International Marketing Final Exam

Front 1

What is the difference between direct and indirect channels of distribution?

Back 1

Direct channel: deals directly with a foreign firm

Indirect channel: deals with a home-country-based intermediary

Front 2

What is the difference between an agent and a merchant intermediary?

Back 2

Agents:
- Do not take title to the product
- Act on behalf of the manufacturer

Merchant intermediaries:
- Take title to the product
- Act in their own name

Front 3

What is the main purpose of the Webb-Pomerene Association?

Back 3

Exempts associations of U.S. firms engaged in export trade from U.S. antitrust laws, so long as they do not restrain any U.S. competitor of the association.

Front 4

What does a foreign freight forwarder do?

Back 4

Acts as an exporter's agent for:
- Scheduling
- Routing
- Consolidating shipments
- Preparing documents
- Providing marine and war risks insurance

Front 5

What are the different roles of an export management company (list six)?

Back 5

- Conduct marketing research
- Find distributors or agents
- Represent at trade shows
- Handle export documentation
- Handle payment
- Help in promotion
- Handle correspondence
- Handle logistics
- Consult on legal issues

Front 6

What are two examples of piggybacking?

Back 6

- Whirlpool uses Sony only in Japan

- Perrier marketed Lindt, the Swiss chocolate, in the U.S.

Front 7

What are the three types of direct-distribution agent intermediaries?

Back 7

- Overseas sales representatives
- Overseas purchasing agents
- Export brokers

Front 8

What are the three types of direct-distribution merchant intermediaries?

Back 8

- Foreign retailers
- Export distributors
- Trading companies

Front 9

List the six factors affecting the choice of distribution channels.

Back 9

- Nature of the product
- Cost
- Investment requirements
- Level of control
- Market coverage
- Continuity

Front 10

List the five reasons distribution systems can become fragmented.

Back 10

- Higher transaction costs
- Financing may be necessary
- Narrower assortment
- Limited coverage
- Less effective promotions/product displays

Front 11

What are four of the major global trends in distribution?

Back 11

- Increasing size of retailers
- Internationalization
- Growth in discounting
- International franchising

Front 12

True or false: the United States had a trade DEFICIT in 2006.

Back 12

- True.

Front 13

What are the two types of export licenses, and what do they do?

Back 13

- general license

- validated license

Front 14

What are the reasons for controlling exports (list six)?

Back 14

- National security
- Missile technology
- Nuclear nonproliferation
- Chemical & biological weapons
- Anti-terrorism
- Crime control
- Regional stability
- Short supply
- UN sanctions

Front 15

What does ECCN stand for, and what does it do?

Back 15

- Export Control Classification Number

- Determines whether a validated license is required.

Front 16

What is a bill of lading?

Back 16

- A contract between the owner of the goods and the carrier (as with domestic shipments)

Front 17

List four examples of export documents.

Back 17

- Bill of lading
- Shipper's Export Declaration (SED)
- Consular Invoice or Certificate of Origin
- Commercial Invoice
- Insurance Certificate
- Inspection Certificate

Front 18

List the five main methods of receiving payment in ascending order of risk.

Back 18

- Cash in advance
- Letter of Credit
- Export Drafts (Bill of Exchange)
- Open Account
- Consignment

Front 19

Explain the process that occurs in a letter of credit agreement.

Back 19

1) L/C is opened by a foreign customer at local bank and sent to U.S. bank.

2) L/C is confirmed by U.S. bank and sent to exporter.

3) Exporter approves terms and conditions of L/C and ships goods to the foreign customer.

4) Exporter sends shipping documents to U.S. bank and a draft for payment.

5) U.S. bank examines the documents and if they match terms and conditions of the L/C, the bank pays the exporter for the goods.

Front 20

What is a duty-free zone?

Back 20

- Government-owned or closely supervised facilities that permit importation of goods without paying any duties for as long as the goods remain within the zone.

Front 21

List the five main benefits of using duty-free zones.

Back 21

- Cash flow management
- Lower insurance cost
- Quota management
- Processing: no taxes on value added
- Re-exporting

Front 22

List the four methods of countertrade.

Back 22

- Pure barter
- Switch trading
- Clearing agreement
- Buyback barter

Front 23

Draw the process of marketing communication.

Back 23

Source > Coded Message > Medium of transmission > Decoded message > Receiver or audience

< Feedback <

~~Noise~~~~~~~~~~Noise~~~~

Front 24

What are the four components of the promotional mix?

Back 24

- Personal selling
- Public relations
- Sales promotons
- Advertising

Front 25

What are some of the factors that help to decide whether to use standardization or adaptation (list five)?

Back 25

- Advertising objectives (eg, AIDA)
- Target market
- Product characteristics
- Media availability
- Availability of advertising agencies
- Cost-benefit relationship

Front 26

Describe the three main points of the decision-making framework for advertising standardization, explaining each briefly.

Back 26

1) Identification: Does the target group have unique and measurable characteristics?

2) Response: Will this group respond differently but more favorably than other groups to the adapted promotion?

3) Cost/Benefit Analysis: Will the extra cost associated with adaptation be less than the incremental profit?

Front 27

What are some examples of short-term promotional efforts directed to the consumer or business customer (list three)?

Back 27

- Facilitate immediate sale
- Facilitate product trial
- Improve intermediary cooperation
- Introduce product (trade shows)

Front 28

What are two types of restrictions or constraints placed on international promotion? List and give an example for each.

Back 28

- Legal restrictions
- Use of premiums

- Cultural constraints
- Use of coupons
- Use of free samples

Front 29

There are ten commandments for local P&R. List seven of them.

Back 29

- Provide autonomy in decision-making.
- Retain earning in the host country
- Encourage exports from the host country
- Conduct local R&D
- Use local sources of supply
- Offer equity to the host country investors
- Provide employment at all levels
- Maintain fair prices
- Engage in cause-related marketing

Front 30

What are the four approaches to setting the promotional budget?

Back 30

- Objective-and-task: Calculating costs to meet objectives
- Percent-of-sales: Fixed cost based on traditional spending
- Competitive Parity: Matching competitor's spending
- Arbitrary: Setting budget as company executive dictates

Front 31

What are the three methods for organizing for international promotions?

Back 31

- Centralized approach
- Decentralized approach
- Coordinated decentralization

Front 32

What are the three main tasks of personal selling?

Back 32

- Sales generation: getting new orders from existing and new customers

- sales support: relationship building

- missionary selling: generating goodwill and interest in the product

Front 33

What are the three sources for recruiting an international sales force?

Back 33

- Expatriates
- Natives
- Third-country nationals

Front 34

What are the four stages in cross-cultural negotiations?

Back 34

- Non-task sounding: relationship building
- Positioning: exchange of information
- Persuasion: the actual negotiation
- Concessions and Agreement

Front 35

What are the four main pricing factors?

Back 35

- Experience curve effect
- Competition
- Elasticity of demand
- Government regulations

Front 36

What is the difference between cost approach and market approach to pricing?

Back 36

Cost approach takes into consideration only the fixed and variable costs associated with producing the product; market approach takes into consideration the perceived market value of the product.

Front 37

List the INCOTERMS selected trade terms from origin to destination, with a brief understanding of each.

Back 37

1) EXW: Origin (factory, mine, warehouse)

2) FCA: Named inland carrier at named inland point of departure

3) FCA: Named inland carrier at named port of exportation

4) FAS: Named port of shipment

5) FOB Vessel: Named port of shipment

6) CFR/CIF: Named port of destination

7) DDU/DDP: Named place of destination

Front 38

What is the formula for currency appreciation?

Back 38

R = [(E0-E1)/E0 ] * 100

R = rate of appreciation
E0 = direct quote at time 0
E1 = direct quote at time 1

Front 39

How can a company deal with price escalation in exporting?

Back 39

- Lowering the cost of goods
- Lowering tariffs
- Lowering distribution costs

Front 40

What are the three levels of transfer pricing?

Back 40

- At manufacturing cost
- At arm's length
- At cost plus

Front 41

What are two methods of dumping, in terms of pricing?

Back 41

- Selling below cost of production

- Selling below price in the home market