful domestic strategy?
90. international licensing: Licensing is when a firm, called the licensor, leases the right to use its intellectual property to another firm,
called the licensee, in return for a fee
Basic Issues
Set the boundaries of the agreement
Establish compensation rates
Agree on the rights, privileges, and constraints conveyed in the agreement
Specify the duration of the agreement
97. international management contract,: an agreement whereby one firm provides managerial assistance, technical expertise, or
specialized services to a second firm for some agreed-upon time in return for monetary compensation
39. international trade barriers: Tariffs
Quantitative restrictions
Non-tariff barriers
87. intracorporate transfer: The sale of goods by a firm in one country to an affiliated firm in another
33. Jones Act: 1920 Act, the United States restricts foreign ships from providing transportation services between U.S. ports. This restriction is
supported by owners of U.S. oceangoing vessels, but, the Jones Act is also estimated to increase the transportation costs that consumers pay
and had unintended consequences
115. levels of exporter involvement in international sales: Indirect exports
Direct exports
Integrated exports
10. major currencies involved in the foreign exchange: USD
EURO
JAPANESE YEN
POUND STERLING
AUSTRALIAN DOLLAR
CANADIAN DOLLAR
13. major foreign exchange clients for the banks: Commercial customers
Speculators
Arbitrageurs
52. major regional trade associations: AFTA
ANCOM
APEC
CACM
CARICOM
CEMAC
CER
ECOWAS
EU
EFTA
GCC
MERCOSUR
NAFTA
SADC
17. major world banks: ING Group
Fortis
Citigroup
Dexia Group
HSBC Holding
BNP Paribas
Credit Agricole
Deutsche Bank
Bank of America Corp.
HBOS
106. marketing communications: The Marketing Communication Process
Be sure to note the field of reference (The culture/context of the receiver)
Sender (encodes message) -> Message -> Message Channel -> Receiver (Decodes Message) -> Communication Outcome -> Feedback -------
>
<<------NOISE ----->>
Noise
Anything that stops the message from being received
Political affiliation etc.
103. method of operation, quality of service, packaging and appearance and method of operation/usage: Product Constituents
and Branding
Care must be taken that the brand in name, symbol, sign, or design does not offend the local customer. Trademarks are especially
vulnerable to counterfeiters.
Selecting the global brand name
Translation
Transliteration
Transparency
Transculture
Packaging and Appearance
Packaging serves three major functions:
Protection
Improper handling and pilferage
Promotion
Language and symbols
User convenience
Packaging aesthetics- color and shape, overall size, and purchase quantity
Adaptations in styling, color, size, and other appearance features play an importance role in how a consumer perceives a product.
Method of Operation or Usage
The product that is operable in in the domestic market may not be operable in the foreign market.
Electrical voltages and connectors vary around the world. English and metric standards are not comparable.
Software may have to be translated into the local language.
Quality and Service
Quality is essential to marketing products internationally, especially in markets where price is an important competitive factor.
ISO compliance may be required by buyers.
Servicing products in international markets requires producers to develop local repair staffs.
75. methods for combating price escalation: use flexible cost-plus pricing
84. modes of entry: Exporting
Indirect exports
Direct exports
Intracorperate transfers
International Licensing
Specialized Modes
Contract manufacturing
Management contracts
Turnkey projects
Foreign Direct Investment
Greenfield strategy
Acquisition strategy
Joint venture
46. most favored nation principle: any preferential treatment granted to one country must be extended to all countries
29. national trade policies: Country must be self-sufficient in critical raw materials, machinery, and technology or else be vulnerable to
foreign threats
108. negotiating internationally: Team assistance
Traditions and customs
Language capability
Determination of authority limits
Patience
Negotiation ethics
Silence
Persistence
Holistic view
The meaning of agreements
77. negotiating terms of payment: Which currency to use for the transaction
When and how to check credit
Which form of payment to use
How to arrange financing
107. negotiations process: The offer
assess each parties' needs and commitment
Informal meetings
trust-building among deal makers
Strategy formulation
review and assess factors to be negotiated
Negotiations
form, informal, short or long
Implementation
37. nontariff barriers: Any policy that has the effect of impeding international trade
22. offshore banking centers and locations: Focus on offering banking and other financial services to nonresident customers
Located in Bahamas, Bahrain, the Cayman Islands, Bermuda, the Netherlands Antilles, Singapore, Luxembourg, Switzerland
59. penetration pricing: Charging a low price in order to penetrate market quickly
Appropriate to saturate market prior to imitation by competitors
81. Porter's generic Strategies: Cost leadership and Market Differentiation
72. price fixing vs. transfer pricing: Price fixing
Representatives of two or more companies secretly set similar prices for their products
Horizontal price fixing
Vertical price fixing
Transfer Pricing
Pricing of goods, services, and intangible property bought and sold by operating units or divisions of a company doing business with an
affiliate in another jurisdiction
Intra-corporate exchanges
Cost-based transfer pricing
Market-based transfer pricing
Negotiated transfer pricing
60. price skimming: Charging a premium price
May occur at the introduction stage of product life cycle
58. pricing objectives-: Unit sales
Market share
Return on investment
69. pricing strategy: If competitors do not adjust their prices in response to rising costs, it is difficult to adjust your pricing to maintain
operating margins
If competitors are manufacturing or sourcing in a lower-cost country, it may be necessary to cut prices to stay competitive.
Using Sourcing as a Strategic Pricing Tool
Marketers of domestically manufactured finished products may move to offshore sourcing of certain components to keep costs down and
prices competitive
56. pricing vs. marketing mix: Most flexible of the four Ps
102. product decisions affected by the decision to standardize or adapt: The fundamental international product decision after the
decision to internationalize.
International market approach alternatives to adaptation.
Sell the product as it is internationally.
Modify product for different countries or regions.
Design new products for foreign markets.
Incorporate all differences into one product and introduce it globally.
40. promoting international trade: Subsidies to local companies
Foreign trade zones
Export financing
Export promotion
32. Public choice analysis: Special interest groups are willing to work harder for the passage of laws favorable to their interests than the
general public is willing to work for the defeat of laws unfavorable to its interests
111. pull strategies: Depend on mass communications (advertising of consumer-oriented goods) to reach target audiences over long
distribution channels.
74. purchase and pricing factors: Price floor
Price ceiling
Optimum prices: function of demand
110. push strategies: Focus on personal selling, considered essential in international marketing of industrial goods.
38. quantitative trade barriers: barriers to trade in the form of numerical limits on the amount of a good it will export
113. reasons for trade show participation and reasons not to participate: Reasons for participation
Customer can examine the product.
Goodwill and contact cultivation.
Locating a trade intermediary.
Opportunity to meet government officials and decision makers.
Opportunity for market research and collecting competitive intelligence.
Exporters able to reach sales prospects in brief time period at reasonable cost per contact.
Reasons for not participating
High cost.
Identifying the "right" trade shows to participate in.
Coordination.
12. role of the bank in the foreign exchange process: Work between central banks and individual consumers and charge fee for
converting currencies
57. Setting prices internationally: Whether or not it should be a different price than domestically, cost-plus etc
79. sources of export financing: Export import bank
Payment in advance
Open account
Documentary collection
Letter of credit
Credit card
Countertrade
94. specialized entry modes: Contract Manufacturing
Management Contract
Turnkey Project
6. spot market: Consists of foreign transactions that can be consummated immediately
3. supply for Yen: derived from Japanese demand for foreign products
62. target costing process: Cost-based pricing is based on an analysis of internal and external cost
34. tariffs: tax placed on a good that is traded internationally to raise revenues for national governments or act as a barrier to trade
16. three point arbitrage: Step 1: Convert 1 into $2.
Step 2: Convert the $2 into 240.
Step 3: Convert the 240 into 1.2.
70. three pricing policy options: Ethnocentric/Extension
Per-unit price of an item is the same no matter where in the world the buyer is located
Importer must absorb freight and import duties
Polycentric/Adaption
Permits affiliate managers or independent distributors to establish price as they feel is most desirable
Sensitive to market conditions but creates potential for gray marketing
Geocentric
Recognized that several factors are relevant to pricing decision
Local costs
Income levels
Competition
Local marketing strategy
36. three types of import tariffs: An ad valorem tariff is assessed as a percentage of the market value of the imported good
A specific tariff is assessed as a specific dollar amount per unit of weight or other standard measure
A compound tariff has both an ad valorem component and a specific component
21. Two types of bonds: Foreign bonds and Eurobonds
35. two types of tariffs: Export and import
89. types of export intermediaries: Management Company
Webb-Pomerene Association
International Trading Company
Other Intermediaries
42. Types of unfair trade: Government subsidies
Unfair pricing practices
65. various terms of the sale: Obtain export license if required
Obtain currency permit
Pack goods for export
Transport goods to place of departure
Prepare a land bill of lading
Complete necessary customs export papers
Prepare customs or consular invoices
Arrange for ocean freight and preparation
Obtain marine insurance and certificate of the policy
48. WTO: Promote trade flows by encouraging nations to adopt nondiscriminatory, predictable trade policies
Reduce remaining trade barriers through multilateral negotiations
Establish impartial procedures for resolving trade disputes among members
49. WTO and GATT: GATT focused on promoting trade in goods; WTO's mandate includes:
trade in goods
trade in services
international intellectual property protection
trade-related investment
WTO's enforcement powers are stronger
50. WTO enforcement: WTO panel evaluates complaints and if found in violation, the country may be asked to eliminate the trade barrier