Professional Documents
Culture Documents
Pricing Decisions
Prices for a
Volkswagen Golf*
BRITAIN $13,040
FINLAND 8,290
FRANCE 10,510
GERMANY 11,040
ITALY 10,690
© 2005 Prentice Hall
©2005 Dr.Gerard Ryan, Universitat Rovira i Virgili.
11-5
Under (-)/
The Hamburger Standard over (+)
valuation
Local Currency Dollars Implied PPP* Actual $ exchange against the
of the dollar rate 17/04/01 dollar %
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© 2005 Prentice Hall 11-27
Extension
Ethnocentric
Per-unit price of an item is the same no
matter where in the world the buyer is
located
Importer must absorb freight and import
duties
Fails to respond to each national market
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© 2005 Prentice Hall 11-30
Currency Fluctuations
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© 2005 Prentice Hall 11-31
Inflationary Environment
Defined as a persistent upward change in
price levels
– Can be caused by an increase in the money
supply
– Can be caused by currency devaluation
Essential requirement for pricing is the
maintenance of operating margins
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