Q&A Hero

Q: Discuss the continuity problem associated with a channel of distribution.

Q: What is a foreign sales corporation?

Q: Discuss the Export Trading Company (ETC) Act and its effects on U.S. firms.

Q: How does complementary marketing extend a company's distribution? When is a company most likely to use it?

Q: What are the main features of export management companies? Describe their advantages and disadvantages.

Q: The Japanese distribution structure has four distinguishing features. Discuss these and explain how they impact Japan's market.

Q: What happens in an import-oriented distribution structure? How are intermediaries affected?

Q: One result of the EU's unification is A) the elimination of trade barriers with countries outside the EU. B) the acceptance of universal prices on basic goods. C) the elimination of transportation barriers among member countries. D) an increase in the number of warehouses in member countries. E) elimination of the need for cargo ships for distribution.

Q: Cargo ships are reducing transit time and are larger and thus able to carry more containers. What is a disadvantage of this for U.S. companies' imports? A) They are taking business away from other forms of transit. B) Some ships are too large to fit into U.S. ports. C) The cost is becoming prohibitive. D) Containers cannot be shipped by rail in Europe. E) They have impeded investment in supersonic passenger jets.

Q: A website and the product must be culturally neutral, which can be a problem when it comes to color. For instance, the color red is associated with socialism in A) the United States. B) China. C) Brazil. D) Uruguay. E) Spain.

Q: E-commerce is a form of ________ selling. A) direct B) parallel C) dual D) indirect E) targeted

Q: A website should be seen as A) a sole means of advertising. B) a vehicle for product delivery. C) a substitute for marketing in more than one language. D) a way to get around differences in cultures. E) a means of promotion and a retail store.

Q: When developing a website, what is true about the use of language? A) English should be used, as it is the most universal language. B) It is not necessary to use multiple languages because the customer will bridge the language gap. C) Simple translation of web pages is sufficient to reach foreign markets. D) Language and culture do not impact a website's message in any significant way. E) A country-specific (and language-specific) website may make the difference between success and failure.

Q: E-commerce is more developed in ________ than the rest of the world, partly because of the lower cost of access to the Internet than found elsewhere. A) China B) Brazil C) Switzerland D) Japan E) the United States

Q: Parallel importing is also known as A) secondary wholesaling. B) black marketing. C) backwashing. D) industrial piracy. E) smuggling.

Q: Abel Corp. is a wholesaler for Global Electric in the French market. Global Electric discovered that Abel Corp. was diverting some of its goods to the English market. Abel could get a greater profit in the English market because the goods were bought by the firm at a cheaper price in France. What is Abel engaged in? A) black marketing B) parallel importing C) backwashing D) industrial piracy E) smuggling

Q: The closer the company wants to get to the customer in its channel contact, A) the larger the sales force required. B) the more routine the channel-building process becomes. C) the more likely the company will use middlemen. D) the more important it is to consult with trade organizations. E) the more effective use of the Internet will be.

Q: According to experienced exporters, what is the only effective way to select a middleman? A) Conduct a background check on all the distributors available in the target market. B) Issue a request-for-proposal to all distributors in the target market and evaluate their responses. C) Consult other manufacturers of similar products and select the distributor recommended by them. D) Consult trade organizations and select the distributor recommended by them. E) Talk personally to ultimate consumers to find whom they consider to be the best distributors.

Q: Sixty percent of the Japanese population lives in the ________ market area, which essentially functions as one massive city. A) TokyoNagoyaOsaka B) KomakiTokonameKariya C) NagoyaHandaSeto D) NishioOkazakiInazawa E) InuyamaNisshinTakahama

Q: Which action should be taken when beginning 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

Q: What subject area should be on the checklist of criteria for evaluating middlemen servicing a market? A) flexibility B) sensitivity C) cultural empathy D) productivity E) breadth of knowledge

Q: One reason 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.

Q: Most middlemen 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 a problem associated with which of the six Cs of distribution channel strategy? A) character B) continuity C) control D) cost E) capital requirement

Q: One way to get around the difficulty of full-market coverage in a country is to A) seek significant penetration in major population areas. B) avoid countries with multiple languages. C) assess countries in terms of market segments, not geographic segments. D) keep marketing efforts to highly developed areas. E) focus on the use of one channel.

Q: Transporting and storing goods, breaking bulk, providing credit, local advertising, sales representation, and negotiations with middlemen most directly relate to which of the six Cs of the channel distribution strategy? A) cost B) control C) coverage D) character E) continuity

Q: Which mode 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

Q: What 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

Q: Which mode of distribution in the foreign market will require a company to make the maximum financial investment? A) export management companies B) trading companies C) export associations D) direct sales force E) complementary marketers

Q: What 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

Q: What is one of the key elements in distribution decisions when it comes to choosing channels? A) selection of optimum container sizes B) volume discounts and rebates C) functions performed by middlemen D) local advertising modes E) target market culture

Q: What is one of the six Cs of distribution channel strategy? A) communication B) continuity C) capacity D) commission E) contribution

Q: What 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.

Q: In the context of the 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

Q: ________ are a type of domestic middleman. A) Sole proprietors B) Export management companies C) Foreign distributors D) Lessors E) Joint ventures

Q: A(n) ________ is a middleman 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

Q: The Webb-Pomerene Act of 1918 made it possible for American business firms to join forces in export activities without being subject to the A) Sherman Antitrust Act. B) Federal Communications Act. C) Trade Commission Act. D) Food, Drug, and Cosmetics Act. E) Robinson-Patman Act.

Q: A ________ provides a selling service for a manufacturer, has a short-term relationship with the manufacturer, 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

Q: A(n) ________ is an individual agent middleman or an agent middleman firm providing a selling service for manufacturers that cover only one or two markets. A) manufacturer's retail store B) export management company C) Webb-Pomerene export association D) global retailer E) manufacturer's export agent

Q: Companies with marketing facilities or contacts in different countries with excess distribution capacity or a desire for a broader product line sometimes take on additional lines for international distribution. The formal name for such activities is A) skimming. B) backhauling. C) complementary marketing. D) export marketing. E) demand shifting.

Q: IGP owned a large warehouse in England where it stored and distributed books. It was approached by a greeting card company in the U.S. to distribute those as well. Since the products would go into similar markets and IGP could make a profit on the distribution of the greeting card line, it decided to participate in A) backhauling. B) demand shifting. C) piggybacking. D) shape shifting. E) skimming.

Q: Which arrangement is best 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

Q: A major goal of the Export Trading Company (ETC) Act was to A) allow U.S. companies to bypass tax laws with respect to international trading. B) remove antitrust disincentives to export activities in the U.S.. C) bypass trade barriers in foreign countries. D) earn the highest possible profits in foreign countries. E) combine export shipments within single containers.

Q: ________ offer one of the easiest routes to gain entrance into the complicated Japanese distribution system 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

Q: 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

Q: Which statement 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 smaller investment from the parent firm to get into international markets.

Q: A marketing manager of a firm with small international sales volume 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. What type of middleman would be the best choice for this marketing manager 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

Q: What company offers a manufacturer's retail store? A) Toys "R" Us B) Walmart C) Costco D) Benetton E) IKEA

Q: Home-country middlemen are also known as ________ middlemen, and are located in the producing firm's country. A) area B) local C) merchant D) domestic E) regional

Q: How are global retailers like IKEA, Costco, and Walmart becoming major domestic middlemen for international markets? A) They maintain their core marketing approaches while localizing the array of products, promotions, and other peripheral aspects of their operations. B) They work under the names of the manufacturers and function as low-cost, independent marketing departments with direct responsibility to the parent firms. C) They have minimum investment costs as they do not commit to investing in company personnel. D) They serve as the producer's export department but have a short-term relationship, cover only one or two markets, and operate on a straight commission basis. E) They offer reduction of export costs, demand expansion through promotion, trade barrier reduction, and improvement of trade terms through bilateral bargaining.

Q: A disadvantage when using home-country middlemen as intermediaries in the distribution process is the A) large financial investment required. B) limited control over the distribution process. C) large managerial investments required. D) limited number of retailers in the foreign country who can be reached. E) large amount of commission.

Q: The 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.

Q: Which group takes title to manufacturers' goods and assume the trading risks? A) merchant middlemen B) brokers C) buying offices D) export agent E) agent middlemen

Q: Which group is frequently criticized for not representing the best interests of a manufacturer? A) global wholesalers B) trading companies C) consumers D) merchant middlemen E) brokers

Q: What has proven 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

Q: What 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

Q: 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.

Q: 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) Hyundai Motors

Q: What makes Walmart's transactions with suppliers highly efficient and lowers its cost of operations? A) clean business reputation B) internal Internet-based system with suppliers C) lack of competitors D) outreach programs to placate small retailers E) ability to influence foreign governments

Q: In Japan, under the Large-Scale Retail Store Law, all proposals for new "large" stores were 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.

Q: Which feature characterizes the business philosophy of Japanese distribution channels? A) loyalty B) direct sales C) fast delivery D) variety E) price competition

Q: What group is considered to be the foundation of the Japanese distribution system? A) consumers B) brokers C) manufacturers D) small retailers E) wholesalers

Q: Distribution in ________ has long been considered the most effective nontariff barrier to that market. A) China B) Japan C) the U.S. D) Western Europe E) Canada

Q: In an import-oriented distribution structure, A) the importerwholesaler 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 provide functions such as advertising, marketing research, and financing. D) the idea of a channel as a chain of intermediaries performing specific activities is common. E) the distribution system is national in scope.

Q: Which distribution structure is also known as a traditional distribution structure? A) Export-oriented B) Import-oriented C) Manufacturer-oriented D) Service-oriented E) Customer-oriented

Q: 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

Q: The ________ process includes the physical handling and distribution of goods, the passage of ownership (title), and the buying and selling negotiations between producers and middlemen and between middlemen and customers. A) logistics B) marketing C) channel D) distribution E) control

Q: A physical distribution system involves only the physical movement of goods.

Q: A change of transportation mode can affect a change in packaging and handling, inventory costs, warehousing time and cost, and delivery charges.

Q: An e-vendor in a foreign market can generally ignore culture as an important variable because the commerce is being done via the Internet, which is culturally insensitive.

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

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

Q: Selecting a middleman is usually as simple as asking for a recommendation from a company's local manager.

Q: In the United States, if a middleman is terminated, the company is required to pay 1 percent of the middleman's average annual compensation multiplied by the number of years the middleman served as a final settlement.

Q: Channels of distribution often pose longevity problems as they tend to be small institutions.

Q: 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.

Q: Trading companies provide the best means for intensive coverage of the market in Japan.

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

Q: The WTO in 2003 ruled export management companies to be in violation of international trade rules.

Q: An export management company (EMC) functions as a low-cost, independent marketing department with direct responsibility to the parent firm.

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