Chapter 8: Importing, Exporting, and Sourcing

Which of the following was a major U.S. tax incentive for exporters that the WTO recently ruled was an illegal subsidy? A) NTR B) CVD C) FSC D) NTB E) HTS

C) FSC

Export marketing requires all of the following except: A) an understanding of the target market environment. B) the use of marketing research. C) identification of market potential. D) decisions concerning product design. E) reaching retail customers.

E) reaching retail customers.

The Fly American Act is an example of a nontariff barrier.

True

Officially, the EU tariffs on Chinese and Vietnamese shoe imports are known as: A) Countervailing duties. B) Antidumping duties. C) Specific duties. D) Ad valorem duties. E) Temporary surcharges

B) Antidumping duties.

After the aftermath of the tragedy involving fire in garment factories in Bangladesh, it was found that the buildings were inspected by: A) Dhaka's building-safety authority. B) Business Social Compliance Initiative (BSCI). C) Walmart's approved contractors. D) Worker Rights Consortium. E) Interfaith Center for Corporate Responsibility.

B) Business Social Compliance Initiative (BSCI).

In the post-September 11 business environment in the United States, imports have come under increased security. One of the initiatives taken in the interest of national security is: A) NAFTA. B) C-TPAT. C) WTO. D) NTB. E) FSC.

B) C-TPAT

According to percent market share of the top ten apparel exporting countries to the United States, which country ranked as number one in 2011? A) Taiwan B) China C) Mexico D) India E) Honduras

B) China

The United States have given Normal Trade Relations (NTR) status to some 180 countries. In actuality only four countries are excluded from this status which includes all of the following countries except: A) North Korea. B) Iraq. C) Iran. D) Cuba. E) Libya.

B) Iraq

Which of the following correctly states the role of banks in import/export transactions involving a letter of credit (L/C)? A) The importer's bank is the advising and/or confirming bank; the exporter's bank is the issuing bank. B) The exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing bank. C) The exporter's bank is the advising, confirming, and issuing bank. D) The importer's bank is the advising, confirming, and issuing bank. E) none of the above

B) The exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing bank.

Which of the following incorrectly states the role of banks in import/export transactions involving a letter of credit (L/C)? A) The exporter's bank is the advising and/or confirming bank. B) The importer's bank is the advising and/or confirming bank. C) The importer's bank is the advising, confirming, and issuing bank. D) The exporter's bank is the advising, confirming, and issuing bank. E) The importer's bank is neither advising nor confirming bank

B) The importer's bank is the advising and/or confirming bank.

A duty that represents a certain percentage of the value of a particular product is a(n): A) specific duty. B) ad valorem duty. C) BTN duty. D) "schedule B" duty. E) antidumping duty.

B) ad valorem duty.

An irrevocable letter of credit transfers the payment obligation for an export deal from the buyer to the buyer's: A) in-house export organization. B) bank. C) freight forwarder. D) credit union. E) checking account.

B) bank

Which set of documents generally represents the minimum documentation required to clear a shipment through customs? A) packing list, commercial invoice B) bill of exchange, commercial invoice C) certificate of origin, bill of exchange D) packing list, insurance certificate E) letter of credit, commercial invoice

B) bill of exchange, commercial invoice

Which of the following types of duties would be imposed on a company whose home-country government provided export subsidies? A) ad valorem duty B) countervailing duty C) antidumping duty D) specific duty E) customs duty

B) countervailing duty

Which of the following receives a fee for bringing together an exporter and a buyer in another country? A) foreign purchasing agent B) export broker C) export merchant D) export management company E) freight forwarder

B) export broker

Governmental actions that discourage imports and block market include all of the following except: A) tariffs. B) free trade zones. C) subsidies. D) tax incentives. E) duties.

B) free trade zone

Developed under the auspices of the Custom Cooperation Council (now the World Customs Organization) the system which took effect is referred to as: A) preferential tariffs. B) Harmonized tariff. C) BTN duty. D) Specialized tariff. E) antidumping duty.

B) harmonized

In an effort to attract assembly operations, Brazil allows certain product components to be imported at reduced tariff rates. This is an example of: A) offsets. B) preferential tariffs. C) the effect of the Customs Valuation Code. D) an EMC. E) discriminatory procurement

B) preferential tariffs

Which of the following is described as the three R's of global business: rules, rate schedules, and regulations? A) quotas B) tariffs C) NTBs D) NTR E) duties

B) tariffs

In which of the following forms of export financing does a bank assume a financial obligation? A) with an L/C but not a documentary collection B) with a documentary collection but not an L/C C) neither an L/C nor a documentary collection requires a bank to assume financial obligation D) with either an L/C or a collection letter E) with both an L/C and a documentary collection

B) with a documentary collection but not an L/C

Which of the following refers to a system of farm subsidies in Europe? A) CVD B) FSC C) CAP D) HTS E) NTR

C) CAP

The furniture industry has become one of the fastest-growing sectors of China's economy. Furniture imports are flooding into the United States from China. This can be attributed to: A) the quality of furniture is better than that made in Europe. B) American tastes in décor have changed. C) China's low labor rates translate into reasonable prices for consumers. D) China can survive tough competition. E) replacement parts are readily available from China.

C) China's low labor rates translate into reasonable prices for consumers.

Agricultural subsidies are particularly controversial because, although they protect the interests of farmers in some countries, they work to the detriment of farmers in countries such as: A) Singapore. B) the United States. C) India. D) Switzerland. E) Japan.

C) India

Which of the following completely eliminates the risk of nonpayment by an importer or a bank in an international transaction? A) documentary credit (letter of credit) B) documentary collection C) cash in advance D) sales on open account E) draft

C) cash in advance

Research has shown that exporting is essentially a developmental process that proceeds in different stages. Before a firm reaches stage 4, it must do one of the following activities: A) explore the feasibility of exporting. B) commit resources for exporting. C) receive unsolicited export orders. D) believe in attractiveness of exporting. E) build confidence in firm's ability for exporting

C) receive unsolicited export orders.

The chief executives of Swiss Swatch Group and Japanese Canon would like to: A) outsource all of the manufacturing units overseas in order to save money. B) outsource a majority of the manufacturing functions overseas. C) retain a majority, if not all, of the manufacturing in their home country. D) establish "call centers" in developing countries in order to save labor costs. E) outsource a full line of new products only

C) retain a majority, if not all, of the manufacturing in their home country.

Which of the following financing methods would be used by an exporter that enjoys good relations with a buyer in a well-established market? A) letter of credit B) cash in advance C) sales on open account D) barter E) arrival draft

C) sales on open account

If the dollar, the yen, or the euro becomes seriously overvalued, a company with a production capacity in other locations can achieve competitive advantage by: A) buying different currencies before major fluctuations take place. B) conducting transactions in different currencies of the world. C) shifting production among different sites. D) cutting down production and waiting until the currency rate is reasonable. E) reducing production and labor force simultaneously.

C) shifting production among different sites.

Which of the following establishes classification numbers that must be used by importers and exporters? A) NTR B) CVD C) FSC D) NTB E) HTS

E) HTS

The Ministry of International Trade and Industry (MITI) has helped devise export strategies for companies in: A) Singapore. B) South Korea. C) Taiwan. D) Hong Kong. E) Japan.

E) Japan

Which of the following is not true about a personal visit to size up the market firsthand and begin the development of an actual export-marketing program? A) Confirm assumptions regarding market potential. B) Contradict assumptions regarding market potential. C) Gather additional data to help make decisions. D) Develop a marketing plan in cooperation with local agents. E) To have a face-to-face meeting and avoid going to trade shows.

E) To have a face-to-face meeting and avoid going to trade shows.

A number of explanations have been offered for the low level of U.S. exports relative to other countries. All of the following can be considered as reasons for low level of exports except: A) limited ambition by many American business owners. B) lack of knowledge of market opportunities abroad. C) perceived lack of necessary resources. D) marketing to home-country users is easier than exporting. E) a strong U.S. dollar translates into less affordable prices in export markets

E) a strong U.S. dollar translates into less affordable prices in export markets

A nontariff barrier (NTB) includes all of the following except: A) quota. B) discriminatory procurement policies. C) restrictive administrative policies. D) restrictive technical regulations. E) ad valorem duty.

E) ad valorem duty.

Direct representation, as opposed to representation by independent intermediaries for exporting in the market country, has several advantages which do not include: A) facilitates control and communications. B) allows decisions concerning program development and resource allocation. C) benefits when a product is not yet established in a market. D) ensures marketer's interest and special efforts. E) helps selling products directly to the consumer in the market country.

E) helps selling products directly to the consumer in the market country.

The possible arrangements of the responsibilities for handling exports include all of the following except: A) as a part-time activity performed by domestic employees. B) through an export partner affiliated with the domestic marketing structure. C) through an export department within an international division. D) through an export department that is independent of the domestic marketing structure. E) through an export department of an embassy in a foreign country.

E) through an export department of an embassy in a foreign country.

Governments commonly use activities to support and encourage firms that engage in exporting. Such activities include all of the following except: A) tax incentives. B) subsidies. C) export assistance. D) free trade zones. E) voting rights. Governments commonly use activities to support and encourage firms that engage in exporting. Such activities include all of the following except: A) tax incentives. B) subsidies. C) export assistance. D) free trade zones. E) voting rights.

E) voting rights

"Export selling" involves tailoring various elements of the marketing mix to global market requirements.

False

"Piggyback exporter," "cooperative exporter," and "export vendor" are all terms used to describe an export broker.

False

CVDs are additional duties levied by exporting countries on imported videodiscs.

False

Foreign purchasing agents are also referred to as jobbers.

False

In general, the greater the distance between the product source and the target market, the greater the time delay for delivery and the lower the transportation cost.

False

Outsourcing means shifting undesirable jobs or work assignments to another company to cut costs. When the outsourced work moves to another country, the terms "global outsourcing" or "offshoring" are used.

False

Tariffs can be thought of as the "three R's" of global business: rules, rigor, and regulations of individual countries.

False

The Common Agricultural Policy (CAP) determines the level of subsidies granted to farmers in Latin America.

False

The terms "export selling" and "export marketing" are interchangeable.

False

The Harmonized Tariff System (HTS) is currently the dominant system for determining the correct classification number.

TRUE

A nontariff barrier (NTB) is a hidden trade barrier which is a deterrent or obstacle to the sale of products in a foreign market.

True

According to the recent import regulations in the United States, action figures that represent non-human creatures such as monsters or robots are categorized as toys and qualified for lower duties than human figures that are classified as dolls.

True

After the research effort has zeroed in on potential markets, there is no substitute for a personal visit to size up the market firsthand and begin the development of an actual export marketing program.

True

An ad valorem duty is expressed as a percentage of the value of goods.

True

Duty drawback refers to refunds of duties paid on imports that are processed or incorporated into other goods and then reexported.

True

For every one yen increase relative to the American dollar, Canon's operating income declines by 6 billion yen.

True

In an effort to facilitate exports, countries are designating certain areas as "free trade zones" (FTZ) or "special economic zones" (SEZ).

True

In an export/import transaction requiring a letter of credit (L/C), the exporter's (seller's) bank can be known as the "advising" bank, the "confirming" bank, or both.

True

It was found by research that even the most experienced exporters express lack of confidence in their knowledge about shipping arrangements, payment procedures, and regulations.

True

Potential export problems include packaging, government red tape, warehousing, advertising, and trade restrictions.

True

Representatives of the apparel, footwear, and textile industries in many countries are deeply concerned about the impact increased trade with China will have on these sectors.

True

Switzerland exports 51 percent of their GDP, compared to the United States which exports only 14 percent.

True

Tax incentives, subsidies, export assistance, and free trade zones are common support provided by governments to firms that engage in exporting.

True

The Buy American Act of 1933, which stipulates that U.S. federal agencies must buy articles produced in the United States unless domestically produced goods are not available, is an example of discriminatory procurement policies.

True

The Customs Trade Partnership Against Terrorism (C-TPAT) recognizes that U.S. Customs and Border Protection (CBP) is responsible for screening import cargo transactions.

True

The Harmonized Tariff System (HTS) has eliminated virtually all problems associated with assigning tariff classifications to new products.

True

The four tigers-Singapore, South Korea, Taiwan and Hong Kong-learned from the Japanese experience and built strong export-based economies of their own.

True

Volkswagen's business environment includes a significant wage differential between Mexico and Germany.

True

When Honda's U.S. manufacturing subsidiaries purchase parts from Japan, customs authorities in the United States have the right to scrutinize the transfer price to make sure it is a fair reflection of market value.

True

The international standard by which letters of credit (L/Cs) are interpreted is known as the ________ 500. A) UCP B) NTR C) FSC D) NTB E) HTS

A) UCP

Which of the following offers a company the best assurance of being paid for exported goods? A) a letter of credit B) a "piggyback" arrangement C) a swap D) an in-house export organization E) a certified check

A) a letter of credit

Which of the following documents represents title to goods in an export transaction? A) bill of lading B) invoice C) packing list D) certificate of origin E) insurance certificates

A) bill of lading

The sale of merchandise in export markets at unfair prices is known as: A) dumping. B) countervailing. C) tariff. D) ad valorem. E) transaction.

A) dumping.

Which of the following is sometimes referred to as a "buyer for export" or an "export commission house" and operates on behalf of a buyer from a foreign country? A) foreign purchasing agent B) export broker C) export merchant D) export management company E) freight forwarder

A) foreign purchasing agent

After the aftermath of the tragedy involving fire in garment factories in Bangladesh, Walmart implemented a "zero-tolerance policy." The Workers Rights Consortium, International Labor Organization and other groups monitoring labor issues are stepping up pressure on the companies that participate in the global garment supply chain due to the following reasons, except: A) retailers pay lip service to concerns about factory safety. B) retailers continue to focus on low prices. C) those auditing facilities are audited by BSCI's qualified engineers. D) the buyers and consumer are willing to pay more for garments. E) retailers do not provide funds for fire safety training.

C) those auditing facilities are audited by BSCI's qualified engineers.

Sweden applies a system to certain categories of imported agricultural products which is referred to as: A) temporary surcharges. B) ad valorem duty. C) variable import levies. D) specific duty. E) countervailing duty.

C) variable import levies.

________ is an independent marketing intermediary that acts as the export department for two or more manufacturers whose product lines do not compete with each other. A) Manufacturer's export agent B) Export commission representative C) Export merchant D) Export management company E) Cooperative exporter

D) Export management company

The export and import process can entail red tape and bureaucratic delays. In an effort to facilitate exports, countries are designating certain areas as: A) import control zones. B) special tariff zones. C) global business zones. D) free trade zones. E) duty free zones.

D) Free Trade Zones

________ are licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules. They can be considered as the travel agents for handling export goods. A) Foreign purchasing agents B) Export brokers C) Export merchants D) Freight forwarders E) Cooperative exporters

D) Freight forwarders

Which of the following arranges export financing payment methods in descending order starting with the most secure/reliable and ending with the least secure/reliable? A) sales on open account→cash in advance→documentary credit (L/C)→documentary collection (draft) B) documentary credit (L/C)→sales on open account→documentary collection (draft)→cash in advance C) documentary collection (draft)→documentary credit (L/C)→cash in advance→sales on open account D) cash in advance→documentary credit (L/C)→documentary collection (draft)→sales on open account E) none of the above

D) cash in advance→documentary credit (L/C)→documentary collection (draft)→sales on open account

Restrictive administrative and technical regulations can create barriers to trade which may take all of the following forms except: A) antidumping regulations. B) product size regulations. C) safety and health regulations. D) common agricultural policies. E) safety and pollution regulations.

D) common agricultural policies.

The only marketing mix element that is applicable in the export selling is: A) price. B) product. C) promotion. D) place. E) process.

D) place

Which of the following methods of financing would be used if the exporting and importing parties had a strong, long-standing relationship? A) documentary credit (letter of credit) B) documentary collection C) cash in advance D) sales on open account E) bank draft

D) sales on open account

The organizational decision to purchase production inputs, components, or finished goods from domestic or foreign producers is known as the ________ decision. A) import/export B) NTB C) preferential D) sourcing E) security

D) sourcing