International Administration - Chapter 16 - Exporting, Importing and Countertrade

What are the different kinds of countertrade?

1. Bartering 2. Counterpurchase 3. Offset 4. Switch Trading 5. Compensation or buyback

What is export management companies (EMC)?

Are export specialist that act as the export marketing department or international department for client firms.

What does the Export-Import Bank do?

Assist in the financing of U.S. exports of products and services to support U.S. employment and market competitiveness.

What is bill of lading?

Bill of lading serves as a receipt, a contract, and a document of title.

What is the advantage of letter of credit?

Both parties to the transaction are likely to trust a reputable bank even if they do not trust each other.

What is draft (or a bill of exchange)?

Is the instrument normally used in international commerce for payment.

What is the major drawback of countertrade?

It may involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably.

What is countertrade?

Refers to a range of barter-like agreements that facilitate the trade of goods and services for other goods and services.

What is letter of credit?

States that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.

Who is the beneficiary of letter of credit?

The exporter.

Who issues letter of credit?

The importer's bank.

Who request letter of credit?

The importer.

What is banker's acceptance?

When a time draft is drawn on and accepted by a bank,

Bartering is the direct exchanging of goods/services between two parties without ____.

a cash transaction

Counterpurchasing, a reciprocal buying agreement, occurs when ____.

a firm agrees to purchase a certain amount of materials back from a country to which a sale is made

An offset is similar to counterpurhcasing but _____.

a party agrees to purchase goods and services within a specified percentage

Who issues bill of lading?

common carrier, e.g. shipping company

Switch trading occurs when a third-party trading house buys the firm's __________ _________ and sells them to another firm that can better use them.

counterpurchase credits

What is a typical international trade transaction with letter of credit?

e.g. The bank of New York might be willing to lend the exporter funds to process and prepare for the merchandise for shipping to France.

A Buyback (or compensation) occurs when a firm provides any method of resource to the country and takes a certain percentage of the plant's output as a _____.

partial payment for the contract

A draft is simply an order written by an exporter instructing an importer to _____.

pay a specified amount of money at a specified time