This Document Contains Chapters 13 to 15 Chapter 13: Advertising, Promotion, and Sales TRUE/FALSE 1. The path through which the message moves from the sender to the receiver is known as the message pipeline. Answer: False 2. The international marketer should ignore cultural noise. Answer: False 3. The success of the communications effort can be analyzed by observing feedback. Answer: True 4. Campaign objectives need not be measurable. Answer: False 5. If multimarket target audience similarities exist, then panregional or global campaigns can be attempted. Answer: True 6. Advertising budgets should be set on a market-by-market basis. Answer: True 7. The major problems affecting global promotional efforts involve conflicting national regulations. Answer: True 8. A major objective of media strategy is to reach the intended target audience irrespective of the waste incurred. Answer: False 9. The reason behind using global advertising for global marketing is that significant cost savings can be realized through a single worldwide ad campaign. Answer: False 10. The main concern arising from the use of mega-agencies is conflict. Answer: True 11. Centralization involves relaxing most of the controls over foreign affiliates and allowing them to pursue their own promotional approaches. Answer: False 12. Advertising involves direct relations between the seller and the prospective buyer or customer. Answer: False 13. The cost per contact for personal selling is extremely low. Answer: False 14. For sales promotion to be effective, the campaign planned by manufacturers must gain the support of the local retailer population. Answer: True 15. An appearance at a trade show produces goodwill and allows for periodic cultivation of contacts. Answer: True 16. Trade fairs provide an excellent chance for market research and collecting competitive intelligence. Answer: True 17. The public perceives advertising as more trustworthy than publicity. Answer: False 18. The reducing costs of sponsorship and the ease of establishing return on investment encourage marketers to involve themselves in sponsorship marketing. Answer: False 19. The authorized use of an event with the permission of the event owner is called ambush marketing. Answer: False 20. Cause-related marketing should be developed mainly as a response to a crisis or to generate publicity. Answer: False MULTIPLE CHOICE 1. The process of converting a message into a symbolic form so that it is properly understood by the receiver is called ____________. a. forwarding b. encoding c. decoding d. kinesics Answer: B 2. The message ____________ is the path through which the message moves from source to receiver. a. pathway b. pipeline c. tunnel d. channel Answer: D 3. Once a sender has placed a message into a channel or a set of channels and directed it to the intended destinations, the completion of the process is dependent on the receiver’s ____________. a. feedback b. forwarding c. decoding d. outcome Answer: C 4. ____________ refers to the interference that is caused when a message moving through a channel gets subjected to the influence of extraneous and districting stimuli. a. Noise b. Feedback c. Decoding d. Disarray Answer: A 5. Which of the following is a kind of marketing in which the company, or one of its brands, is linked to issues such as environmental protection or children’s health? a. Loyalty marketing b. Cause-related marketing c. Relationship marketing d. Personalized marketing Answer: B 6. Natural Waters Inc. is a packaged drinking water company based in Ohio. The company contributes a bottle of water to every 10 sold in the U.S., to a foundation in Africa that supplies it to the poor. Identify the type of marketing undertaken by Natural Waters. a. Loyalty marketing b. Cause-related marketing c. Relationship marketing d. Personalized marketing Answer: B 7. ____________ is an umbrella campaign to boost the image of lesser-known product lines or make the company itself be understood correctly or perceived more positively. a. Personal selling b. Market segmentation c. Corporate image advertising d. Undifferentiated marketing Answer: C 8. Which of the following statements about local campaign objectives is true? a. They are exclusively product-related. b. They set measurable targets for individual markets. c. They are developed exclusively by headquarters. d. They are related solely to the entity itself. Answer: B 9. The major problems affecting global promotional efforts involve ____________. a. conforming to the uniform legal standards globally b. homogeneous global demands c. conflicting national regulations d. undifferentiated marketing demands Answer: C 10. Creating brand awareness by featuring a product in visual media such as movies, TV shows, videogames, or Internet sites is known as ____________. a. CGM marketing b. cause-related marketing c. product differentiation d. product placement Answer: D 11. A media strategist would need data on all of the following EXCEPT ____________. a. media audiences b. product placement c. advertising exposure d. media distribution Answer: B 12. Developing the promotional message is referred to as ____________. a. ambush marketing b. creative strategy c. sales promotion d. cooperative advertising Answer: B 13. The ideal situation in developing a message strategy is to have a ____________, which refers to a product that is manufactured, packaged, and positioned the same globally. a. world brand b. product class c. brand mark d. product family Answer: A 14. ____________ involves relaxing most of the controls over foreign affiliates and allowing them to pursue their own promotional approaches. a. Centralization b. Glocalization c. Localization d. Decentralization Answer: D 15. ____________ involves direct relations between the seller and the prospective buyer or customer. a. Advertising b. Personal selling c. Sales promotion d. Publicity Answer: B 16. Which of the following is true about personal selling? a. It allows for immediate feedback on customer reaction as well as information on markets. b. Its costs per contact are the least amongst the different types of promotional tools. c. It is similar to advertising as it involves no direct relations between the seller and the buyer. d. It is the least effective of the promotional tools available to the marketer. Answer: A 17. When an exporter uses indirect exports to reach international markets, the export process is said to be ____________. a. internalized b. externalized c. outsourced d. localized Answer: B 18. Which of the following is a disadvantage of direct exports? a. Exporters have to engage in cooperative advertising which decreases the overall promotional budget for the product. b. Exporters will have no opportunity to sell the product with intermediaries. c. Exporters encounter possible gatekeeping by intermediaries. d. Exports have to face minor learning about sales in the markets that buy the product. Answer: C 19. ____________ will give the exporter’s product local flavor and increase the overall promotional budget for the product. a. Ambush marketing b. Database marketing c. Cooperative advertising d. Internal public relations Answer: C 20. What is the purpose of direct marketing? a. To use an event without the permission of the event owner b. To establish a relationship with a customer in order to initiate immediate and measurable responses c. To give the exporter’s product local flavor and increase the overall promotional budget for the product d. To be prepared to utilize the tremendous power of the multinational corporation in a responsible manner and, in the case of pressure, to counter criticisms swiftly Answer: B 21. Which of the following is an advantage of the Internet? a. Every individual around the world is connected via the Internet. b. There are hardly any adjustments that need to be made by exporters for each market served. c. Internet diffusion always reaches the targeted customer. d. The Internet provides the opportunity to actually close sales. Answer: D 22. ____________ marketing allows the creation of an individual relationship with each customer or prospect. a. Ambush b. Sponsorship c. Database d. Undifferentiated Answer: C 23. Which of the following is a sales promotion activity directed at intermediaries? a. Couponing b. Cooperative advertising c. Premiums d. Cents-off packs Answer: B 24. Which of the following is an argument in favor of the participation of exporters in a trade show? a. Due to the availability of resources, there is no difficulty in choosing the appropriate trade fairs for participation. b. The low costs associated with trade shows enable exporters to reach a sizable number of sales prospects in a brief time period. c. There is a constant level of coordination among larger exporters with multiple divisions. d. The opportunity to find an intermediary may be one of the best reasons to attend a trade show. Answer: D 25. Which of the following is a reason for nonparticipation in trade shows? a. It is difficult for the firm to choose the appropriate trade fairs for participation. b. Exporters are able to reach a sizable number of sales prospects but over an extensive time period. c. Exporters are able to reach a sizable number of sales prospects but at very high costs per contact. d. They are an expensive way of obtaining evaluative data on the effectiveness of a promotional campaign. Answer: A 26. ____________ is the marketing communications function charged with executing programs to earn public understanding and acceptance, which means both internal and external communication. a. Cooperative advertising b. Sales promotion c. Ambush marketing d. Public relations Answer: D 27. External public relations is focused on interactions with ____________. a. employees b. supervisors c. customers d. managers Answer: C 28. Which of the following is true about public relations? a. The public relations function is handled exclusively by the human resources department of the firm. b. The employee publication is produced and edited typically by the company’s external public relations. c. Companies might require reactive public relations in case of any unanticipated developments in the marketplace. d. The use and extent of public relations activity will remain constant irrespective of the company and the type of activity needed. Answer: C 29. ____________ is the securing of editorial space to further marketing objectives. a. Public relations b. Advertising c. Publicity d. Personal selling Answer: C 30. ____________ is a form of communication where consumers can find or initiate topics of interest on the Web and engage in online discussions using bulletin boards, blogs, podcasts, and Web sites. a. CPM b. CRM c. CGM d. CAD Answer: C 31. ____________ marketing involves the marketer’s investment in events or causes and is specially directed for the most part at sports events and cultural events. a. Ambush b. Custom c. Sponsorship d. Channel Answer: C 32. SigmaDrinks Inc., a Florida-based soft drinks manufacturing company, has been providing funds to promote local cultural events in Florida. It has recently started providing funds for literary events at schools and colleges in other states too. What kind of marketing is SigmaDrinks demonstrating? a. Ambush marketing b. Channel marketing c. Sponsorship marketing d. Piggyback marketing Answer: C 33. ____________ marketing is the use of an event without the permission of the event owner. a. Event b. Cause c. Ambush d. Personalized Answer: C 34. SnackTime Inc., a manufacturer of snacks, was the official sponsor of a cultural event conducted in Tampa, Florida. During the course of the event, it was noticed that other local snack competitors had placed their stalls outside the venue, selling their snacks and soft drinks. What kind of marketing is being demonstrated by SnackTime’s competitors? a. Cause-related marketing b. Piggyback marketing c. Ambush marketing d. Channel marketing Answer: C 35. Which of the following is true about cause-related marketing? a. It is developed mainly as a response to a crisis. b. It is developed to increase the firm’s profits. c. It is developed as a social vision and a long-term social policy. d. It is developed mostly as a piecemeal effort to generate publicity. Answer: C ESSAY 1. Explain the significance of local campaign objectives. Answer: The objectives that are set at the local level are more specific and set measurable targets for individual markets. These objectives may be product- or service-related or related to the entity itself. Typical goals are to increase awareness, enhance image, and improve market share in a particular market. Whatever the objective, it has to be measurable for control purposes. Local objectives are typically developed as a combination of headquarters (global or regional) and country organization involvement. Basic guidelines are initiated by headquarters, whereas local organizations set the actual country-specific goals. These goals are subject to headquarters approval, mainly to ensure consistency. Although some campaigns, especially global ones, may have more headquarters involvement than usual, local input is still quite important, especially to ensure appropriate implementation of the subsequent programs at the local level. 2. What are the reasons for a firm’s nonparticipation in trade fairs? Answer: The following are among the reasons cited for a firm’s nonparticipation in trade fairs: 1. High costs - These can be avoided by participating in events sponsored by the U.S. Department of Commerce or exhibiting at U.S. trade centers or export development offices. An exporter can also lower costs by sharing expenses with distributors or representatives. Further, the costs of closing a sale through trade shows are estimated to be much lower than for a sale closed through personal representation. 2. Difficulty in choosing the appropriate trade fairs for participation - This is a critical decision. Because of scarce resources, many firms rely on suggestions from their foreign distributors on which fairs to attend and what specifically to exhibit. 3. For larger exporters with multiple divisions, the problem of coordination - Several divisions may be required to participate in the same fair under the company banner. Similarly, coordination is required with distributors and agents if joint participation is desired, which requires joint planning. 3. Explain crisis management. Answer: Crisis management is becoming more formalized in companies, with specially assigned task forces ready to step in if problems arise. In general, companies must adopt policies that will allow them to effectively respond to pressure and criticism, which will continue to surface. Crisis management policies should have the following traits: (1) openness about corporate activities, with a focus on how these activities enhance social and economic performance; (2) preparedness to utilize the tremendous power of the multinational corporation in a responsible manner and, in the case of pressure, to counter criticisms swiftly; (3) integrity, which often means that the marketer must avoid not only actual wrongdoing but also the mere appearance of it; and (4) clarity, which will help ameliorate hostility if a common language is used with those pressuring the corporation. Chapter 14: Pricing Strategies and Tactics TRUE/FALSE 1. Price is the only element of the marketing mix that is revenue generating. Answer: True 2. Price should be determined in isolation from the other marketing mix elements. Answer: False 3. Skimming is selling goods overseas for less than in the exporter's home market or at a price below the cost of production, or both. Answer: False 4. As more segments of the market are targeted and more of a product is made available, the price is gradually increased. Answer: False 5. If similar products already exist in the target market, market pricing is used. Answer: True 6. When penetration pricing is used, the product is offered at a low price intended to generate volume sales and achieve high market share, which would compensate for a lower per-unit return. Answer: True 7. As in all marketing decisions, the marketing intermediaries establish the basic premise for pricing. Answer: False 8. The cost-plus strategy is the true cost, fully allocating domestic and foreign costs to the product. Answer: True 9. The costs of modifying the product for foreign markets are considered export-related costs. Answer: True 10. Reorganizing the channel of distribution can help overcome price escalation. Answer: True 11. Incoterms are the terms agreed upon by nation states that allow for the incorporation of companies as recognized globally. Answer: False 12. The most favorable term to the exporter is cash in advance. Answer: True 13. The most favorable term to the importer is consignment selling, which allows the importer to defer payment until the goods are actually sold. Answer: True 14. Political risk is a controllable variable, which the exporter controls through paying extra taxes or import duties. Answer: False 15. An option gives the holder the right to buy or sell foreign currency at a prespecified price on or up to a prespecified date. Answer: True 16. As the share of international sales and reach of companies increases, banking relationships become less important. Answer: False 17. Factoring houses are places where customs affords reliable accounting of the dollar increment of actual purchasing power. Answer: False 18. Product line pricing occurs typically in conjunction with positioning decisions. Answer: True 19. Once under price controls, the global marketer has to operate as it would in a regulated industry. Answer: True 20. Cost-plus pricing is favored by many constituents, such as governments, to ensure proper intracompany pricing. Answer: False MULTIPLE CHOICE 1. Which of the following statements about pricing is true? a. It cannot determine the long-term viability of an enterprise. b. It should be determined in isolation from the other marketing mix elements. c. It is a major competitive tool in meeting and beating close rivals and substitutes. d. It is the only element in the marketing mix that produces fixed costs. Answer: C 2. In first-time pricing, the objective of ____________ is to achieve the highest possible contribution in a short time period. a. market pricing b. skimming c. penetration pricing d. predatory pricing Answer: B 3. For an exporter to use the ____________ approach, the product has to be unique, and some segments of the market must be willing to pay the high price. a. extinction pricing b. skimming c. penetration pricing d. market pricing Answer: B 4. Which of the following is a reactive approach that may lead to problems if sales volumes never rise to sufficient levels to produce a satisfactory return? a. Market pricing b. Penetration pricing c. Multiple-product pricing d. Isolation pricing Answer: A 5. When ____________ is used, the product is offered at a low price intended to generate volume sales and achieve high market share, which would compensate for a lower per-unit return. a. market pricing b. skimming c. penetration pricing d. isolation pricing Answer: C 6. Which of the following can marketers use to discourage other marketers from entering the market? a. Cost-plus pricing b. Changing pricing c. Multiple-product pricing d. Penetration pricing Answer: D 7. Price changes are called for when: a. the value of the billing currency is stable. b. there is a change in the internal situation. c. a change occurs in a particular market segment. d. the costs of production are relatively constant. Answer: B 8. In setting export prices, which of the following is an attribute of pricing policy determination? a. Flexibility b. Decision control c. Competitive posture d. Market-based differentiation Answer: D 9. Which of the following is considered as an internal factor in setting the export price? a. Nature of demand b. Exchange rate stability c. Distribution system d. Company’s customers Answer: C 10. Which of the following is considered as an external factor in setting the export price? a. Promotion needs b. Overall price position of firm c. Distribution system d. Exchange rate stability Answer: D 11. ____________ pricing is set regardless of the buyer or may be based on average unit costs of fixed, variable, or export-related costs. a. Dual b. Export variable c. Standard worldwide d. Market-differentiated Answer: C 12. Cost-driven and market-driven approaches to pricing products for export are associated with: a. standard worldwide pricing. b. dual pricing. c. market-differentiated pricing. d. single pricing. Answer: B 13. ____________ system differentiates between domestic and export prices. a. Dual pricing b. Bilateral pricing c. Semi-pricing d. Isolation pricing Answer: A 14. Which of the following is a drawback of the cost-plus method? a. The final price may be so high that the firm's competitiveness is compromised. b. It is so variable that the actual price cannot be substantiated. c. There is a high turnover of product resulting in cost fluctuations. d. It is a time-consuming method. Answer: A 15. The marginal cost method of pricing considers the direct costs of producing and selling products for export as the floor beneath which prices cannot be set. What costs need to be excluded in these direct costs? a. Variable costs and product costs b. Shipment costs and manufacturing costs c. Fixed costs, R&D, and domestic overhead d. Inventory costs and production costs Answer: C 16. ____________ pricing calls for pricing exports according to the dynamic conditions of the marketplace. a. Marginal b. Market-differentiated c. Isolation d. Cost-plus Answer: B 17. Market-differentiated pricing calls for export pricing according to the dynamic conditions of the marketplace. What are the three changes which might affect this type of pricing? a. Pre-, present, or post-fluctuations b. Competition, exchange rates, or environment c. Space, time, or utility d. Operations, media, or markets Answer: B 18. The combined effect of both clear-cut and hidden costs results in export prices that far exceed domestic prices. This cause is known as: a. cost overrun. b. seamless integration. c. relationship pricing. d. price escalation. Answer: D 19. Which of the following is a strategy to compensate for price escalation? a. Weeding out government controls and avoiding them by entering markets through third parties b. Reorganizing the channel of distribution c. Reassessing customer needs by conducting market research d. Assembling products made with domestic components Answer: B 20. Which of the following allows an exporter to be refunded up to 99 percent of duties paid on imported goods when they are incorporated in articles that are subsequently exported within five years of the importation? a. Foreign sourcing b. Skimming c. Duty drawbacks d. Forfaiting Answer: C 21. Which of the following is true of carriage and insurance paid to (CIP)? a. The buyer is responsible to provide insurance. b. The maximum burden is on the seller. c. The seller is obligated to provide minimum insurance only. d. The buyer must bear all transportation costs. Answer: C 22. Which of the following statements is true of delivered at place (DAP)? a. The seller delivers the goods with import duties paid. b. The seller typically handles the cost of unloading and wharfage. c. The seller and buyer should agree which party will be responsible for unloading. d. The seller’s risk and responsibility for the condition of the cargo end when the goods are delivered to the first carrier. Answer: C 23. Free on board (FOB): a. means that the buyer usually quotes a price for the goods. b. applies only to vessel shipments. c. means that the price is decided only upon delivery. d. applies only at a designated inland shipping point. Answer: B 24. Under ____________ to a named overseas port of import, the seller quotes a price for the goods including the cost of transportation to the named port of debarkation. The cost of insurance and the choice of insurer are left to the buyer. a. delivered duty paid b. cost and freight c. free on board d. free alongside ship Answer: B 25. What is a letter of credit? a. It is an instrument issued by a bank at the request of a buyer in which the bank promises to pay a specified amount of money on presentation of documents stipulated in the letter. b. It is a letter which states that after the seller ships the goods, the shipping documents and the draft demanding payment should be presented to the importer through banks acting as the seller’s agent. c. It is a set of instructions given to shipping companies who have a line of vessels. d. It is an instrument of currency issued by a foreign government to the exporter. Answer: A 26. According to the new rules drawn by the ICC, all letters of credit are considered ____________ unless otherwise stated. a. irrevocable b. inconclusive c. reversible d. transitional Answer: A 27. What are the two forms of risk which might affect an export transaction? a. Inward and outbound b. Unilateral and bilateral c. Commercial and political d. Contact and expatriate Answer: C 28. Which of the following is a weak exporter strategy used under varying currency conditions? a. Speed repatriation b. Export prioritization c. Using nonprice competition d. Buying needed services abroad Answer: A 29. Destination-specific adjustment of markups in response to exchange-rate changes are referred to as: a. pass-through. b. markup via commercialization. c. prime manipulation. d. pricing-to-market. Answer: D 30. Which of the following provides the exporter with a complete financial package that combines credit protection, accounts-receivable bookkeeping, and collection services to take away many of the challenges that come with doing business overseas? a. Forfaiting b. Factoring c. Invoice discounting d. Leasing Answer: B 31. ____________ are frequently used as a basis for price determination largely because they are easily measured and provide a floor under which prices cannot go in the long term. a. Costs b. Corporate objectives c. Demand factors d. Competitive factors Answer: A 32. Arm’s-length pricing: a. becomes difficult when sales to outside parties occur in a product category. b. is the price that unrelated parties would have reached on the same transaction. c. does not ensure proper intracompany pricing. d. is the discounted “dealer” price derived from end-market prices. Answer: B 33. Which of the following is true about the transfer pricing methods of determining an arm’s-length price? a. The arm’s-length standard is only applicable for commodities businesses. b. The resale method is most applicable for transfers of components or unfinished goods to overseas subsidiaries. c. The cost-plus approach usually applies best to transfers to sales subsidiaries for ultimate distribution. d. The starting point for testing the appropriateness of transfer prices is a comparison with comparable uncontrolled transactions involving unrelated parties. Answer: D 34. ____________ is a compensation arrangement where one party agrees to supply technology or equipment that enables the other party to produce goods with which the price of the supplied products or technology is repaid. a. Clearing arrangements b. Buyback c. Switch trading d. Offset Answer: B 35. ____________ is a form of barter aimed at reducing the effect of the immediacy of the transaction. a. Offset b. Parallel barter c. Buyback d. Clearing arrangements Answer: D ESSAY 1. Why has price become such a dynamic element of the marketing mix? Answer: Price is the only element of the marketing mix that generates revenue; all the others are costs. It should therefore be used as an active instrument of strategy in the major areas of marketing decision making. Price serves as a means of communication with the buyer by providing a basis for judging the attractiveness of the offer. It is a major competitive tool in meeting and beating close rivals and substitutes. Competition will often force prices down, whereas intracompany financial considerations have an opposite effect. Prices, along with costs, will determine the long-term viability of the enterprise. 2. What is a skimming price strategy? Answer: In first-time pricing, one of the general alternatives involves skimming. The objective of skimming is to achieve the highest possible contribution in a short time period. For an exporter to use this approach, the product has to be unique, and some segments of the market must be willing to pay the high price. As more segments are targeted and more of the product is made available, the price is gradually lowered. The success of skimming depends on the ability and speed of competitive reaction. 3. What is the process of setting an export price? Answer: The process of setting an export price must start with the determination of an appropriate cost baseline and should include variables such as export-related costs to avoid compromising the desired profit margin. The quotation needs to spell out the respective responsibilities of the buyer and the seller in getting the goods to the intended destination. The terms of sale indicate these responsibilities but may also be used as a competitive tool. The terms of payment have to be clarified to ensure that the export will indeed get paid for the products and services rendered. Facilitating agents such as freight forwarders and banks are often used to absorb some of the risk and uncertainty in preparing price quotations and establishing terms of payment. Chapter 15: Global Distribution and Logistics TRUE/FALSE 1. The connections made by marketing institutions are unidirectional and flow downward from the producer. Answer: False 2. The use of intermediaries will automatically lead to loss of some control over the marketing of the firm’s products. Answer: True 3. Agents have more freedom of movement than distributors. Answer: False 4. Marketers attend trade fairs to get data on intermediaries in the industry. Answer: True 5. Facilitating payments by providing a small fee to expedite paperwork through customs is considered illegal. Answer: False 6. Parallel importation refers to illegally manufactured items that are smuggled into a market. Answer: False 7. In international logistics, the objective of the total cost concept is to minimize total cost rather than maximize after-tax profits. Answer: False 8. Close collaboration with customers is required in order to develop a just-in-time inventory system. Answer: False 9. International firms experience ongoing increases in their logistics cost. Answer: True 10. Currency variation in international logistics forces corporations to adjust planning to incorporate changes in exchange rates. Answer: True 11. Tramp service is available for regular routes and is at service at all times. Answer: False 12. High-value items are more likely to be shipped by air, particularly if they have a high density. Answer: True 13. Low-priced items can absorb transportation costs more easily than high-priced goods. Answer: False 14. A bill of exchange is a document that acknowledges the receipt of goods and represents the basic contract between the shipper and the carrier. Answer: False 15. A customs broker serves as an agent for an importer with authority to clear inbound goods through customs and ship them on to their destination. Answer: True 16. Firms using just-in-time inventory policies will choose suppliers on the basis of their delivery and inventory performance. Answer: True 17. By increasing inventories before an imminent devaluation of a currency instead of holding cash, the corporation can reduce its exposure to devaluation losses. Answer: True 18. According to an ABC analysis, products for which immediate delivery is not urgent are classified as “C” products. Answer: False 19. The responsibility for appropriate packaging in logistics rests with the shipper of goods. Answer: True 20. Reverse distribution systems ensure that the firm not only delivers the product to the market but can also retrieve it for subsequent use. Answer: True MULTIPLE CHOICE 1. Which of the following is true about channels of distribution? a. Their role is limited to providing essential linkages that connect raw material suppliers with manufacturers. b. They are independent agents who work to achieve individual, personal goals. c. They are the partners with whom marketing efforts are planned and implemented. d. They are temporary market-entry vehicles. Answer: C 2. The term “____________” refers to the length and width of the channel employed. a. channel bandwidth b. channel capacity c. channel freight d. channel design Answer: D 3. Which of the following is a factor that determines channel design? a. Documentation required b. Competition involved c. Transport modes chosen d. Level of inventory stocked Answer: B 4. Hybrid channels differ from dual channels in that hybrid channels: a. have one tier of distributors and resellers. b. use a single channel to enhance sales performance in a foreign market. c. are based more on cooperation and partnership. d. lead to conflicts if disagreements arise as to who is to handle a specific customer. Answer: C 5. Which of the following statements is true of the factors that determine channel design? a. The stronger the marketer’s finances, the more able the firm is to establish channels it either owns or controls. b. The number of areas to be covered is independent of the time elapsed since the product’s introduction to the market. c. The longer the channel, the more easier it is for the marketer to have a final say over pricing, promotion, and so on. d. The looser the relationship is between the marketer and the intermediaries, the more control can be exerted. Answer: A 6. In managing channel relationships, vertical trading restrictions result from: a. geographic separation. b. separate ownership. c. cultural separation. d. different rules of law. Answer: D 7. Which of the following best describes gray markets? a. They are markets where goods or services are illegally trafficked outside the formal ones supported by established state power. b. They are legal markets for goods and services where all the distribution takes place through legal channels. c. They refer to the distribution of used, repaired, recycled, or discontinued products that are in working condition through legal brokers and resellers. d. They refer to authentic and legitimately manufactured trademark items that are produced and purchased abroad but imported by bypassing designated channels. Answer: D 8. The exchange of goods and services via the use of smart mobile handheld devices that allow Web browsing is known as ____________. a. outsourcing b. autonomic networking c. m-commerce d. communication security Answer: C 9. ____________ is the design and management of a system that controls the flow of materials into, through, and out of the international corporation. a. M-commerce b. Statistical process control c. Autonomic networking d. International logistics Answer: D 10. Electronic data interchange (EDI) aims for: a. manual recording of all customer data. b. providing a platform for customers to interact with each other globally. c. standardizing and eliminating the wastes during manufacturing. d. more efficient order processing. Answer: D 11. The ____________ phase in logistics involves the movement of the firm’s finished product to its customers. a. materials management b. quality assurance c. physical distribution d. production management Answer: C 12. What is the goal of logistics management? a. To ensure that marketing effort is sponsored by an organization that solicits responses from individuals who share common interests and activities. b. To effectively coordinate the materials management and physical distribution phases and their various components to result in maximum cost-effectiveness while maintaining service goals and requirements. c. To aim for high growth and profits by creating new demand in an uncontested market space rather than by competing head-to-head with other suppliers for known customers in an existing industry. d. To gather volunteers to try products and then rely on them to talk about their experiences with friends and colleagues. Answer: B 13. Which of the following logistics concepts is based on the notion that materials-flow activities within and outside of the firm are so extensive and complex that they can be considered only in the context of their interaction? a. Aggregation concept b. Operating concept c. Inert concept d. Systems concept Answer: D 14. The purpose of the ____________ concept is to minimize the firm's overall logistics cost within the entire system. a. aggregation b. total cost c. inert d. trade-off Answer: B 15. The ____________ concept recognizes the linkages within logistics systems that result from the interaction of their components. a. trade-off b. total cost c. systems d. operating Answer: A 16. Which of the following encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and logistics? a. Supply chain management b. Scientific management c. Six Sigma d. Lean manufacturing Answer: A 17. Which of the following is NOT one of the guideposts that the experienced manager uses for logistics decisions? a. Development of heuristics b. Industry comparison c. Intimate knowledge of trends d. Demographics of the population Answer: D 18. The period between departure and arrival of a carrier is called the ____________. a. waiting time b. transit time c. transfer time d. lag time Answer: B 19. Which of the following is an import document required during an international shipment? a. Bill of lading b. Collateral assurance c. Promissory note d. Letter of credit Answer: A 20. Which of the following is the most important document to the shipper, the carrier, and the buyer? a. Promissory note b. Surety bond c. Bill of lading d. Letter of intent Answer: C 21. The shipper's export declaration: a. may be a negotiable instrument in that it may be endorsed to other parties or may be nonnegotiable. b. acknowledges receipt of the goods, represents the basic contract between the shipper and the carrier, and serves as evidence of title to the goods for collection by the purchaser. c. is the most important document to the shipper, the carrier, and the buyer. d. is a document that states proper authorization for export and serves as a means for governmental data-collection efforts. Answer: D 22. Which of the following acts as an agent for the marketer in moving cargo to an overseas destination? a. International customs broker b. International freight forwarder c. Consignee d. Stevedore Answer: B 23. The expense of maintaining inventories is called ____________. a. inventory sunk costs b. inventory marginal costs c. inventory carrying costs d. inventory opportunity costs Answer: C 24. Which of the following minimizes the volume of inventory by making it available only when it is needed for the production process? a. Lean manufacturing b. Total productive maintenance c. Just-in-time d. Six Sigma Answer: C 25. Which of the following best describes order cycle time? a. The total lifespan of a product ranging from production to consumption b. The total time that passes between the placement of an order and the receipt of the merchandise c. The total time spent in transit by an ordered product d. The period between departure and arrival of the carrier Answer: B 26. Which of the following is true about order cycle time? a. In domestic marketing, the order cycle is frequently longer than in international business. b. Order transmission times remain the same internationally irrespective of the mode of communication used. c. The international marketer should attempt to increase the consistency without an increase in total costs. d. The international marketer should attempt to increase order cycle time without an increase in total costs. Answer: C 27. International inventories can be used by the international corporation as a strategic tool in dealing with currency valuation changes or in hedging against inflation. Which of the following statements is true? a. By decreasing inventories before an imminent devaluation of a currency instead of holding cash, a corporation may reduce its exposure to devaluation losses. b. In the case of high inflation, holding small inventories provides an important inflation hedge. c. If an increase in tax payments outweighs the hedging benefits to a corporation, the firm needs to increase inventories before devaluation occurs. d. The international inventory manager must balance the cost of maintaining high levels of inventories with the benefits accruing to the firm from hedging against inflation or devaluation. Answer: D 28. Which of the following is a method for classifying products that are most sensitive to delivery times? a. Economic impact analysis b. ABC analysis c. Cost-benefit analysis d. CPM analysis Answer: B 29. Which of the following statements is true of “A” products in an ABC analysis? a. They are products that are stocked in all distribution centers, and safety stock levels would be kept high. b. They are products for which immediate delivery is not urgent. c. They are products that are stored only at selected distribution centers around the world. d. They are products for which short delivery time is not important and hence they are stocked only at headquarters. Answer: A 30. ____________ refers to the shifting of traditional corporate activities to parties outside of the firm and often outside of the country. a. Expediting b. Outsourcing c. Warehousing d. Onshoring Answer: B 31. Which of the following is true about foreign trade zones? a. They enforce duty payment for all merchandise. b. Duty payments are not due when the merchandise is shipped into the country from the foreign trade zone. c. If the merchandise is shipped abroad from these zones, no duty payments are ever due. d. They are considered, for purposes of tariff treatment, to be within the customs territory of the country in which they are located. Answer: C 32. The responsibility for appropriate packaging rests with the ____________ of goods. a. freight forwarder b. shipper c. carrier d. consignee Answer: B 33. Which of the following statements about third-party logistics is true? a. Firms will be able to maintain higher levels of control if they outsource their logistics operations to third parties. b. Third-party logistics provide logistics services at very high costs. c. Third-party logistics usually provide low-quality services. d. Third-party logistics providers have the knowledge and means to perform efficient and innovative services for firms. Answer: D 34. Which of the following systems is instrumental in ensuring that a firm not only delivers the product to the market, but also can retrieve it from the market for subsequent use, recycling, or disposal? a. Continuous review systems b. Perpetual inventory systems c. Periodic inventory systems d. Reverse distribution systems Answer: D 35. Which of the following is true about reverse logistics? a. Reverse logistics management is highly specialized. b. Retrieval of items in reverse logistics is restricted to short-term consumer goods. c. Reverse logistics refers to the shifting of traditional corporate activities to parties outside of the country. d. Traditionally, businesses have focused on reverse logistics. Answer: A ESSAY 1. Identify the reasons for the termination of a channel relationship. Answer: Many reasons exist for the termination of a channel relationship, but the most typical are changes in the international marketer’s distribution approach or a perceived lack of performance by the intermediary. On occasion, termination may result from either party not honoring agreements. It can also be the result of structural change in the firm’s logistics operations. When a producer expands its market presence, it may expect more of a distributor’s effort than the distributor is willing to make available. Furthermore, with expansion, the marketer may want to expand its product line to items that the distributor is neither interested in nor able to support. This could also lead to termination of the channel relationship. In some cases, intermediaries may not be interested in growing the business beyond a certain point or as aggressively as the principal may expect. As a marketer’s operations expand, it may want to start to coordinate operations across markets for efficiency and customer-service reasons or to cater to global accounts—thereby needing to control distribution to a degree that independent intermediaries are not willing to accept, or requiring a level of service that they may not be able to deliver. This could lead to termination of the channel relationship. 2. How can inventory be used as a strategic tool? Give an example. Answer: International inventories can be used by the international corporation as a strategic tool in dealing with currency valuation changes or hedging against inflation. By increasing inventories before an imminent devaluation of a currency, instead of holding cash, the corporation may reduce its exposure to devaluation losses. Similarly, in the case of high inflation, large inventories can provide an important inflation hedge. In such circumstances, the international inventory manager must balance the cost of maintaining high levels of inventories with the benefits accruing to the firm from hedging against inflation or devaluation. Many countries, for example, charge a tax on stored goods. If the increase in tax payments outweighs the hedging benefits to the corporation, it would be unwise to increase inventories before devaluation occurs. Only by recognizing the trade-offs, which may result in less-than-optimal inventory policies, can the corporation maximize the overall benefit. 3. Why are reverse distribution systems important? Answer: By using logistics, the international marketer can play an increasingly important role in allowing the firm to operate in an environmentally conscious way. Environmental laws, social expectations, and self-imposed goals set by firms are difficult to adhere to without a logistics orientation that systematically takes these concerns into account. Since laws and regulations differ across the world, the firm's efforts need to be responsive to a wide variety of requirements. One logistics orientation that has grown in importance due to environmental concerns is the development of reverse distribution systems. Such systems are instrumental in ensuring that their firm not only delivers the product to the market, but also can retrieve it from the market for subsequent use, recycling, or disposal. To a growing degree, the ability to develop such reverse logistics is a key determinant for market acceptance and profitability. Test Bank for International Marketing Michael R. Czinkota, Ilkka A. Ronkainen 9781133627517, 9788131533642
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