Chapter 17 Global Marketing and R&D

Chapter 17 - Global Marketing and R&DChapter 17Global Marketing and R&D

True / False Questions1.(p.592)The set of choices the firm offers to its targeted markets is known as the marketing mix.TRUE

Difficulty: Easy2.(p.592)The marketing mix is comprised of product attributes, distribution strategy, communication strategy and pricing strategy.TRUE

Difficulty: Easy3.(p.593)Most academics support Theodore Levitt's assertion that global markets are becoming more standardized.FALSE

Difficulty: Medium4.(p.593)The process of identifying distinct groups of consumers whose purchasing behavior differs from others in important ways is known as the marketing mix.FALSE

Difficulty: Easy

5.(p.594)The goal of market segmentation is to optimize the fit between the purchasing behavior of consumers in a given segment and the marketing mix, thereby maximizing sales to that segment.TRUE

Difficulty: Medium6.(p.594)The structure of market segments may differ significantly from country to country.TRUE

Difficulty: Easy7.(p.595)Products sell well when their attributes match consumer needs.TRUE

Difficulty: Easy8.(p.595)The most important aspect of cultural differences is values.FALSE

Difficulty: Medium9.(p.596)Firms based in less-developed nations tend to build a lot of extra performance attributes into their products.FALSE

Difficulty: Medium

10.(p.597)Consumers in the most developed countries are typically willing to sacrifice their preferred product attributes for lower prices.FALSE

Difficulty: Easy11.(p.597)Differences in technical standards can prevent a firm from standardizing products across markets.TRUE

Difficulty: Easy12.(p.597)The four main differences between distribution systems are retail concentration, channel length, channel exclusivity and channel quality.TRUE

Difficulty: Medium13.(p.597-598)In a concentrated retail system, there are many retailers, no one of which has a significant share of the market.FALSE

Difficulty: Medium14.(p.598)Developing countries tend toward greater retail concentration.FALSE

Difficulty: Easy

15.(p.598)An increase in car ownership, the number of two-income households and the number of households with a refrigerator have all contributed to the more fragmented retail system found in developed countries.FALSE

Difficulty: Medium16.(p.598)The number of intermediaries between the producer and the consumer is known as the channel length.TRUE

Difficulty: Medium17.(p.598)A channel is considered to be long when a producer sells through an import agent, a wholesaler and a retailer.TRUE

Difficulty: Easy18.(p.599)The most important determinant of channel length is the degree to which the retail system is concentrated.FALSE

Difficulty: Medium19.(p.599)Countries with fragmented retail systems tend to have long channels of distribution.TRUE

Difficulty: Easy

20.(p.599)The entry of large discount superstores such as Tesco and Carrefour have shortened channel length in some countries.TRUE

Difficulty: Easy21.(p.600)One benefit of a shorter channel is that it cuts selling costs when the retail sector is very fragmented.FALSE

Difficulty: Medium22.(p.600)Import agents are typically limited to independent trading houses.FALSE

Difficulty: Medium23.(p.602)Source effects occur when the receiver of the message evaluates the message based on the status or image of the sender.TRUE

Difficulty: Medium24.(p.604)Source effects and country of origin effects are always negative.FALSE

Difficulty: Medium

25.(p.604)A company that depends on mass media advertising to communicate its marketing message to potential consumers is using a push strategy.FALSE

Difficulty: Medium26.(p.604)When a company emphasizes personal selling, the company is probably using a push strategy.TRUE

Difficulty: Medium27.(p.604)A push strategy is generally favored by consumer goods firms that are trying to sell to a large segment of the market.FALSE

Difficulty: Medium28.(p.606)A push strategy makes sense when distribution channels are short.TRUE

Difficulty: Medium29.(p.607)A firm may be prevented from using standardized advertising because of advertising regulations.TRUE

Difficulty: Easy

30.(p.608)Price discrimination involves charging whatever the market will bear.TRUE

Difficulty: Easy31.(p.608)When a small change in price produces a large change in demand, demand is said to be inelastic.FALSE

Difficulty: Easy32.(p.609)The use of price as a competitive weapon to drive weaker competitors out of a national market is known as predatory pricing.TRUE

Difficulty: Easy33.(p.610)Pricing decisions around the world must be delegated to the managers of various national subsidiaries.FALSE

Difficulty: Medium34.(p.612)The "customization versus standardization" debate is an all or nothing issue.FALSE

Difficulty: Medium

35.(p.613)The rate of new-product development seems to be lesser in countries where more money is spent on basic and applied research and development.FALSE

Difficulty: Medium36.(p.614)Over the past 20 years, the U.S. monopoly on new-product development has strengthened significantly.FALSE

Difficulty: Medium37.(p.614)New-product development has a high failure rate.TRUE

Difficulty: Easy38.(p.615)A company's customers can be a primary source of new-product ideas.TRUE

Difficulty: Easy39.(p.615)Designing for manufacturing increases not only product quality, but also costs involved.FALSE

Difficulty: Medium

40.(p.616)One solution many international businesses adopt for allocating product development responsibilities to various centers involves establishing a global network of R&D centers.TRUE

Difficulty: Easy

Multiple Choice Questions41.(p.592)Which of the following is not an element that constitutes a firm's marketing mix?A.Product attributesB.Communication strategyC.Reverse engineeringD.Distribution strategy

Difficulty: Easy42.(p.592)The set of choices the firm offers to its targeted market is known as theA.Marketing mixB.Marketing conceptC.Marketing strategyD.Market promotion

Difficulty: Easy43.(p.592)Research has long maintained that a major factor of success for new products is the closeness of the relationship betweenA.Finance and marketingB.Marketing and R&DC.Finance and materials managementD.Finance and R&D

Difficulty: Medium

44.(p.592)According to Levitt, which of the following statements is true?A.Technology drives the world toward a converging commonaltyB.There are accustomed differences in national preferencesC.The multinational corporation operates in a number of countries at low relative costsD.The global corporation operates with resolute consistency at high relative costs

Difficulty: Medium45.(p.593)The continuing persistence of _____ differences between nations acts as a major brake on any trend toward global consumer tastes and preferences.A.Technological and industrialB.Institutional and politicalC.Cultural and economicD.GNP level and growth rate

Difficulty: Medium46.(p.593)The identification of distinct groups of consumers whose purchasing behavior differs from others in important ways is known asA.Market segmentationB.Market penetrationC.Diversification strategyD.Differentiation

Difficulty: Medium47.(p.595)If market segments transcend national borders,A.The company should develop unique products for each national marketB.The company can view the global market as a single entity and pursue a global strategyC.A localization strategy would be appropriateD.Consumers will have differing purchasing behavior in different nations

Difficulty: Medium

48.(p.595)The most important aspect of a country's cultural differences, particularly important in foodstuffs and beverages is the impact ofA.ValuesB.TraditionsC.NormsD.Attitudes

Difficulty: Medium49.(p.596)Consumers in highly developed countries value _____ as compared to their counterparts in less developed nations.A.PriceB.Product reliabilityC.Product attributesD.Standardized products

Difficulty: Medium50.(p.596)Which of the following statements is false?A.Product reliability may be a more important attribute in most advanced countriesB.Consumers in highly developed countries tend to build a lot of extra performance attributes into their productsC.Consumers in the most developed countries are often not willing to sacrifice their preferred attributes for lower pricesD.Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind

Difficulty: Medium51.(p.597)The means a firm chooses for delivering the product to the consumer is itsA.Communication strategyB.Segmentation strategyC.Product attributesD.Distribution strategy

Difficulty: Medium

52.(p.597)The way a product is delivered is determined byA.A firm's entry strategyB.A firm's product positioningC.The target marketD.Market segmentation

Difficulty: Medium53.(p.597)Contrary to Levitt's suggestions, consumers in the most developed countries are oftenA.Willing to sacrifice their preferred attributes for lower pricesB.Not willing to pay more for products that have additional features customized to their tastesC.Not willing to sacrifice their preferred attributes for lower pricesD.Willing to accept globally standardized products that have been developed with the lowest common denominator in mind

Difficulty: Hard54.(p.597)In a concentrated retail system,A.There are many retailers who have a major share of the marketB.There are many retailers, no one of which has a major share of the marketC.A few retailers supply a small segment of the marketD.A few retailers supply most of the market

Difficulty: Medium55.(p.598)By acquiring retailers in different countries, large global retailers such as Carrefour and Wal-Mart have increasedA.Retail concentrationB.Retail fragmentationC.Retail dispersionD.Retail crowding

Difficulty: Medium

56.(p.598)A country with high car ownership, a large number of households with refrigerators and a large number of two income families tend to haveA.Retail divisionB.Retail dispersionC.Retail concentrationD.Retail fragmentation

Difficulty: Medium57.(p.597)In a _____ retail system, a few retailers supply most of the market.A.FragmentedB.DispersedC.FocusedD.Concentrated

Difficulty: Medium58.(p.597)Which of the following is not a key difference between distribution systems in different countries?A.Channel speedB.Channel lengthC.Channel exclusivityD.Channel quality

Difficulty: Medium59.(p.597-598)A _____ retail system is one in which there are many retailers, no one of which has a major share of the market.A.ConcentratedB.ConsolidatedC.FocusedD.Fragmented

Difficulty: Medium

60.(p.598)Which of the following statements about retail systems is true?A.One factor contributing to greater retail concentration is an increase in car ownershipB.The number of households with refrigerators leads to lesser retail concentration in developed countriesC.There is a tendency for greater retail concentration in many developing countriesD.Retail systems are very fragmented in developed countries

Difficulty: Hard61.(p.598)In terms of retail concentration, developed countries tend to have a higher degree of concentration than developing countries for all of the following reasons exceptA.Number of households with refrigerators and freezersB.Tradition of established local neighborhoods in which people walk to storesC.Increase in car ownershipD.Number of two-income households that accompany development

Difficulty: Medium62.(p.598)Developed countries are more likely to have aA.Concentrated retail systemB.Fragmented retail systemC.Crowded retail systemD.Dispersed retail system

Difficulty: Medium63.(p.598)The number of intermediaries between the manufacturer and the consumer is referred to asA.Channel reachB.Channel concentrationC.Channel exclusivityD.Channel length

Difficulty: Medium

64.(p.598)If a producer sells through an import agent, a wholesaler and a retailer, thenA.A long channel existsB.The retail system must be concentratedC.The internet probably plays a big role in the economyD.There is no channel

Difficulty: Medium65.(p.599)The most important determinant of channel length is the degree to which a retail system isA.ConcentratedB.FragmentedC.DecentralizedD.Globalized

Difficulty: Medium66.(p.599)Which of the following statements about fragmented retail systems is true?A.Countries with fragmented retail systems tend to have short channels of distributionB.The more fragmented the retail system, the less expensive it is for a firm to make contact with each individual retailerC.Fragmented retail systems tend to promote the growth of wholesalers to serve retailersD.When the retail sector is very fragmented, it makes sense for the firm to deal directly with retailers

Difficulty: Hard67.(p.599)What kind of retail systems do rural India and China have?A.FragmentedB.DirectC.IndirectD.Concentrated

Difficulty: Hard

68.(p.599)With a concentrated retail sector,A.A relatively large sales force is requiredB.The orders generated from each sales call can be largeC.There are long channels of distributionD.It is expensive for the firm to make contact with each individual retailer

Difficulty: Hard69.(p.599)A(n) _____ distribution channel is one that is difficult for outsiders to access.A.SelectiveB.IntensiveC.ExclusiveD.Multichannel

Difficulty: Easy70.(p.599)When a channel is exclusiveA.It carries only high-end productsB.It is controlled by market leaders or by firms who have a niche marketC.It focuses on only on elite customersD.It is often difficult for a new firm to get access to shelf space in supermarkets

Difficulty: Medium71.(p.600)The expertise, competencies and skills of established retailers in a nation and their ability to sell and support the products of international businesses isA.Channel exclusivityB.Channel knowledgeC.Channel qualityD.Channel skill

Difficulty: Medium

72.(p.601)Which of the following does not affect a firm's international communication?A.Cultural barriersB.Source effectsC.Channel exclusivityD.Noise levels

Difficulty: Medium73.(p.602)To overcome cultural barriers, companies shouldA.Develop products specifically for each marketB.Focus on universal needsC.Focus only on market segments that transcend national boundariesD.Develop cross-cultural literacy

Difficulty: Easy74.(p.602)When the receiver of a message evaluates a message based on the status or image of the sender, _____ are said to have occurred.A.Sender effectsB.Noise effectsC.Source effectsD.Communication effects

Difficulty: Medium75.(p.602)The extent to which the place of manufacturing influences product evaluations is known asA.Source effectsB.Country of origin effectsC.Noise effectsD.Location effects

Difficulty: Easy

76.(p.604)The probability of effective communications is reduced byA.Noise effectsB.Location effectsC.Country of origin effectsD.Source effects

Difficulty: Easy77.(p.604)Which of the following statements about barrier to international communication is true?A.Source effects occur when the receiver of the message evaluates the message on the basis of the location of the senderB.The best way for a firm to overcome cultural barriers is to use local inputC.Source effects and country of origin effects are always negativeD.Noise is extremely high in highly developed countries such as the United States

Difficulty: Hard78.(p.604)When a firm emphasizes personal selling rather than mass media advertising in the promotional mix, the firm is using aA.Standardized strategyB.Pull strategyC.Push strategyD.Localized strategy

Difficulty: Medium

79.(p.604)Which of the following statements is true?A.Firms in consumer goods industries that are trying to sell to a large segment of the market generally favor a push strategyB.Mass communication has cost advantages for firms in consumer goods industries that are trying to sell to a large segment of the marketC.Direct selling may be the only way to reach consumers in poor nations with low literacy levelsD.Firms that sell industrial products or other complex products favor a pull strategy

Difficulty: Hard80.(p.604)A firm that depends more on mass media advertising to communicate the marketing message to potential consumers is using aA.Pull strategyB.Push strategyC.Standardized strategyD.Localized strategy

Difficulty: Medium81.(p.604)Factors that determine the relative attractiveness of push and pull strategies include all of the following exceptA.Product type relative to consumer sophisticationB.Channel lengthC.Noise levelsD.Media availability

Difficulty: Medium

82.(p.604)When firms in the consumer goods industry are trying to sell to a large segment of the market they favor aA.Push strategyB.Pull strategyC.Standardized strategyD.Localized strategy

Difficulty: Medium83.(p.604)A(n) _____ strategy is favored by firms that sell industrial products or other complex products.A.LocalizedB.IndirectC.PushD.Pull

Difficulty: Medium84.(p.606)If media availability is limited, a firm shouldA.Use a push strategyB.Use a pull strategyC.Consider a longer channelD.Consider a shorter channel

Difficulty: Medium85.(p.606)When distribution channels are short, firms shouldA.Use a direct channelB.Use a push strategyC.Focus on consumer products or other standardized productsD.Focus on industrial products or other complex products

Difficulty: Medium

86.(p.606)A push strategy is appropriate whenA.There are many choices of electronic mediaB.The firm is selling consumer goodsC.Distribution channels are longD.The firm is selling complex new products

Difficulty: Medium87.(p.606)If a firm is facing long distribution channels, the firm should choose a _____ strategy.A.Competitive advertisingB.Price discriminationC.Predatory pricingD.Pull

Difficulty: Medium88.(p.606)Which of the following is an argument that supports global advertising?A.Standardized advertising lowers the costs of value creation by spreading the fixed costs of developing the advertisements over many countriesB.Because of concerns about the scarcity of creative talent, some feel that smaller efforts will produce better results than one large effort to develop a campaignC.Even though there are cultural differences between nations, a single advertising theme that is effective worldwide can be easily developedD.Standardized advertising may be implemented even in the face of advertising regulations

Difficulty: Hard89.(p.608)When a company charges whatever the market will bear, the company is usingA.Strategic pricingB.Price discriminationC.A push strategyD.A pull strategy

Difficulty: Easy

90.(p.608)In order for price discrimination to be successfulA.There must be a strong case for arbitrageB.Markets must be kept separateC.Demand must be very elasticD.A large change in demand must be triggered by a small change in price

Difficulty: Medium91.(p.608)If a _____ change in a price produces a _____ change in demand, then price is elastic.A.Small; largeB.Small; smallC.Large; smallD.Large; large

Difficulty: Medium92.(p.608)A measure of the responsiveness of demand for a product to change in price is referred to asA.Arbitrage demandB.Predatory pricingC.Price elasticity of demandD.Experience curve pricing

Difficulty: Easy93.(p.608)_____ occurs when an individual or business capitalizes on a price differential for a firm's product between two countries by buying the product in the country where the price is low and reselling it in the country where prices are higher.A.ArbitrageB.Strategic pricingC.Price discriminationD.Market pricing

Difficulty: Easy

94.(p.608)Which of the following statements about price discrimination is true?A.It exists whenever consumers in a country are charged different prices for the same productB.It involves charging whatever the market will bearC.It is the use of price as a competitive weapon to drive weaker competitors out of a national marketD.It makes economic sense to charge the same prices across countries

Difficulty: Hard95.(p.608)What is the most important factor in determining the elasticity of demand for a product in a given country?A.Personal sellingB.LogisticsC.Operating revenueD.Income level

Difficulty: Medium96.(p.608)Which of the following statements is false?A.The lesser the number of competitors, the higher the elasticity of demandB.When competitors are limited, consumers' bargaining power is weakerC.A firm may charge a higher price for its product in a country where competition is limited than in one where competition is intenseD.When there is high elasticity of demand and a firm raises its prices above those of its competitors, consumers will switch to the competitors' products

Difficulty: Hard97.(p.609)In a country where competition is limited,A.Prices will be lowB.There will be low elasticity of demandC.Prices will be highD.Consumers' bargaining power rises

Difficulty: Medium

98.(p.609)For _____ to work, the firm must normally have a profitable position in another national market, which it can use to subsidize aggressive pricing in the market it is trying to monopolize.A.Multipoint pricingB.Value-based pricingC.Experience curve pricingD.Predatory pricing

Difficulty: Medium99.(p.609)This refers to impact a firm's pricing strategy in one market may have on its rivals' pricing strategy in another market.A.Multipoint pricingB.Experience curve pricingC.Predatory pricingD.Competitive pricing

Difficulty: Easy100.(p.615)Tight cross-functional integration between R&D, production and marketing can help a company to ensure that all of the following take place exceptA.Time to market is minimizedB.Development costs are kept in checkC.New products are designed for ease of manufactureD.Product development projects are driven by internal needs

Difficulty: Medium

Essay Questions101.(p.592-593)What is Theodore Levitt's contribution to international business?Theodore Levitt wrote about the globalization of world markets in a now-classic Harvard Business Review article. Levitt suggested that due to technology, the world was moving toward a converging commonalty and the emergence of global markets for standardized consumer products. According to Levitt, this convergence creates an opportunity for the global corporation to serve the entire world as if it were a single entity or in other words, sell the same thing in the same way everywhere. Most academics believe that Levitt has overstated his case, that globalization in consumer products is probably the exception rather than the rule. Furthermore, cultural and economic differences between countries will continue to limit the effects of any movement toward the standardization of consumer preferences and tastes. In addition, trade barriers and differences in product and technical standards will also constrain a firm's ability to sell standardized products to global markets using a standardized marketing strategy.

Difficulty: Hard102.(p.593-594)Define market segmentation. What is its goal?Market segmentation refers to identifying distinct groups of consumers whose purchasing behavior differs from others in important ways. Markets can be segmented in numerous ways: by geography, demography, social-cultural factors and psychological factors. The goal of market segmentation is to optimize the fit between the purchasing behavior of consumers in a given segment and the marketing mix, thereby maximizing sales to that segment.

Difficulty: Medium

103.(p.594-595)What are the two main issues that managers must be aware of when considering market segmentation in foreign countries?There are two key issues that managers must be aware of when using market segmentation in foreign countries. First, managers must consider the differences between countries in the structure of market segments, which may differ significantly from country to country. The firm may have to develop a unique marketing mix to appeal to the purchasing behavior of a certain segment in a given country. Second, managers must be aware of the existence of segments that transcend national borders. Such segments would enhance the ability of a company to view the global marketplace as a single entity and pursue a global strategy.

Difficulty: Medium104.(p.595)Discuss the notion of a product being a bundle of attributes. How can approaching a product in this manner help a firm reach its target market?A product can be viewed as a bundle of product attributes. Products sell when their attributes match consumer needs. For example, BMW recognizes that its consumers have a need for luxury, quality and performance. Accordingly, the company builds these attributes into its cars. If consumer needs were the same across the world, the firm could simply sell the same product worldwide. However, because consumer needs vary by country depending on culture and the level of economic development, a firm's ability to sell the same product will be constrained.

Difficulty: Hard

105.(p.596-597)How do levels of economic development affect consumer behavior? What are the implications for marketing strategy?Consumers in the most advanced countries often shun globally standardized products that have been developed with the lowest common denominator in mind. They are willing to pay more for products that have additional features and attributes customized to their tastes and preferences. In response to this behavior, firms marketing to consumers in highly developed markets tend to build a lot of extra performance attributes into their products. In contrast, consumers in less-developed countries typically demand a more basic product. In addition, product reliability becomes more important as the purchase may account for a greater share of a consumer's income than for the advanced country consumer. Consequently, products sold in developing countries typically lack many of the features found in products sold in advanced countries.

Difficulty: Hard106.(p.597-598)Explain the difference between a concentrated retail system and a fragmented one. Why is this distinction important to international businesses?In some countries the retail system is very concentrated, where just a few retailers supply most of the market. Other countries have a fragmented system in which there are many retailers, no one of which has a major share of the market. In the U.S., for example, the retail system is a concentrated one where there are large stores or shopping malls. In contrast, Japan's more fragmented retail system involves many small stores that serve local neighborhoods.

Difficulty: Medium

107.(p.597-600)What are the four main differences between distribution systems across countries?The four main differences between distribution systems are retail concentration, channel length, channel exclusivity and channel quality. Retail concentration refers to how many retailers supply most of the market. Channel length refers to the number of intermediaries between the producer and the consumer. Channel exclusivity refers to how difficult it is for outsiders to access the channel. Finally, channel quality refers to the expertise, competencies and skills of established retailers in a nation and their ability to sell and support the products of international businesses.

Difficulty: Medium108.(p.598)What are the three factors that contribute to the trend toward greater retail concentration in developed countries? How have these factors promoted retail concentration?There are three factors that contribute to the greater retail concentration in developed countries. First is the increase in car ownership. Second is the increase in the number of households with refrigerators and freezers. Third is the increase in the number of two-income households. All of these factors have changed shopping habits and facilitated the growth of large retail establishments sited away from traditional shopping areas.

Difficulty: Medium109.(p.598-599)What is channel length? What is the most important determinant of channel length? Mention two factors that shorten channel length.Channel length refers to the number of intermediaries between the producer and the consumer. The most important determinant of channel length is the degree to which the retail system is fragmented. Fragmented retail systems tend to promote the growth of wholesalers to serve retailers, which lengthens channels. However, the internet and the entry of large discount superstores have served to shorten channel lengths.

Difficulty: Medium

110.(p.599-600)Describe an exclusive distribution channel. Consider the implications of channel exclusivity for outside firms.An exclusive distribution channel is one that is difficult for outsiders to access. Channel exclusivity is very high in Japan, which makes the Japanese market so difficult to penetrate effectively. In Japan, relationships between manufacturers, wholesalers and retailers often go back decades. Many of these relationships are based on the understanding that distributors will not carry the products of competing firms. Firms from other countries may find it very difficult to break into the Japanese market as a result of this exclusivity.

Difficulty: Medium111.(p.601-604)What factors affect the success of a firm's international communications?The effectiveness of a firm's international communications can be jeopardized by three critical variables: cultural barriers, source effects and noise levels. Cultural barriers can make it difficult to communicate messages across cultures. Source effects occur when the receiver of the message evaluates the message based on the status or image of the sender. Finally, noise refers to the amount of other messages competing for a potential consumer's attention.

Difficulty: Medium112.(p.604)Compare and contrast push strategies and pull strategies.When developing its communications strategy, a firm must decide between a push and a pull strategy. A push strategy emphasizes personal selling rather than mass media advertising in the promotional mix. This type of strategy requires intensive use of a sales force and is relatively costly. In contrast, a pull strategy depends more on mass media advertising to communicate the marketing message to potential customers.

Difficulty: Easy

113.(p.606-607)What are the arguments for standardized advertising across international markets?There are three main arguments supporting the notion of standardized advertising across markets. First, such a campaign has significant economic advantages because it lowers the cost of value creation by spreading the fixed costs of developing the advertisements across many countries. Second, because of concerns about the scarcity of creative talent, one large effort to develop a campaign will produce better results than 40 or 50 smaller efforts. Finally, many brand names are global.

Difficulty: Medium114.(p.609)What is predatory pricing? Describe how a firm might use predatory pricing.Predatory pricing is the use of price as a competitive weapon to drive weaker competitors out of a national market. Once the competitors have left the market, the firm can raise prices and enjoy high profits. For such a pricing strategy to work the firm must normally have a profitable position in another national market, which it can use to subsidize aggressive pricing in the market it is trying to monopolize.

Difficulty: Medium115.(p.615-616)Discuss the notion of cross-functional teams and their role in cross-functional integration. What are the attributes that make a product development team successful?A firm can achieve cross-functional integration by establishing cross-functional product development teams comprised of representatives from R&D, marketing and production. The objective of the team should be to take a product development project from the initial concept development to market introduction. The success of such teams is dependent on three attributes. First, the team should be led by "heavyweight" managers who have high status within the organization and who have the power and authority required to get the financial and human resources the team needs to succeed. Second, the team should be comprised of at least one member from each key function. Finally, the team should physically be in one location if possible to create a sense of camaraderie and to facilitate communication.

Difficulty: Medium

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