QUESTION: 26

A global firm establishes a cost-based price for the firm's product in each country. The most likely negative outcome is that this pricing strategy will

Set too high a price in countries where the firm's costs are high.
Overprice the product in some markets and underprice the product in others.
Create a gray market.
Result in dumping.

Answer(s): A

Explanation:

A firm may set a cost-based price in each market with a standard markup. In a region or country where costs are high, this strategy may result in prices that are too high to be competitive within the local market.

Show Answer Next Question

QUESTION: 27

A firm sells its product in a foreign market for a much higher price than in the firm's home market. The reason is most likely:

Price elasticity of demand.
Dumping.
Gray market activity.
Price escalation.

Answer(s): D

Explanation:

Price escalation is caused by an accumulation of additional costs, e.g., currency fluctuations; transportation expenses; profits earned by importers, wholesalers, and retailers; and import duties.

Show Answer Next Question

QUESTION: 28

A firm sold the same product in many foreign countries but changed the ad copy to allow for language and cultural differences. According to teegan's model of adaptation strategies, the firm adopted a strategy of:

Product adaptation.
Communication adaptation.
Dual adaptation.
Straight extension.

Answer(s): B

Explanation:

Communication adaptation is a strategy that does not change the products, but advertising and marketing campaigns are changed to reflect the local culture and beliefs. For example, a firm may use one message but with changes in language, name, and colors. It may use a consistent theme but change the ad copy in each market. Another option is for a firm to devise a group of ads from which each market may choose the most effective. Still another option is to develop promotion campaigns locally.

Show Answer Next Question

QUESTION: 29

A firm that sells in foreign markets should consider all aspects of how products move from the firm to ultimate users. Where in the whole channel are marketing mix decisions most likely made?

Export department of the seller firm.
Import department of the buyer firm.
Channels within nations.
Channels between nations.

Answer(s): A

Explanation:

Distribution channels are a necessity to ensure that goods are successfully transferred from the production facility to end users. These channels include three distinct links that must work smoothly together.
1. The international marketing headquarters (export department of international division) is where decisions are made with regard to the subsequent channels and other aspects of the marketing mix.
2. Channels between nations carry goods to foreign borders. They include air, land, sea, or rail transportation channels. At this stage, in addition to transportation methods, intermediaries are selected (e.g., agents or trading companies) and financing and risk management decisions are reached.
3. Channels within nations take the goods from the border or entry point to the ultimate users of the products. Among nations, the number of levels of distribution, the types of channels, and the size of retailers vary substantially.

Show Answer Next Question

QUESTION: 30

The inherent attractiveness of a national market is most likely increased by which factor?

The firm's strategic position.
The market's exclusion from a regional free trade zone.
Unmet needs of a developing nation.
Product adaptation is costly.

Answer(s): C

Explanation:

Attractiveness is a function of such factors as geography, income, climate, population, and the product. Another major factor is the unmet needs of a developing nation, for example, China or India.

Show Answer Next Question

Free IIA IIA-CIA-PART4 Exam Questions (page: 7)

QUESTION: 26

Explanation:

QUESTION: 27

Explanation:

QUESTION: 28

Explanation:

QUESTION: 29

Explanation:

QUESTION: 30

Explanation:

IIA-CIA-PART4 Exam Discussions & Posts