In a short essay, explain the concept of international price ...

[Collmarie]

In a short essay, explain the concept of international price escalation, and discuss how distribution channel length affects international business transactions.
 
  What will be an ideal response?

Question 2

An MNE in which new knowledge and capabilities are developed in both domestic and foreign locations, both independently and jointly, and then diffused throughout the worldwide organization, is following a ________ strategy.
 
  A) transnational
  B) multidomestic
  C) global
  D) matrix

[helenmarkerine]

Answer to Question 1

International price escalation refers to the problem of end-user prices reaching exorbitant levels in the export market caused by multilayered distribution channels, intermediary margins, tariffs, and other international customer costs. International price escalation means the retail price in the export market can be significantly higher than the domestic price, creating a competitive disadvantage for the exporter.

Channel length refers to the number of distributors or other intermediaries that it takes to get the product from the manufacturer to the market. The longer the channel, the more intermediaries the firm must compensate, and the costlier the channel. For example, Japan is characterized by long distribution channels involving numerous intermediaries. High channel costs contribute to international price escalation, creating a competitive disadvantage for the firm.

Answer to Question 2

A