Part 1. Identify some of the environmental constraints on global pricing decisions.

 When making pricing decisions for a global market, companies must consider numerous environmental constraints that will affect the price. Currency fluctuations must be taken into consideration to decide whether or not price adjustments should be made. Companies can decide to either fix the price of products in country target markets or fix the price to home-country currency. Companies rarely take either of these extremes and attempt to keep pricing consistent with the company’s overall business. Exchange-rate clauses must also be considered when making pricing decisions. This allows the buyer and the seller to agree to supply and purchased at fixed rate in each country’s currency. Pricing in an inflationary environment requires period price adjustments and must be considered. Government controls and subsidies, competitive behavior, and price/quality relationships also all affect global pricing decisions. 

The extension / ethnocentric pricing policy requires that the price of the item should be the same around the world and that the importer should absorb all freight and import duties . This gives companies ‘ the advantage of extreme simplicity, however , it does not respond to competition and market changes . Adaptation / Polycentric pricing permits subsidiary or affiliate managers to establish a price that they feel is most desirable . Lastly , invention / geocentric pricing makes companies neither fix worldwide prices nor remain aloof for subsidiary pricing decisions . Instead , companies work on the assumption that there are unique local markets factors that would aid in the pricing decision . When aspiring to go global , I would recommend the invention pricing strategy because it is the only one that takes into account global markets and global competitors .

Part 2. Explain these and then research external companies/products to illustrate these constraints and how these companies addressed them. You have to find companies that are existed and how these companies addressed them.

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