BA 474 FINAL EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026

BA 474 FINAL EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026 exporting - Answers most common form of entry for new brand two forms of exporting operation - Answers 1. exporters use distributors which take title to goods, store goods, and sell to retailers 2. exporters use facilitators which perform specific services but do not take title to goods (most often called agents) when exporters sell DIRECTLY to retailers are distributors or agents more common? - Answers distributors because exporting directly to retailers is NOT the norm e-commerce - Answers over the web firms using e-commerce need - Answers 1. REGULATORY and CUSTOMS expertise to deliver internationally 2. maintain LOCAL PRESENCE t/f: can e-commerce be implemented together with other types of market entry? - Answers TRUE licensing agreement - Answers one firm (the licensor) permits another (the licensee) to use its brand in exchange for compensation designated as a royalty ADVANTAGES of licensing for company granting license (licensor) - Answers - builds AWARENESS and EQUITY for brands - ROYALTY provides ADDITIONAL PROFIT - NO capital or investment necessary DISADVANTAGES of licensing for company granting license (licensor) - Answers - licensor records NO SALES; profits LIMITED TO royalties - only LIMITED LEARNING of foreign market secured licensing KEYS TO SUCCESS - Answers - brand needs AWARENESS and EQUITY before licensing agreement begins - category needs to fit BRAND POSITIONING - contract VERY IMPORTANT for both sides franchising - Answers model under which a franchiser provides standard package of services to franchisee, who provides market knowledge, capital, and management does franchisee benefit from greater or reduced risk? - Answers REDUCED because the concept is a TOTAL OPERATION which is READY TO GO ("turnkey") and ALREADY PROVEN which two services is franchising very common? - Answers hotels and restaurants foreign direct investment - Answers international firm establishes SUBSIDIARY and acquires properties and plants subsidiary ex - Answers instagram is a subsidiary of meta regarding foreign direct investment, what is the relationship between gain and risk? - Answers MORE gain but MORE risk rationale for foreign direct investment - Answers - LOWER LABOR AND MATERIAL COSTS due to production in-country - NO TARIFFS - firm can offer more COMPETITIVE RETAIL PRICING (due to savings from lower costs and no tariffs) - BETTER SERVICE to local trade customers and end consumers - local customers may appreciate that production is in-country due to NATIONALISM - firms may benefit from GOVERNMENT INCENTIVES to invest foreign direct investment types of ownership - Answers 1. full ownership 2. joint venture 3. strategic alliance joint venture (one type of foreign direct investment) - Answers - partners share assets, profits, and risk - equality of partners not necessary ADVANTAGES of joint ventures - Answers - pooling of resources - better relationships with local entities - partner's knowledge of local markets DISADVANTAGES of joint ventures - Answers - difficulty in maintaining relationship - disagreements over business decisions - disagreement over profit accumulation and distribution strategic alliance (one type of joint venture) - Answers - special form of joint venture which is more FLEXIBLE (can be formed, adjusted, and dissolved rapidly) - leverage distinct, complementary strengths of partners to collaborate towards a joint objective strategic alliance ex. - Answers starbucks partnering with barnes and noble to put cafes in stores organizational structure - Answers the types of structures companies use to manage foreign activities DIVIDED INTO THREE CATEGORIES 1. little or no formal organization 2. international division 3. global organizations little or no formal organization (first type of organizational structure) - Answers - in early stages of international involvement, the share of international operations in the sales and profits of the corporation is MINOR - NO organizational adjustment takes place in the early stages of international involvement, is the share of international operations in the sales and profits of the corporation minor or major? - Answers MINOR in the early stages of international involvement, does organizational adjustment take place? - Answers NO international division (second type of organizational structure) - Answers - ONE ENTITY at headquarters has the TOTAL RESPONSIBILITY for international activity - prevents international division from being "RUN OVER" or IGNORED by domestic division - best structure when international sales are still insignificant vs. those of domestic divisions when international sales are still insignificant vs. those of domestic divisions, what is best organizational structure? - Answers INTERNATIONAL DIVISION global organizations (third type of organizational structure) - Answers THREE MAIN TYPES OF STRUCTURES ARE USED 1. product structure 2. area structure 3. transnational structure product structure (first type of global organization structure) - Answers - companies divided up by product line (strategic business unit) strategic business unit ex. pepsi co. -- bevs, frito-lay snacks, quaker foods - gives WORLDWIDE RESPONSIBILITY to each STRATEGIC BUSINESS UNIT for the marketing of its product line - one disadvantage: domestic priorities often win out excessively what is a disadvantage of product structure? - Answers domestic priorities often win out excessively area structure (second type of global organization structure) - Answers - organized on basis of GEOGRAPHICAL AREA which each area in TOTAL CONTROL of marketing and manufacturing - best suited if market and operating conditions vary DRAMATICALLY between regions when is the global organization structure area structure best suited? - Answers when market and operating conditions vary DRAMATICALLY between regions transnational structure (second type of global organization structure) - Answers - HEADQUARTERS/SUBSIDIARIES structure which builds GLOBAL SYNERGIES while being LOCALLY RESPONSIVE AND ADAPTIVE - TRANSNATIONAL STRUCTURES MOST COMMON THE THE WAVE OF THE FUTURE which global organization structure is most common and the wave of the future? - Answers TRANSNATIONAL STRUCTURES factors affecting product-adaptation decisions - Answers 1. CONSUMER CHARACTERISTICS 2. LEGAL REGULATIONS 3. USAGE ISSUES 4. TECHNICAL ISSUES consumer characteristics - Answers local tastes of consumers consumer characteristics ex. - Answers - outside of the us, hazelnut is preferred over peanut - snapple failed in japan because quaker did not modify flavors, reduce sweetness, and filter out sediment the acceptance of appearance (e.g., size, style, and color) may vary between countries for product and packaging because of WHICH CHARACTERISTIC - Answers CONSUMER CHARACTERISTIC legal regulations - PRODUCT REGULATIONS - Answers product regulations: ingredients can not be in violation of LAWS or RELIGIOUS CUSTOMS legal regulations ex. - Answers big mac made with lamb instead of beef in india legal regulations - PACKAGING REGULATIONS - Answers ex. all packaging in canada must include french usage issues - Answers METHOD OF OPERATION OR USAGE for product or service adapt product based on how it is used in different country usage issues ex. - Answers fans marketed in india must be able to withstand power surges due to frequent blackouts large parking lots aren't as attractive to walmart in developing countries since most people go to stores with public transportation technical issues - Answers climate and geography: product has to be protected against longer transit times and warmer climates STAGES OF THE PRODUCT DEVELOPMENT PROCESS - Answers 1. IDEA GENERATION 2. SCREENING of ideas by organization internally and externally with research 3. PRODUCT AND PROCESS DEVELOPMENT in which organization chooses idea and develops it in research & development labs 4. SCALE-UP in which organization determines how to translate idea to higher volume initiative 5. COMMERCIALIZATION in which organization brings idea to market sources for idea generation - Answers - COMPANY (HEADQUARTERS AND SUBSIDIARIES) - ANALYSIS OF COMPETITION - RESEARCH - OPEN INNOVATION (CROWDSOURCING) innovation can range from continuous (incremental) to disruptive) - Answers - continuous (incremental) innovation: small improvement to a company's product line (e.g., more flavors of campbell's soup - dynamically continuous innovation: major improvement but using same business model (e.g., liquid soap vs. bar soap) - disruptive innovation: innovation which disrputs existing market with whole new business model (e.g., air bnb) managing the brand portfolio - Answers global marketers have THREE CHOICES for overall branding THREE CHOICES FOR OVERALL BRANDING - Answers 1. corporate name with no individual brand (e.g., heinz) 2. corporate name and individual brands, with brands dominant (e.g., nestle) 3. individual brands without corporate name (e.g., P&G) corporate and strategic business unit management establish BRAND PLANNING DOCUMENTS with RESPECT TO - Answers - positioning - logo portrayal - packaging - communications store brands - Answers - have achieved SIGNIFICANT PENETRATION in many countries (e.g., kirkland) - the trade's own branded products (sometimes called "private brands" or "private label") - do not require marketing investment do store brands require marketing investment? - Answers NO ROLE OF E-COMMERCE IN MARKETING SERVICES INTERNATIONALLY - Answers e-commerce has helped enable SERVICE firms to become more GLOBAL what does E-COMMERCE REQUIRE? - Answers a multilingual website multilingual website - Answers - allows access to new customers - demonstrates cultural sensitivity each country needs its own website with appropriate adaptations when marketing services internationally, WHAT is just as critical for SERVICES as PRODUCTS? - Answers ADAPTATION adaptation of services - Answers - consumer requirements - legal regulations - usage issues (same as adaptation of products) when marketing services internationally, WHAT is required for effective delivery of services in international enviornments? - Answers CULTURAL SENSITIVITY when marketing services internationally, BLANK of services has special issues - Answers PRICING PRICING OF SERVICES INTERNATIONALLY - Answers - have to be responsible to DEMAND FLUCTUATIONS with PRICE FLEXIBILITY (i.e., manage inventory with DYNAMIC PRICING) - must show price transparency to foster a strong relationship with consumers when marketing services internationally, WHAT is critical due to the INCONSISTENCY and INSEPARABILITY of services? - Answers employee training employee training - Answers - TRAIN ORGANIZATIONAL PERSONNEL to convey the spirit, values, and attitudes of the corporation - particularly important to keep the HUMAN ELEMENT in the age of AI what should international services do? - Answers provide consumers an OUTSTANDING EXPERIENCE with GLOBAL VALUES and LOCAL ADAPTATION international pricing strategies - Answers 1. SKIMMING PRICING: achieve the highest possible profit via a HIGH PRICE 2. PENETRATION PRICING: offer products at a LOW PRICE to generate volume sales and achieve high market share 3. MARKET PRICING: make pricing decisions based on COMPETITIVE PRICES which international pricing strategy is more common in INTRODUCTORY STAGE of product life cycle? - Answers SKIMMING (HIGH PRICE) which international pricing strategy is more common in GROWTH STAGE? - Answers PENETRATION (LOW PRICE) which international pricing strategy is more common in MATURITY STAGE? - Answers MARKET (COMPETITIVE PRICING) parallel imports - Answers develop when corrupt buyers TAKE ADVANTAGE OF PRICE DIFFERENCES BETWEEN COUNTRIES to DIVERT SHIPMENTS and UNDERCUT PRICES in particular markets WHAT DETERMINES EXPORT PRICING - Answers not only PRICING STRATEGY but EXCHANGE RATES, TARIFFS, SHIPPING RATES, ETC. when firm can not price competitively and still be profitable cost cutting measures may be considered such as... - Answers - make the product cheaper - assemble or produce overseas when setting export prices, the VALUE-ADDED TAX (VAT) also needs to be considered - Answers tax on all products and services sold is VAT used in most markets outside the US? - Answers YES FOB (FREE ON BOARD) - Answers the seller quotes a price including all expenses UP TO the delivery of goods on a ship (BUYER PAYS FOR OVERSEAS FREIGHT AND INSURANCE) for FOB, does buyer or seller pay for overseas freight and insurance? - Answers BUYER CIF (COST, INSURANCE, AND FREIGHT) - Answers the seller quotes a price including all expenses up to the point of leaving a vesse (SELLER for CIB, does buyer or seller pay for overseas freight and insurance? - Answers SELLER WHAT determines the PREFERRED SELLING TERMS and DEGREE OF RISK the firm is willing to assume? - Answers EXPORTER'S CREDIT POLICY due to the potential risk of not getting paid, WHAT is it important to get right in international marketing? - Answers CREDIT POLICY three types of terms of payment - Answers 1. payment in advance 2. letter of credit 3. open account payment in advance - Answers relieves exporter of all risk and allows for immediate use of the money most favorable term to exporter what is the most favorable term of payment to the exporter? - Answers payment in advance letter of credit - Answers financing device issued buy a bank at the request of a buyer in which the bank guarantees payment if all conditions of the shipment are met open account - Answers normal manner or doing business in the domestic market seller ships goods first and gets paid later WHAT is a major risk for the international marketer? - Answers FOREIGN EXCHANGE (CURRENCY) one way to help minimize risk of foreign exchange (currency) - Answers foreign currency CONTRACTUAL HEDGING foreign exchange option: for a gee, gives the holder the right to buy or sell foreign currency at a pre-specified price on or up to a pre-specified date (but they don't have to exercise that right) second way to help minimize risk of foreign exchange (currency) - Answers adjust price to compensate for change in exchange rate when domestic currency is WEAK vs. other countries: - Answers FAVORABLE to exporter when domestic currency is STRONG vs. other countries: - Answers UNFAVORABLE to exporter when domestic currency is WEAK... - Answers 1. stress price benefits 2. expand product line 3. shift sourcing to domestic market when domestic currency is STRONG... - Answers 1. use nonprice competition 2. improve productivity/cost reduction 3. source overseas techniques to adjust pricing when STRONG DOMESTIC CURRENCY RATE (unfavorable to EXPORTER) - Answers 1. pass through pricing 2. absorb pricing pass through pricing - Answers exporter "passes through" increase to foreign country via HIGHER PRICE TO FOREIGN COUNTRY consumers in foreign country must have high level of preference for exporter's product absorb pricing - Answers increase is absorbed into the MARGIN of the produce rather than into the END PRICE to the consumer (NO CHANGE IN PRICE TO FOREIGN COUNTRY) company makes less profit but maintains market share; thus, they will try to reduce costs pricing in individual markets determined by... - Answers - COMPETITIVE AND CONSUMER CONDITIONS: demand sets a price ceiling - will determine whether you take a skimming, penetration, or market strategy factors affecting distribution channel choice - Answers 1. consumer requirements 2. cultural requirements 3. competitive activity 4. coverage 5. company goals and strategies 6. profitability consumer requirements (first factor affecting distribution channel choice) - Answers - need to understand WHERE target market PURCHASES consumer requirement ex. - Answers travel industry has developed increasingly sophisticated websites to accommodate global consumers cultural requirements (second factor affecting distribution channel choice) - Answers marketers must develop channel strategies which are sensitive to the DISTRIBUTION CULTURE of the market cultural requirement ex. - Answers culture-specific types of department stores, convenience stores, and smaller retail outlets can be important in different markets competitive activity (third factor affecting distribution channel choice) - Answers channels used by competitors may signal to a firm WHICH DISTRIBUTION SYSTEMS ARE ACCEPTED by both the trade and consumers competitive activity ex. - Answers or a firm may use a TOTALLY DIFFERENT DISTRIBUTION APPROACH than the competition (like ikea) to stand out coverage (fourth factor affecting distribution channel choice) - Answers - international marketers generally try to MAXIMIZE COVERAGE (the number of areas/locations in which a product is represented) - INTENSIVE DISTRIBUTION - for premium products, EXCLUSIVE DISTRIBUTION is often desired to help create high-end image company goals and strategies (fifth factor affecting distribution choice) - Answers channel choice needs to be in sync with the firm's overall goals and strategies company goals and strategies ex. - Answers if the firm wants to create a premium image, it can't be in low quality retail outlets profitability - Answers firm must be able to be profitable in the channel system it selects types of intermediaries (for exporters) - Answers 1. distributor 2. agent distributor (first type of intermediary for exporters) - Answers - actually purchases the product from exporter and owns it - not a retailer like walmart but rather an INTERMEDIARY SELLING TO RETAILERS with an office, warehouse, and sales force what is the MOST COMMON INTERNATIONAL INTERMEDIARY? - Answers DISTRIBUTOR agent (second type of intermediary for exporters) - Answers - operates on a COMMISSION BASIS, different than distributors - does not physically handle goods and never own them used as a FACILITATOR when exporter sells DIRECTLY TO RETAILERS which type of intermediary for exporters operates on a COMMISSION BASIS? - Answers AGENT which type of intermediary for exporters DOES NOT PHYSICALLY HANDLE GOODS? - Answers AGENT does a distributor need a STRONG DEGREE OF FOCUS on exporter's products? - Answers YES does a distributor need to be financially sound? - Answers YES does a distributor need a strong LOGISTICAL and SALES ability? - Answers YES for distributor management, do the marketer and distributor need a WRITTEN CONTRACT? - Answers YES what does the written contract between the marketer and distributor need to specify? - Answers - duration period - products and conditions of sale - method of payment - minimum sales requirements - marketing funding responsibilities - reasons for termination what is INTERNATIONAL LOGISTICS? - Answers system that controls the INFLOW AND OUTFLOW OF MATERIALS in an international corporation what is CRITICAL in INTERNATIONAL LOGISTICS? - Answers critical to source or produce a HIGH QUALITY product at AS LOW A COST AS POSSIBLE... and then to deliver it to a customer as QUICKLY as possible what is CUSTOMER SERVICE? - Answers responsiveness that inventory policies permit for any given situation BLANK exists between CUSTOMER SERVICE and INVENTORY CARRYING COSTS - Answers TRADE-OFF relationship between customer service and inventory carrying costs - Answers the more inventory, the better your customer service, but the higher your inventory carrying costs BLANK is particularly important in certain markets - Answers CUSTOMER SERVICE what is ORDER CYCLE TIME? - Answers total time that passes between the PLACEMENT OF THE ORDER and RECEIVING THE MERCHANDISE