chapter 15 part 2

Question 1

Bundling product and services together in a system-solution product. If the customer thinks that entry price is a key barrier, service contracts can be priced higher which allows for lower entry product pricing

Answer 1

Product-service bundle pricing

Question 2

Setting a price for the product as it leaves the factory, fixed world price at HQ. Low-risk strategy that does not respond to local conditions. Rapid introduction of new products in international markets

Answer 2

Price standardization

Question 3

Each local subsidiary or partner can set a price that is considered to be the most appropriate for local conditions.

Answer 3

price differentiation

Question 4

Refers to an e-business that provided periodic delivery of a customized box of merchandise or services directly to the customer’s home for subscription fee, or it may be digital services

Answer 4

Subscription-based pricing

Question 5

Subscription pricing strategies (5)

Answer 5

• Attract customers through freemium strategy
• Create a transparent multiple edition strategy
• Upsell/upgrade the subscription strategy
• Pay-for-use strategy
• Base-line strategy

Question 6

Preparedness for internationalization vs. industry globalism

1. low prep & low global
2. low prep & high global
3. high prep & low global
4. high prep & high global

Answer 6

1. Local price follower
2. Global price follower
3. Multi-local price setter
4. Global price leader

Question 7

A customer requiring one global price from the supplier for all its foreign strategic business units (SBUs) and subsidiaries

Answer 7

Global-pricing contract

Question 8

Prices are charged for intro-company movement of goods and services. While transfer prices are internal to the company, they are important externally for cross-border taxation purposes

Answer 8

Transfer pricing

Question 9

Three basic approaches for transfer pricing (3)

Answer 9

• Transfer at cost
• Transfer at arm’s lenght
• Transfer at cost plus

Question 10

Implementing pricing strategies (3)

Answer 10

• Fixed price mechanism
• Auction mechanism
• Negotiated price mechanism

Question 11

Terms of payment

order most secure for seller

Answer 11

• Cash-in-advance
• Letter of credit
• Document against payment
• Open account
• Consignment

Question 12

Bank agrees to pay specified amount of money on presentation of documents stipulated in the letter of credit

Answer 12

Letter of credit

Question 13

Buyer must make a payment for the face value of draft before receiving documents conveying title to the merchandise

Answer 13

document against payment

Question 14

Exporter ships goods without documents calling for payment, other than the invoice. The buyer can pick up the goods without having to make a payment first

Answer 14

Open account

Question 15

Consignment

Answer 15

Exporter retains title of goods until the importer sells them. Great financial burden and risk of exporter