Deck 12: Channels of Distribution

Question 1

Whereas domestic agents take title to the goods they handle, domestic merchants do not

Answer 1

False

Question 2

An indirect selling channel (in contrast with the direct selling channel) should not be used when a manufacturer's foreign sales volume is small

Answer 2

False

Question 3

The direct channel is time consuming and expensive

Answer 3

True

Question 4

By using a manufacturer's export agent, a manufacturer can avoid fixed costs of having a distribution organization

Question 5

When acting as agents, these intermediaries represent only sellers and not buyers

Question 6

Unlike an export broker, a manufacturer's export agent works for a manufacturer on a one-shot basis

Question 7

An EMC represents several allied but noncompeting manufacturers

Question 8

American EMCs are typically large

Question 9

Some EMCs act as both agents and merchants

Question 10

An EMC's costs are high because of the lack of efficiencies of scale

Question 11

EMCs are more market specialists than product specialists

Question 12

Japanese trading companies are well financed because they are partners with groups of banks

Question 13

U.Sbanks are not allowed to hold equity positions in export trading companies

Question 14

Export trading companies can obtain binding antitrust preclearance

Question 15

Unlike Japanese trading companies that develop two-way trade, U.Strading companies are required by law to focus primarily on exports

Question 16

U.Strading companies are legally allowed to import and export freely

Question 17

When a country is "cold," the channel of distribution is likely to keep on changing

Question 18

"Hot" countries are dynamic markets, while "cold" countries do not easily accommodate changes

Question 19

Due to environmental forces, new institutional structures arise in hot countries

Question 20

There is a relationship between available channels and the stage of economic development

Question 21

"Hot" countries are industrialized countries

Question 22

As a country moves toward becoming a hot country, there is a decrease in distribution specialization (the manufacturer- wholesaler-retailer functions)

Question 23

The degree of distribution standardization across countries is high

Question 24

Exclusive sales agreements give appearance of restrictions of trade

Question 25

The European Union prohibits exclusive distribution that restricts a European distributor from selling to buyers in the other member states (i.e., outside the distributor's own country)

Question 26

For high unit-value, low-turnover specialty goods, a manufacturer can shorten and narrow its distribution channel

Question 27

A distributor's power is derived in part from its market knowledge gap

Question 28

Japan's distribution channel is longer than that of the United States

Question 29

The Japanese distribution network has more wholesalers and retailers per capita than any of the advanced industrial nations

Question 30

Distribution channels in Japan are characterized by many large retailers and a relatively small number of small retailers

Question 31

In Japan, a remarkable number of people are engaged in selling merchandise in very small quantities

Question 32

Japan, in spite of being classified as a hot country, has distribution system so rigid that there has been hardly any distribution evolution

Question 33

To avoid or reduce potential compensation obligations when terminating a relationship with a foreign intermediary, a manufacturer should use a merchant intermediary instead of appointing a foreign agent

Question 34

A manufacturer should insist on an evergreen contract when signing up overseas representatives

Question 35

To avoid excessive compensation and legal difficulties when terminating a relationship with a foreign intermediary, it is better to use a foreign merchant than to appoint a foreign agent

Question 36

To reduce potential compensation obligations when terminating overseas intermediaries, it is a good practice to insist on having a so-called evergreen contract

Question 37

A black market is not necessarily illegal

Question 38

Gray marketing is impossible without price differential between markets

Question 39

Gray marketing takes place primarily because of price differences across markets

Question 40

The U.SCustoms will not issue an exclusion order for a foreign firm's U.Ssubsidiary which imports its goods into the United States

Question 41

When the foreign and domestic trademark holders are "subject to common ownership or control," they cannot bar importation of gray market goods into the United States

Question 42

When a foreign holder and a U.Sholder of the same trademark are subject to common ownership and control, they can legally ask the U.Sgovernment to stop gray marketing

Question 43

An "independent" authorized U.Simporter can ask the U.SCustoms to bar entry of gray market goods