Exam Questions on International Marketing

Some of the frequently asked exam questions on international marketing are as follows:

Q.1. State and discuss the principle underlying international trade.

Ans. International trade is a trade among countries or different geographical areas. The earliest trade between countries occurred when they were able to supply one another with goods which they were unable to produce for them­selves.

Now the sphere of international trade has widened both in volume and in value. Countries now-a-days import many things which they could not produce for themselves. Division of labour and specialisation, followed by exchange, result in a greater output of everything, and the same applies to international trade also.

The principle underlying international trade is that a country should specialise in the production of those commodities for which it has the greater advantage over others. The result of such specialisation will be a large total world output of these things than if every country tries to be as nearly self-sufficient as possible. The theory of international trade is, therefore, based on the principle of comparative advantage (cost).

Q.2. State the different types of international business.

Ans. International business can be classified under four types of headings:

(1) The company whose only international business is trading internationally.

(2) The company which has a high volume of export business supported by marketing companies in other countries and the occasional manufacturing subsidiary.

(3) The trans – national company with a network of subsidiaries or associate companies in other countries, including many overseas plants.

(4) The true multi-national business which produces and markets inter­nationally and which has a multi-national management.

Q.3. In an attempt to market the products abroad, what kind of marketing strategy a firm should choose ?

Ans. When a firm attempts to market its products abroad, it can choose between two divergent marketing :

(1) Initially it can enter a few of the most promising markets. Once its presence is established’ and the potential of its product proved, it penetrates new and presumably less profitable markets.

(2) The firm may choose to enter as many potential markets as possible as the same time. The initial broad-,scale penetration is followed by a strategy of abandoning some old and less profitable markets.

Marketing managers find the first strategy superior and use it widely because it requires a lower investment in marketing and permits the firm to test its products and concentrate on markets with the highest expected return. Most firms become multinational through this kind of creeping commitment.

Q.4. There are various types of export arrangements. Mention the main types and identify the basic stages of exporting.

Ans. The main types of export arrangements are:

Basic Stages of Exporting : 

It is observed that a number of different channels of distribution are possible within the exporting framework stated above. With the expansion of a company’s foreign operations, it has to pass through different stages of export development in which a growing proportion of exports go to foreign sales and manufacturing affiliates for resale rather than to customers or agents.

There are three basic stages of exporting :

Stage I : Exports to customers, and agents.

Stage II : Exports to customers, agents and sales subsidiaries.

Stage III : Exports to foreign manufacturing affiliates.

Q.5. Name the national and international agencies that conduct market research for the knowledge of Indian exporters.

Ans. National agencies include : Government Departments, Ministry of Commerce, Export Promotion Councils, Commodity Boards (e.g. Tea, Coffee Rubber, etc.) Research Institutions, Chambers of Commerce, Export- Import Bank, etc.

International agencies or sources include : United Nations Organisa­tion, General Agreements on Tariffs and Trade (GATT), International Monetary Fund (IMF) Year Book, International Trade Centre, United Nations Conference on Trade and Development (UNCTAD), World Bank or International Bank for Reconstruction and Development (IBRD), etc.

Q.6. Mention the differences between international marketing and export marketing ?

Ans. Though the two terms ‘international marketing’ and ‘export marketing’ are taken synonymously and used interchangeably, yet there are differ­ences.

They differ basically with respect to :

(i) Scope:

International’ marketing is wider in concept and includes research into the needs of the foreign markets and developing marketing strategies to meet them.

Export marketing is narrower in concept and includes only the activity of exporting goods and services to a foreign country.

(ii) Approach:

In international marketing, the approach is to explore the marketing opportunities in the host countries and thus, involves the study of host country’s environment.

In export marketing, the approach is ethnocentric or home-oriented in the sense that the goods are sold in the foreign markets. Here, the philosophy is either to counter domestic competition and export the surplus production or to avail of the incentives provided by the home government.

Q.7. List the important steps through which an export transaction passes.

Ans. An export transaction passes through many steps, of which the important are :

(1) Receipt of indent from abroad,

(2) Shipping and credit enquiry,

(3) Packing and forwarding of the goods,

(4) Observing customs formali­ties,

(5) Issuing Bill of Lading and freight note,

(6) Preparing ship­ping documents,

(7) Effecting marine insurance, and

(8) Securing pay­ment for the goods.