MGMT 425 Ch. 16
discount
After the US completed a counterpurchase agreement with Indonesia, it ended up with counterpurchase credits. Since it had no use for these credits, it sold them to a third-party trading house. These credits would be sold to the third-party at a _____.
packaging
An export _____ company can advise companies on the best design and materials for their product packages. These companies can also help minimize packaging to maximize the number of items to be shipped.
draft
An order written by an exporter which tells the importer to pay $4,975 by June 20th is an example of a(n) _____.
is obligated to provide a transportation service in return for a certain charge.
As a contract, the bill of lading specifies that the carrier
letter of credit
At the request of the importer, the national bank paid the exporting company upon presentation of the documents that had been issued. What document did the importer request?
export credit
Brett's Bicycle Shop has decided to export products to Finland without using a letter of credit. One way the shop can insure against payment default would be to purchase _____ insurance.
Unfamiliar with opportunities Intimidated by language, culture, currency
Exports only account for a small percentage of US business. Which two characteristics does the text cite as being the reason businesses don't export more?
customs brokers
Freestyle Performance Group is new to the exporting business and has no understanding of the customs requirements foreign countries might place on the athletic equipment they want to export. Which type of service provider can help the company with this problem?
freight forwarder
Jason's company is involved with the international transportation of goods. The company is able to keep costs down for its customers because it combines smaller shipments from a variety of companies into one large shipment. Jason's company is an example of a ____.
Exporting
Kent told the management team that there were many opportunities for market expansion of their product in western Europe. He felt they should find a means to sell there and begin shipping product immediately. What entry mode is Kent interested in?
exporting
The Export Legal Assistance Network consists of trade attorneys who provide advice on matters involving _____.
financing; export credit insurance
The Export-Import Bank provides ______ while the Foreign Credit Insurance Association provides ______.
Export-Import
The Foreign Credit Insurance Association operates under the direction of the _____ Bank.
political commercial
The Foreign Credit Insurance Association provides coverage against which two risks?
countertrade
What did the Soviet Union rely on to purchase imports in the 1960s since its currencies were generally nonconvertible?
Company Readiness to Export
What does the acronym CORE represent?
a reputable bank
What intermediary is typically used to establish trust during an international trade transaction?
franchise
What is NOT a form of countertrade?
government embassy
What is a resource for finding confirming houses?
trading goods for other goods when they can't be traded for money
What is an accurate description of countertrade?
combine smaller shipments into a single large shipment to lower shipping costs
What is the primary task of a freight forwarder?
it specifies an amount to be paid and when it should be paid
What is the purpose of a bill of exchange?
Export-Import Bank
What organization is an independent agency of the US government that was set up to provide financing to facilitate exports, imports, and the exchange of commodities?
products sold by potential distributors in a foreign market name of potential distributor in a foreign market
What two items would be included on a "best prospects" list supplied by the US Department of Commerce? (choose all that apply)
upon presentation
When a drawee receives a sight draft it should be paid ______.
letter of credit
When an importer is in a strong bargaining position and is putting competing suppliers against one another, an exporter might be forced to forego a(n) _____ in order to get the order.
buying agent
A confirming house is sometimes referred to as a(n) _____.
circular
A counterpurchase agreement is BEST described as ______
is issued by a bank at the request of an importer.
A letter of credit is a document that
importer
A letter of credit is requested by the _____ from a bank.
buyback
A(n) ____ agreement involves taking a percentage of a company's output as partial payment.
counterpurchase
Caitlin's U.S. firm sold paint additives to Japan and in return her company was paid by Japan but is also required to purchase plastic products produced in Japan with some of the proceeds from the sale of the paint additive. This example demonstrates _____.
ELAN
Chad runs a small business and is interested in exporting his product to France but he needs some advice on the legal issues this would entail. Which organization would provide him with a free initial consultation for his legal questions?
switch trading
Countertrade agreements can result in credits. These credits can be purchased by a third party which has a better use for them. What is the name given to this type of transaction?
developing
Countertrade would be more likely used by a _____ nation.
Japan
Currently you will find the BEST use of countertrading in _____.
offset counterpurchase buyback
What are three forms of countertrade?
letter of credit
Gina's company is in competition with four other suppliers who are trying to get similar products into France. One way Gina's company could boost its appeal with the importer would be to forgo a _____.
Loans
How does the Ex-Im bank fund the financing aid it provides to facilitate exports, imports, and the exchange of commodities between the US and other countries?
countertrade
If Saudi Arabia buys jets from Boeing and pays for the jets in crude oil, it is using _____ to structure the sale.
maker
If a US exporter writes a draft that instructs the Bank of Thailand to pay for merchandise shipped to Thailand, then the US exporter would be considered the ____ in this scenario.
not receiving the product receiving a defective product
If a payment is made before products are shipped, an importer may be concerned about ________. (Choose the two that apply.)
countertrade
In exchange for getting an order for commercial aircraft from Air India, Boeing might be required to buy aircraft doors from an Indian company. This is an instance of using ____ as a marketing tool.
Foreign Credit Insurance Association (FCIA)
In the United States, export credit insurance is provided by the ________, an association of private commercial institutions operating under the guidance of the Export-Import Bank.
The maker sells the draft to an investor which includes a discount from face value.
In what way are time drafts negotiable?
proactive
Lila warned the management team that if they didn't try to enter the foreign market now, it would be hard to expect growth experience because all of their competition would saturate the market. Lila would like her company to be _____ (reactive or proactive?).
export management company
Lisette runs a small perfume business and is interested in exporting but she does not have a large enough staff to expedite the marketing needed to do this. She could find an export specialist by working with a(n) _____.
commerce
Marcus is in charge of finding out all of the available export opportunities for his company. The best source for him to begin is the US Department of _____.
lack of customization
Marcus's company began exporting their line of ski-wear to Australia last year but soon realized that there was little need for the products in that country. Why did this company's attempt to export fail?
barter
Michael doesn't have the money to buy a new car and he wishes he could trade in his old car, his bike, and his computer to buy a new car. If Michael was running a company this way, what type of countertrade would he be thinking about?
barter
Michael's company would like to sell its products to a company in Nicaragua, but it fears that the company will not pay for the products in a timely manner. Instead of asking for cash, Michael's company decides to ask for a shipment of coffee and tobacco products in exchange for their products. What type of countertrade is Michael's company using?
knowledge
Nathan was worried that his company was missing a lot of opportunity to sell their products in China because of the separation created by language, culture, and distance. In other words, his company had a lack of _____.
countertrade
One drawback of _______ is that unsaleable or poor quality goods may be exchanged in place of payment of currency.
export credit
One way to avoid payment default on a foreign export sent without a letter of credit is to purchase _____ insurance.
piggyback
Parul contacted another company to see if they could provide the mulch she needed for an overseas client because her lawncare company does not produce mulch. This type of arrangement is an example of ____ marketing.
5%
Recent statistics from the Small Business Administration show that about _____ of US firms with fewer than 500 employees are involved in exporting.
countertrade
Since the developing country was not able to pay in hard currency, Daveed's company agreed to accept motor parts for use in their motorcycle product line as payment. Unfortunately, the motor parts they received were all broken. This is an example of a disadvantage of _____.
export
Sogo shosha are the Japanese trading houses that work with their affiliated companies to identify _____ opportunities
lack of trust
Special mechanisms for financing exports and imports have been created to deal with the issue of _____ that is present when firms deal with strangers.
US Department of Commerce
The International Trade Administration is an organization within the _____.
sogo shosha
The Japanese trading houses that work with their affiliated companies to identify export opportunities are called ___________.
Small Business Administration
The Service Corps of Retired Executives is an organization within the _____.
prospects
The US Department of Commerce would supply a business with a best _____ list if the company was interested in learning more about potential foreign markets.
buyback
The US energy company agreed to build three hydrogen-energy facilities in Thailand. As part of the agreement, the US company had to take 15% of the plants' output as partial payment for the contract. This is an example of a(n) _____.
a contract a receipt a document of title
The bill of lading acts as _____.
Foreign Credit Insurance Association Export-Import Bank
The government provides two sources of assistance to US exporters to finance their export programs. The two sources are ______.
trust
The letter of credit and a bill of lading are both financial devices that were created in a response to a lack of ____ that can develop when companies export products.
letter of credit
The main advantage of the ________ is that both parties are likely to trust reputable banks regardless of whether they trust each other.
distance between the two parties problems enforcing contractual obligations
The two factors that lead to a lack of trust in an export transaction are ______.
universities
The unique feature of the CIBER network is that it connects the US business community with the research capacities associated with _____.
Since the exchange of goods are not simultaneous, one firm finances the other Firms may not get what they want or can use
What are two drawbacks of bartering?
true
True or false: A letter of credit may place limitations on an importer's ability to secure a loan.
false
True or false: An exporter has greater flexibility when using a straight counterpurchase agreement rather than an offset agreement.
true
True or false: Commercial banks are more willing to lend cash to foreign enterprises when the Ex-Im Bank guarantees the transaction.
false
True or false: For export transactions, many countries prefer cash deals rather than countertrade.
true
True or false: In order to reduce the risks associated with exporting, it is a good idea for a company to initially focus on one market.
true
True or false: Smaller firms tend to be more reactive than large firms when it comes to exporting.
false
True or false: The Export-Import Bank was developed by the European Community with the advent of the euro.
the importer has to pay the bank's fee for the letter of credit it could limit the importer's ability to borrow since it is a liability
What are the two negatives associated with a letter of credit?
US and Foreign Commercial Service International Trade Administration
What are the two organizations found within the US Department of Commerce that provide businesses with intelligence and assistance for going after foreign markets?
piggyback
When one firm distributes another firm's products because it does not carry that particular product, it is using _____ marketing.
Department of Commerce
Which department of the US federal government provides the most all-inclusive source of information regarding export opportunities?
CORE
Which diagnostic tool on globalEDGE helps firms assess their exporting proficiency and identifies the firm's strengths and weaknesses within the context of exporting?
bill of lading
Which document shows that a carrier has received the merchandise?
exporting
Which entry mode can expand the size of the market and achieve economies of scale while not adding too much risk?
It is a wholly owned corporation of the U.S. government and promotes international trade.
Which of the following describes the Export-Import (Ex-Im) Bank?
providing one-on-one counseling to active and new-to-export businesses
Which of the following is the main objective of the SCORE program administered by the SBA?
Novice exporters often have a poor understanding of competitive conditions in the foreign market.
Which of the following is true of many novice exporters?
bill of exchange
Which of the following refers to an order written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time?
Many customers require face-to-face negotiations on their home turf.
Which of these is a common difficulty that traders face when exporting goods or services to other countries?
CIBER
Which organization connects the technological needs of the US business community with the international education, language training, and research capabilities of universities across the United States?
Service Corps of Retired Executives
Which organization oversees volunteers who have international trade experience and who use this experience to provide one-on-one counseling to active and new export businesses?
not changing products to meet the foreign markets poorly executed promotional campaign difficulty securing financing
Which three factors are considered pitfalls of exporting?
distance language time
Which three factors might make it difficult for some companies to gain knowledge of opportunities available in foreign countries? (check all that apply)
Sight draft
Which type of draft should a company use if it wants immediate payment from the drawee upon receipt?
large and diverse
Which type of exporter can get the greatest advantage from countertrade?
time; sight
While a _____ draft is negotiable, a _____ draft is not.
drawee
While a maker initiates a draft, the party to whom the draft is presented is called the _____.
An offset
_______ occurs when a firm agrees to purchase goods from any firm in a country where a sale has been made with a percentage of the proceeds from an original sale.
