International Price Setting (Scenario)
The Comfy Couch Corporation (CCC) is a leading American manufacturer of sofas, sectionals, and lounge chairs. Managers from the U.S.-based firm recently met a London retailer who expressed an interest in selling CCC lounge chairs in his stores. The retailer sells a number of different furniture brands in his stores, so CCC managers need to price their furniture appropriately if the firm is to be competitive in the European market.
If CCC managers employ rigid cost-plus pricing they would most likely be disadvantaged because ________.
◦ rigid cost-plus pricing often fails to account for local market conditions
◦ through rigid cost-plus pricing, added costs of doing business abroad cannot be adjusted
◦ rigid cost-plus pricing overly focuses on the prevailing conditions in the local markets
◦ rigid cost-plus pricing is primarily driven by buyer demand in the local markets
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