Chapter 11: Managing International Distribution Operations and Logistics
TRUE/FALSE
1. The initial channel selection decision is very important since a company may be bound to that
relationship and may not legally be allowed to change distributors.
2. Building a channel is sometimes necessary in situations where there are no channels that conform to
the needs of the company.
3. It is often cheaper for a company to build its own channel than to use an established channel.
4. A company that uses intermediaries in its own country is likely to be more involved in managing the
marketing mix in the country where the target market is located.
5. Home-country middlemen typically provide all marketing services for firms that do not wish to enter
the foreign market and/or do not have the capability to do so.
6. Companies relying on home-country middlemen relinquish their control of the marketing mix to their
distributors in the target-market foreign country.
7. A company using intermediaries in the host-country is likely to have a presence there.
8. Export management companies are generalized across industries and typically represent large
companies in global markets.
9. Sogo shoshas are general trading companies in Japan.
10. The Trading Company Act was created to prevent international monopolies from forming.
11. The Trading Company Act is a Japanese legislation promoting Japanese exports.
12. Home-country brokers do not carry title to the product.
13. Cooperative exporters are large multinationals with substantial in-house know how and resources.
14. If a complementary exporter takes title to the complementary products that it distributes, then it is
considered to be a complementary export agent.
15. Webb-Pomerene Associations are immune from antitrust prosecution.
16. Part of a Webb-Pomerene Association member’s income is exempt from U.S. income tax.
17. Export merchants take title to the goods that they sell, but they do not take possession.
18. A Norazi agent is an example of an export merchant.
19. Merchant middlemen are intermediaries that take title to and possession of the products they carry.
20. Agents and brokers are intermediaries that take title to and possession of the products they carry.
21. A comprador usually purchases commodity goods from the manufacturer to sell to the trade
(wholesaler, retailer, business-to-business client) in the target market.
22. Network marketing serves only as a retailing function.
23. Network marketing companies are gaining access to emerging markets all over the world, and many
continue to find potential in developed countries.
24. Logistics account for about 27 percent of Singapore’s GDP.
25. Railways are used for the intercontinental transportation over long distances of high-weight,
high-volume products that have a low per pound value
26. Tankers, barges, and other freighters in the sea and inland waterways account for a substantial
proportion of international traffic.
27. Railways remain the primary mode for intracontinental freight transportation.
28. Railways are a low-cost, lower-speed mode of transportation, and mobility is restricted to designated
areas for freight handling.
29. Waterways and railways are used for transporting over long distances high-weight, high-volume
products that have a low per pound value, such as grains, gasoline, forestry products, cement, and
fertilizers.
30. Railway transportation handles smaller shipments over shorter distances.
31. The Internet poses the greatest threat to freight forwarders and customs brokers.
32. In the United States, international distribution and logistics involvement is shared by a number of
different government agencies – most of which are affiliated with the U.S. Department of Agriculture.
33. The Bureau of Export Administration advances U.S. national security, foreign policy, and economic
interests by regulating exports of products and technologies that could affect those interests.
34. The U.S. Commercial Service enforces sanctions against certain countries for the purpose of enforcing
national security and foreign policy interests.
35. The Bureau of Export Administration operates Export Assistance Centers which offer companies a
range of export facilitation services.
36. The Ex-Im Bank competes with commercial lenders and insurance firms.
37. The U.S. Trade and Development Agency funds feasibility studies, training, business workshops, and
is directly involved in distribution in logistics.
38. The International Chamber of Commerce International Court of Arbitration is the world’s leading
arbitral institution.
39. If price differences are not substantial, there will not be a gray market.
40. Unlike in the case of counterfeit products, it is often not possible to fight gray markets through
litigation.
MULTIPLE CHOICE
1. What difficulty did Kraft face in its attempt to enter the Hong Kong market?
a.
Existing distributors charged an exorbitant amount.
b.
Kraft had to create its own distributorship since an existing channel was not available.
c.
The Chinese government controlled the established channel.
d.
Kraft was blocked from entry by competitors.
2. Why did Coca Cola decide to create its own channels of distribution in Eastern Europe?
a.
Existing channels were too expensive.
b.
Existing channels had low operating efficiency.
c.
Pepsi controlled the existing channels.
d.
The government controlled the existing channels.
3. Which of the statements regarding home-country middlemen is accurate?
a.
A company that uses home-country intermediaries is likely to be more involved in
managing the marketing mix than companies that use host-country intermediaries.
b.
Companies relying on home-country middlemen relinquish their control of the marketing
mix to their distributors.
c.
Home-country middlemen distribute the product but do not provide other marketing
services for firms.
d.
None of the above are true.
4. Activities of export management companies include all of the following except:
a.
researching the international market.
b.
representing the company at trade shows.
c.
screening and selecting international distributors.
d.
Export management companies provide all of the above activities.
5. Which of the following is an activity of export management companies?
a.
Setting up a foreign sales corporation in the home country for export purposes
b.
Representing the company at trade shows.
c.
Managing greenfielding companies.
d.
Export management companies provide all of the above activities.
6. According to the text, Amex Inc. is an example of which type of middleman?
a.
Export management company
c.
Webb-Pomerene exporter
b.
Manufacturer’s export agent
d.
Import jobber
7. Keiretsus are
a.
agents that deal in illegal and/or gray market products.
b.
export management companies used by Japanese firms.
c.
families of firms with interlocking stakes in one another.
d.
trading associations formed under the Webb-Pomerene Act.
8. Which of the following is not an example of a sogo shosha?
a.
Itochu Corp.
c.
Mitsubishi
b.
Mitsui
d.
Toyota
9. There is currently a shift in sogo shosha activities to more
a.
third-country trade.
b.
participation in high-risk overseas mega projects.
c.
increased participation in product areas requiring sophisticated distribution.
d.
All of the above are true.
10. How are Honda, Sony, and Toyota creating difficulties for sogo shoshas?
a.
Their keiretsu derived power is forcing sogo shoshas to reduce prices.
b.
The companies are lobbying the Japanese government for sogo shosha reform.
c.
The companies have set up their own direct export-sales networks.
d.
The companies are using U.S. trading companies to distribute their products.
11. Why was the Export Trading Company Act established?
a.
To limit the monopoly like power of certain industries.
b.
To regulate exports of products that affect for policy, such as weapons and technology
products.
c.
To encourage the formation of export trading companies in order to promote U.S. exports.
d.
To eliminate double taxation of U.S. based firms exporting to or operating in foreign
countries.
12. Which of the following actually takes title to the products that it sells?
a.
Home-country brokers
c.
Manufacturer representatives
b.
Complementary export merchants
d.
Export agents
13. ____ occurs when exporters agree to handle export functions for unrelated companies on a contractual
basis.
a.
Piggybacking
c.
Parallel importing
b.
Network marketing
d.
Leap frogging
14. Which statement is true regarding Webb-Pomerene Associations?
a.
They are a way for firms to avoid double taxation.
b.
Members are immune from antitrust prosecution.
c.
They deal in illegal and/or gray market products.
d.
They were created by the Export Trading Company Act in order to promote U.S. exports.
15. What is a Norazi agent?
a.
A parallel importer
c.
A trading company in Japan
b.
A family of firms
d.
A complementary exporter
16. Which type of merchant middleman usually purchases commodity goods from the manufacturer to sell
to the trade in the target market?
a.
Compradors
c.
Parallel importers
b.
Complementary export agents
d.
Import jobbers
17. Which type of agent represents the manufacturer exclusively in a market?
a.
Norazi agents
c.
Complementary export agents
b.
Manufacturer’s representatives
d.
Import jobbers
18. ____ are used for intercontinental transportation over long distances of high-weight, high-volume
products that have a low per pound value.
a.
Airways
b.
Railways
c.
Tankers, barges, and other sea freighters
d.
Pipelines