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24 Cards in this Set

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  • Back
Determinations of an Export Price: What are the basic factors for setting an export price?
-Costs
-Market conditions and customer behavior (demand or value)
-Competition
-Legal and political issues
-General company policies
Cost pricing suggest fairness and reasonableness.

Any consideration of costs requires knowledge about volume
True
Value to purchasers (demand) set a _____ _______.
price ceiling
Demand may be determined by:
Asking people, barter experiment, test market pricing, comparison to substitute products, statistical analysis.
Competition: More significant barriers = what?
More pricing freedom
Competition: Increased competition results in what?
price cuts (EU market)
Law against selling in foreign markets at prices below those in the home country market.
Antidumping legislation
Product decisions affect both what?
Costs and what consumer is willing to pay.
What sets price ceiling?

What sets costs?
Value to customer sets price ceiling; price floor set by costs
Fundamental Export Pricing Strategy:
________ _____ (____ ____) based on expected decline in costs as accumulated volume increases.
Experience curve (learning curve)
Fundamental Export Pricing Strategy:

What is starting with a high price, lower as small market at top is exhausted, and repeat?
Skimming the market
Fundamental Export Pricing Strategy:

What is it called when a company reduces prices faster and further in order to establish itself in the market?
Sliding down the demand curve
Fundamental Export Pricing Strategy:

Setting price lower; assumes high degree of price elasticity of demand
Expansionist pricing
Fundamental Export Pricing Strategy:

This strategy discourages potential competitors and takes advantage of experience curves.
Pre-emptive pricing
Fundamental Export Pricing Strategy:

This strategy eliminates existing competitors and may involve dumping, legal problems.
Extinction pricing
Fundamental Export Pricing Strategy:

High or low price determined by:
-Product, characteristics

-Present and future foreign market: projected size and acceptance of product

-Financial and technical ability of exporter to meet demand.
Relation of Export to Domestic Price Policies:
What happens when Export Prices are lower than Domestic?
-Product is less known in foreign markets; to secure market acceptance and initial purchase the lowest possible price should be quoted.
Relation of Export to Domestic Price Policies:

What happens when Export Prices are higher than Domestic?
-Extra investment is needed to enter foreign markets; extra expenses; slower turnover; risk
Relation of Export to Domestic Price Policies:

What happens when Export Prices are on par with Domestic?
-Permits pricing felt to be necessary and fair.

-Gives a feeling of safety when inadequate information is available.

-To avoid antidumping problems
Relation of Export to Domestic Price Policies:

______ ______ is for setting a different price to each market.

Effective separation of markets is necessary condition!
Differential pricing
Relation of Export to Domestic Price Policies:

For differential elasticity of demand, high price elasticity suggests low prices; price inelasticity suggests high prices.
True
Relation of Export to Domestic Price Policies:

Differential pricing is appropriate for what?
Varying market strategies; product line considerations; product line pricing; modification requirements
Sources of Information on Transfer Pricing:

-Limited flexibility in setting transfer prices.

-May be limited by law, used for managerial control, or to influence location of recorded profits.
Decentralization and profit centers
Sources of Information on Transfer Pricing:

Transfer prices affect customs duty and location of profits.
True