International Business Exam 2

Buyback

42. A(n) _____ occurs when a firm supplies technology, equipment, training, or other services in a country and agrees to take a certain percentage of the resultant output as partial payment for the contract.

A _____ is more likely to capture first-mover advantages associated with demand preemption, scale economies, and switching costs. A. large-scale entrant B. joint venture C. small-scale entrant D. turnkey contract

A

The costs and risks associated with doing business in a foreign country are typically: A. low in an economically advanced nation. B. low in the countries of the European Union. C. high in an economically advanced nation. D. high in a politically stable democratic nation.

A

Draft

A ____ is the instrument normally used in international commerce to effect payment.

Time Draft

A _____ allows for a delay in payment.

Time Draft

A _____ allows for a delay in payment—normally 30, 60, 90, or 120 days.

Bill of lading

A _____ is issued to the exporter by the common carrier transporting the merchandise.

Sight Draft

A _____ is payable on presentation to the drawee.

Draft

A _____ is simply 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.

Bill of lading

A _____ serves as a receipt, a contract, and a document of title.

Letter of credit

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

Is a time draft that has been drawn on and accepted by a bank.

A banker's acceptance:

False

A counterpurchase gives exporters more flexibility than an offset.

True

A draft is simply an order written by an exporter instructing an importer to pay a specified amount of money at a specified time

is a document requesting payment

A draft used in international transactions:

False

A letter of credit states that an exporter has availed credit from the bank to manufacture goods.

False

A sight draft allows for a delay in payment.

export management company

A(n) _____ can help new exporters identify opportunities and avoid common pitfalls.

Buyback

A(n) _____ occurs when a firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.

Letter of credit

An importer obtains a _____ from a local bank in a typical international transaction.

Bill of lading

As a document of title, a _____ can be used to obtain payment or a written promise of payment before the merchandise is released to the importer.

has obtained the merchandise described on the face of the document.

As a receipt, the bill of lading indicates that the carrier:

_____ are the advantages associated with entering a market early. A. Pioneering advantages B. First-mover advantages C. Core competencies D. Late-mover advantages

B

_____ is advantageous because it avoids the cost of establishing manufacturing operations in the host country and because it may help a firm achieve experience curve and location economies. A. Licensing B. Exporting C. Franchising D. A turnkey contract

B

Size of the transaction

Bank charges on letters of credit will depend on the:

False

Barter is a reciprocal buying agreement that occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.

Costs that an early entrant has to bear that a later entrant can avoid are known as _____. A. first-mover costs B. late-mover disadvantages C. pioneering costs D. licensing fees

C

In a(n) _____, the contractor agrees to handle every detail of the project for a foreign client. A. joint venture B. exporting agreement C. turnkey project D. licensing agreement

C

True

Countertrade denotes a whole range of agreements that involve financial exchanges.

False

Countertrade is least attractive to large, diverse multinational enterprises

most attractive to large, diverse multinational enterprises.

Countertrade is:

Large strategic commitments: A. have many benefits and little to no risks. B. increase strategic flexibility. C. have many risks and little to no benefits. D. limit strategic flexibility.

D

True

Ex-Im Bank has a direct lending operation under which it lends dollars to foreign borrowers.

True

Exporters often face voluminous paperwork and complex formalities.

Reputable bank

Firms commonly employ a(n) _____ as third party in international transactions.

False

Foreign Credit Insurance Association is a part of the U.S Department of Commerce and guides the activities of the Export-Import Bank.

True

Hiring an EMC will help a novice exporter identify opportunities and navigate the paperwork involved in exporting.

Letter of credit

Importers usually issue a _____ to importers in international transactions.

before product shipment.

In a letter of credit transaction, the importer secures the letter of credit:

importer's bank sends a letter of credit to the exporter's bank.

In a typical international trade transaction, the:

Offset

In a(n) ____, one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale and this party can fulfill the obligation with any firm in the country to which the sale is being made.

the bank promises to pay on the importer's behalf.

In an international transaction involving a bank as a third party, the exporter ships the product after:

matchmaker

In the _____ program organized by the U.S. Department of Commerce, department representatives accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers.

Soviet Union and the Communist states of Eastern Europe

In the modern era, the concept of countertrade arose as a way for the _____ to purchase imports.

experienced specialists who can help the neophyte exporter.

In theory, the advantage of EMCs is that they are:

sogo shosha

Japan's _____ have offices all over the world, and they proactively, continuously seek export opportunities for their affiliated companies large and small.

sogo shosha

Japan's great trading houses are called _____.

True

Lack of knowledge is one of the biggest impediments to a company becoming a successful exporter.

True

Nearly every state in the U.S. maintains active trade commissions to promote exports.

False

Proactive firms do not consider exporting until their domestic market is saturated.

U.S government

The Export-Import Bank is an independent agency of the _____.

provides finance to facilitate trade between United States and other countries.

The Export-Import Bank:

against commercial risks and political risks faced by exporters.

The Foreign Credit Insurance Association provides coverage:

True

The U.S. Department of Commerce organizes trade events that help potential exporters make foreign contacts and explore export opportunities

Bill of lading

The _____ is issued to the exporter by the common carrier transporting the merchandise.

True

The bank promises to pay on behalf of the importer when a bank is used as a third party in international transactions.

True

The bill of lading can function as collateral against which funds may be advanced to the exporter by its local bank.

False

The bill of lading does not serve as a document of title as such.

large revenue opportunities are often found in foreign markets.

The great promise of exporting is that:

Countertrade

The main attraction of _____ is that it can give a firm a way to finance an export deal when other means are not available.

Countertrade

The main attraction of a(n) _____ is that it can give a firm a way to finance an export deal when there are no other means available.

Maker

The person or business initiating a draft is known as the ____.

True

The term switch trading refers to the use of a specialized third-party trading house in a countertrade arrangement.

Score

Through its _____ program, the SBA oversees about 850 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses.

False

Time drafts cannot be sold to investors at a discount from its face value.

True

U.S. organizations can get financing aid from the Export-Import Bank.

True

When a time draft is drawn on and accepted by a business firm, it is called a trade acceptance.

Exporters often face voluminous paperwork and complex formalities.

Which of the following is a common difficulty that traders face when exporting goods or services to other countries?

Countertrade contracts may involve the exchange of unusable or poor-quality.

Which of the following is a disadvantage of countertrade?

The importer must pay a bank fee for the letter of credit.

Which of the following is a disadvantage of using a letter of credit (L/C)?

Bill of lading

Which of the following is a document used to give the title of the products to a bank?

It helps international traders engage in trade with trust.

Which of the following is a major advantage of using a letter of credit?

Countertrade may involve the exchange of unusable goods.

Which of the following is a major drawback of engaging in countertrade?

ELAN

Which of the following is a nationwide group of international trade attorneys who provide free initial consultations to miniature businesses on export-related matters?

They are intimidated by the complexities and mechanics of exporting to countries where business practices, language, culture, legal systems, and currency are very different from the home market.

Which of the following is a reason that firms take a reactive approach to exporting rather than a proactive approach?

Add additional products once exporting becomes successful

Which of the following is a successful exporting strategy used by 3M?

It is an effective way of doing business with developing nations.

Which of the following is an advantage of countertrade?

A common pitfall of exporting is a poor understanding of competitive conditions in the foreign market.

Which of the following is true of exporting?

The SBA employs trade officers throughout the United States.

Which of the following statements is true about Small Business Administration (SBA)?

EMCs are export specialists that act on behalf of their client firms

Which of the following statements is true of EMCs?

Countertrade occurs when goods and services are traded for other goods and services.

Which of the following statements is true of countertrade?

The FCIA provides coverage against commercial risks and political risks.

Which of the following statements is true of export credit insurance?

It helps a firm achieve economies of scale.

Which of the following statements is true of exporting?

They consider exporting only after their domestic market is saturated.

Which of the following statements is true of reactive firms?

Switch Trading

Which of the following terms refers to the use of a specialized third-party trading house in a countertrade arrangement?

Export Management Companies

_____ are export specialists that act as the export marketing department or international department for their client firms.

Foreign borrowers

_____ can avail loans from Ex-Im Bank to pay U.S. suppliers.

Countertrade

_____ can be used when a government restricts the convertibility of its currency to preserve its foreign exchange reserves so they can be used to service international debt commitments and purchase crucial imports.

Countertrade

_____ denotes a whole range of barter-like agreements and its principle is to trade goods and services for other goods and services when they cannot be traded for money.

ELAN

_____ is a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.

Counterpurchase

_____ is a reciprocal buying agreement and occurs when a firm agrees to buy a certain amount of materials back from a country to which a sale is made.

Countertrade

_____ is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.

Barter

_____ is primarily used for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy.

Barter

_____ is the direct exchange of goods and/or services between two parties without a cash transaction and is the simplest arrangement.

Barter

_____ is viewed as the most restrictive countertrade arrangement and is primarily used for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy.

Barter

_____ is viewed as the most restrictive countertrade arrangement.

Counterpurchase

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

Switch Trading

_____ occurs when a third-party trading house buys the firm's counterpurchase credits and sells them to another firm that can better use them.