Montclair inbs 346 intro to international business ch 15

1. The distribution process includes promotion of goods and services by sellers and resellers.

True False

2. The behavior of channel members in the distribution process is the result of the interactions between the

cultural environment and the marketing process.

True False

3. In an import-oriented distribution structure, supply often exceeds demand.

True False

4. Traditional channels in developing countries evolved from economies with a strong dependence on

imported manufactured goods.

True False

5. In a traditional distribution structure, distribution systems are national rather than local in scope.

True False

6. In the traditional distribution structure, independent agencies that provide facilitating functions are

nonexistent or underdeveloped.

True False

7. A distinguishing characteristic of the Japanese distribution channel system is that it is controlled by a few

small retailers found in the country.

True False

8. The Japanese distribution structure is similar to the one found in the U.S. or in Europe.

True False

9. In the context of the distribution structure in Japan, it has been observed that Japanese consumers favor

cheaper prices over personal service.

True False

10. As traditional channel structures are changing, importers and retailers are also becoming involved in new

product development.

True False

11. In the context of distribution structures, one of Walmart’s strengths is its ability to influence foreign

governments.

True False

12. In the context of distribution patterns, wholesaling shows a greater diversity in its structure than does

retailing.

True False

13. In the context of retail patterns, direct marketing works well in affluent markets as well as in markets with

underdeveloped distribution systems.

True False

14. Agent middlemen work on commission and do not take title to the merchandise.

True False

15. Merchant middlemen tend to be more controllable than agent middlemen because they take title to

manufacturers’ goods.

True False

16. The distribution channel process includes all activities, beginning with the manufacturer and ending with

the retailer.

True False

17. Domestic middlemen offer many advantages for companies with large international sales volume.

True False

18. An export management company functions as a low-cost, independent marketing department with direct

responsibility to the parent firm.

True False

19. In the context of the different kinds of middlemen, in 2003, the WTO ruled export management

companies to be in violation of international trade rules.

True False

20. Domestic middlemen are most likely to be used when the marketer desires to minimize financial and

management investment.

True False

21. Export management companies work under their own names.

True False

22. The Export Trading Company Act allows producers of similar products to form export trading companies

in the U.S.

True False

23. Trading companies provide the best means for intensive coverage of the market.

True False

24. An e-vendor in a foreign market can generally ignore culture as an important variable because the

commerce is being done via the Internet that is culturally insensitive.

True False

25. Using foreign-country middlemen moves the manufacturer away from the market and the company

becomes less involved with problems of language, physical distribution, communications, and

financing.

True False

26. Channels of distribution often pose longevity problems.

True False

27. In the U.S., if a middleman is terminated, the company is required to pay one percent of the middleman’s

average annual compensation, multiplied by the number of years the middleman served, as a final

settlement.

True False

28. Legal advice is not necessary when entering distribution contracts with middlemen.

True False

29. Ideally, a website should be translated into the languages of the target market.

True False

30. A physical distribution system involves only the physical movement of goods.

True False

31. Which of the following is true of the distribution process?

A. It does not involve the physical handling and distribution of goods.

B. It includes activities related to the promotion of goods and services.

C. The ownership title remains with the distributor even on completion of the transaction.

D. It includes buying and selling negotiations.

E. The behavior of channel members is not affected by the cultural environment.

32. In a _____ distribution structure, an importer controls a fixed supply of goods and the marketing system

develops around the philosophy of selling a limited supply of goods at high prices to a small number of

affluent customers.

A. domestic

B. traditional

C. manufacturer-oriented

D. service

E. customer-oriented

33. Which of the following statements is true of a traditional distribution structure?

A. The distribution system is national in scope.

B.

The relationship between the importer and any middleman is similar to that found in a mass-marketing

system.

C.

The idea of a channel as a chain of intermediaries performing specific activities and each selling to a

smaller unit beneath it until the chain reaches the ultimate consumer is common.

D.

Independent agencies providing functions such as advertising, marketing research, and financing are a

part of this distribution structure.

E.

The marketing system develops around the philosophy of selling a limited supply of goods at high

prices to a small number of affluent customers.

34. Which of the following distribution structures is also known as a traditional distribution structure?

A. Export-oriented

B. Import-oriented

C. Manufacturer-oriented

D. Service-oriented

E. Customer-oriented

35. Which of the following statements is true regarding an import-oriented distribution structure?

A. The importer–wholesaler traditionally performs most of the marketing functions.

B.

The relationship between the importer and any middleman is similar to that found in a mass-marketing

system.

C.

Several independent agencies providing functions such as advertising, marketing research, financing

are a part of this distribution structure.

D. The idea of a channel as a chain of intermediaries performing specific activities is common.

E. This distribution system is national in scope.

36. _____ has long been considered the most effective nontariff barrier to the Japanese market.

A. The Japanese population

B. The Japanese distribution structure

C. Japanese culture

D. The Japanese import and export procedure

E. Intense competition in Japan

37. _____ are considered to be the foundation of the Japanese distribution system.

A. Consumers

B. Brokers

C. Manufacturers

D. Small retailers

E. Wholesalers

38. Which of the following characterizes the business philosophy of the Japanese distribution channels?

A. Loyalty

B. Direct sales

C. Fast delivery

D. Variety

E. Price competition

39. Which of the following statements is true of the Japanese market?

A. The costs of Japanese consumer goods are among the lowest in the world.

B.

Manufacturers are independent of wholesalers for a multitude of services to other members of the

distribution network.

C. The Japanese distribution structure supports long-term dealer–supplier relationships.

D. Japanese law favors the establishment of large retail stores.

E. Japanese consumers favor price over personal service.

40. In Japan, under the Large-Scale Retail Store Law, all proposals for new “large” stores are first judged by

the _____.

A. Transport and Tourism Department

B. Internal Affairs and Business Council

C. Ministry of International Trade and Industry

D. Health and Welfare Committee

E. Local Retailers Union

41. In the international business arena, which of the following is considered to be one of Walmart’s

strengths?

A. Clean business reputation.

B. Internal Internet-based system.

C. Ability to beat competitors.

D. Outreach programs to placate small retailers.

E. Ability to influence foreign governments.

42. General Motors, _____, and DaimlerChrysler have created a single online site called Covisint for

purchasing automotive parts from suppliers.

A. Toyota Motor Corporation

B. Honda Motor Company

C. Ford Motor Company

D. Nissan Motor Company

E. Tata Motors

43. Which of the following countries has the largest number of retailers?

A. United States

B. Argentina

C. China

D. South Africa

E. Japan

44. In the context of distribution patterns, the rate of change in retailing around the world appears to be

directly related to the _____.

A. literacy rate

B. rate of inflation

C. population growth

D. speed of economic development

E. currency exchange rate

45. _____ is often the approach of choice in markets with insufficient or underdeveloped distribution

systems.

A. Direct marketing

B. A big wholesale store

C. Internet selling

D. A discount house

E. Television advertising

46. Which of the following has proved to be an important way to break the trade barrier imposed by the

Japanese distribution system?

A. Direct sales through catalogs.

B. Large wholesale stores.

C. Street corner kiosks.

D. Internet shopping.

E. Television advertising.

47. Which of the following are frequently criticized for not representing the best interests of a manufacturer?

A. Global wholesalers

B. Trading companies

C. Consumers

D. Merchant middlemen

E. Brokers

48. _____ take title to manufacturers’ goods and assume the trading risks.

A. Merchant middlemen

B. Brokers

C. Buying offices

D. Export agent

E. Agent middlemen

49. The distribution channel process includes all activities, beginning with the manufacturer and ending with

the _____.

A. wholesaler

B. agent middlemen

C. merchant middlemen

D. retailer

E. final consumer

50. Which of the following statements is true regarding agent middlemen?

A. They take title to the merchandise.

B. They work on commission and arrange for sales in the foreign country.

C. Manufacturers cannot control them as they control merchant middlemen.

D. They do not represent the best interests of the manufacturer.

E. They assume trading risks.

51. Which of the following statements is true regarding merchant middlemen?

A. They represent the best interests of a manufacturer.

B. They can be controlled better than agent middlemen.

C. They assume trading risks.

D. They work on commission and arrange for sales in the foreign country.

E. They do not take title to manufacturers’ goods.

52. A disadvantage when using home-country middlemen as intermediaries in the distribution process is:

A. the large financial investment required.

B. the limited control over the distribution process.

C. the large managerial investments required.

D. the limited number of retailers in the foreign country who can be reached.

E. the large amount of commission.

53. A major trade-off when using home-country middlemen is:

A. the large financial investment required.

B. the limited control over the entire distribution process.

C. the large managerial investments required.

D.

the limited number of retailers in the foreign country who can be reached through the home-country

middlemen.

E. the large amount of commission charged by the home-country middlemen.

54. Home-country middlemen are also known as _____ middlemen.

A. area

B. local

C. merchant

D. domestic

E. regional

55. In the context of the different types of middlemen, which of the following is an example of a

manufacturer’s retail store?

A. Toys “R” Us

B. Walmart

C. Costco

D. Benetton

E. IKEA

56. James Barker is the marketing manager of a firm with small international sales volume. He is looking for

a middleman who can take responsibility for promotion of the company’s products, credit arrangements,

physical handling, and market research. Also, the middleman must be able to provide information on

financial, patent, and licensing matters. In addition, the middleman should agree to work under the name

of the firm. Which of the following types of middlemen would be the best choice for Mr. Barker if he

wants to meet his objectives?

A. A manufacturer’s export agent.

B. An export merchant.

C. A trade representative.

D. An export management company.

E. A complementary marketer.

57. Which of the following statements is true regarding an export management company (EMC)?

A. It acts as a middleman for firms with relatively large international sales volume.

B. It operates under its own name while providing services to another firm.

C. It does not have direct responsibility to the parent firm.

D. It acts as a middleman for firms willing to involve their own personnel in international functions.

E. It calls for a minimum investment from the parent firm to get into international markets.

58. A major disadvantage of _____ is that they can seldom afford to make the kind of market investment

needed to establish deep distribution for products.

A. export management companies

B. trading companies

C. import associations

D. global retailers

E. complementary marketers

59. For companies seeking entrance into the complicated Japanese distribution system, _____ offer one of the

easiest routes to success because they virtually control distribution through all levels of channels in Japan.

A. trade representatives

B. trading companies

C. brokers

D. export management companies

E. complementary marketers

60. Which of the following was a goal of the Export Trading Company Act?

A. To allow U.S. companies to bypass tax laws with respect to international trading.

B. To remove antitrust disincentives to export activities.

C. To bypass trade barriers in foreign countries.

D. To earn the highest possible profits in foreign countries.

E. To combine export shipments within single containers.

61. Which of the following arrangements are undertaken when a firm wants to keep its seasonal distribution

channels functioning throughout the year?

A. Price skimming.

B. Using the services of a trading company.

C. Establishing a retail store.

D. Using the services of an export management company.

E. Complementary marketing.

62. Complementary marketing is commonly known as _____.

A. backhauling

B. demand shifting

C. piggybacking

D. shape shifting

E. skimming

63. Companies with marketing facilities in different countries with excess marketing capacity sometimes take

on additional product lines for international distribution. The formal name for this type of marketing is:

A. skimming.

B. backhauling.

C. complementary marketing.

D. export marketing.

E. demand shifting.

64. A(n) _____ is an individual agent middleman or an agent middleman firm providing a selling service for

manufacturers that covers only one or two markets.

A. complementary marketer

B. export management company

C. Webb-Pomerene export association

D. global retailer

E. manufacturer’s export agent

65. A _____ provides a selling service for a manufacturer, has a short-term relationship, and operates on a

straight commission basis.

A. manufacturers’ retail store

B. trading company

C. global retailer

D. manufacturer’s export agent

E. complementary marketer

66. The Webb-Pomerene Act of 1918 made it possible for American business firms to join forces in export

activities without being subject to which of the following acts?

A. The Sherman Antitrust Act.

B. The Federal Communications Act.

C. The Trade Commission Act.

D. The Food, Drug, and Cosmetics Act.

E. The Robinson-Patman Act.

67. A(n) _____ is a domestic middleman set up in a foreign country or U.S. possession that can obtain a

corporate tax exemption on a portion of the earnings generated by the sale or lease of export property.

A. Webb-Pomerene export association

B. manufacturer’s export agent

C. export management company

D. complementary marketer

E. foreign sales corporation

68. Which of the following is a type of domestic middleman?

A. Sole proprietors.

B. Export Management Companies.

C. Foreign distributors.

D. Lessors.

E. Joint ventures.

69. In the context of types of domestic middlemen, the WTO in 2003 ruled _____ to be in violation of

international trade rules, thus starting a major trade dispute with the European Union.

A. foreign sales corporations

B. direct marketing partnerships

C. trading companies

D. export promotion companies

E. Webb-Pomerene export associations

70. Which of the following is true of foreign sales corporations?

A. They are commonly called piggybackers.

B. They can only be related to a manufacturing parent and not an independent broker.

C. They virtually control distribution through all levels of channels in Japan.

D. They accumulate, transport, and distribute goods from many countries.

E. They can function as a principal or a commissioned agent.

71. Which of the following factors affects the choice of distribution channels?

A. Distance from manufacturer.

B. Language spoken in the target market.

C. Available distribution intermediaries.

D. Consumer literacy levels.

E. Country’s per capita income.

72. Which of the following is one of the six Cs of distribution channel strategy?

A. Communication

B. Continuity

C. Capacity

D. Commission

E. Contribution

73. In the context of factors affecting choice of channels, one of the key elements in distribution decisions

includes _____.

A. the selection of optimum container sizes

B. volume discounts and rebates

C. the functions performed by middlemen

D. the local advertising modes

E. the target market culture

74. Which of the following is a critical element associated with using a particular type of middleman?

A. Knowledge of the culture of the target market.

B. Number of employees.

C. Mode of transportation for moving goods.

D. Influence over the target market.

E. Cash-flow patterns.

75. In which of the following modes of distribution in the foreign market will a company have to make

maximum financial investment?

A. Export management companies.

B. Trading companies.

C. Export associations.

D. Direct sales force.

E. Complementary marketers.

76. Which of the following is one of the highest costs of doing business in China?

A. Money required for the transportation of goods.

B. Money required for obtaining appropriate permits.

C. Cost of local advertising.

D. Capital required to maintain effective distribution.

E. Cost of customizing products for the Chinese market.

77. Which of the following modes of distribution affords the most control over the distribution channels but

often at a cost that is not practical?

A. Complementary marketers.

B. Direct sales force.

C. Export associations.

D. Trading companies.

E. Export management companies.

78. Most middlemen have little loyalty to their vendors. They handle brands in good times when the line is

making money but quickly reject such products within a season or a year if they fail to produce during

that period. This is an example of problems associated with which of the following six Cs of distribution

channel strategy?

A. Character

B. Continuity

C. Control

D. Cost

E. Capital requirement

79. One of the reasons that channels of distribution often pose longevity problems is that most middlemen

_____.

A. do not maintain sufficient inventory to serve customers

B. lack product knowledge resulting in low sales volume

C. have little loyalty to their vendors

D. tend to slow down distribution to extract higher commissions

E. do not have sufficient knowledge of the target market

80. _____ is an area that should be on a checklist of criteria for evaluating middlemen servicing a market.

A. Flexibility

B. Hypersensitivity

C. Cultural empathy

D. Productivity

E. Breadth of knowledge

81. Which of the following actions should be taken to begin with the search for prospective middlemen?

A. Short listing the middlemen.

B. Studying the target market.

C. Evaluating the available financial resources.

D. Designing the sales force required.

E. Understanding the mission of the manufacturing firm.

82. Experienced exporters suggest that the only way to select a middleman is:

A. to conduct a background check on all the distributors available in the target market.

B. to issue a request-for-proposal to all distributors in the target market and evaluate their responses.

C. consult other manufacturers of the similar products and select the distributor recommended by them.

D. consult trade organizations and select the distributor recommended by them.

E. to personally talk to ultimate consumers to find whom they consider to be the best distributors.

83. Sixty percent of the Japanese population lives in the _____ market area, which essentially functions as

one massive city.

A. Tokyo-Nagoya-Osaka

B. Komaki-Tokoname-Kariya

C. Nagoya-Handa-Seto

D. Nishio-Okazaki-Inazawa

E. Inuyama-Nisshin-Takahama

84. Most middlemen have little loyalty to their vendors. They handle brands in good times when the line is

making money but quickly reject such products within a season or a year if they fail to produce during

that period. This is an example of problems associated with which of the following six Cs of channel

strategy?

A. Character

B. Continuity

C. Control

D. Cost

E. Capital requirement

85. Apex Corporation is a wholesaler for Global Electronics in the French market. Global Electronics

discovered that Apex Corp. was diverting some of their goods to the English market. Apex Corp. could

get a greater profit in the English market because the goods were bought by the firm at a cheaper price in

France. In the context of the above scenario, which of the following forms of business is Apex engaged

in?

A. Black marketing.

B. Parallel importing.

C. Backwashing.

D. Industrial piracy.

E. Smuggling.

86. In the context of controlling middlemen, parallel importing is also known as _____.

A. secondary wholesaling

B. black marketing

C. backwashing

D. industrial piracy

E. smuggling

87. E-commerce is more developed in _____ than the rest of the world, partly because of the lower cost ofaccess to the Internet than found elsewhere.

A. China

B. Brazil

C. Switzerland

D. South Africa

E. the United States

88. In the context of the Internet in international marketing channels, technically, e-commerce is a form of _____ selling.

A. direct

B. parallel

C. dual

D. mass

E. targeted

89. In the context of cultural reactions when engaging in e-commerce, the color red is associated with socialism in _____.

A. the United States

B. China

C. Brazil

D. Uruguay

E. Spain

90. Which of the following is true of a physical distribution system?

A. It involves only the physical movement of goods.

B. It is a total systems approach to the management of the distribution process.

C. A decision involving an activity has no impact on the cost and efficiency of one or all others.

D. It excludes the interdependence of the costs of each activity.

E. It includes transportation mode, inventory quantities, and packing.

91. Write a short note on the import-oriented distribution structure.

92. In the context of channel-of-distribution structures, discuss the distinguishing features of the Japanese

distribution structure.

93. Describe export management companies. What are their advantages and disadvantages?

94. What is complementary marketing?

95. Discuss the export trading company act (ETC).

96. What is a foreign sales corporation?

97. Discuss the continuity problem associated with a channel of distribution.

98. What are the various techniques that can be used to motivate middlemen?

99. What is secondary wholesaling?

100. What are the various issues that must be taken into consideration by an e-vendor?