MGT FInal Exam 2

Which of the following is true of exporting?

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

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

Add additional products once exporting becomes successful

_____ 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.

Barter

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

Bill of lading

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

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.

Bill of lading

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

Bill of lading

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

Bill of lading

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.

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.

Buyback

_____ 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.

Counterpurchase

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

Counterpurchase

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.

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.

Countertrade

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

Countertrade

Which of the following is a disadvantage of countertrade?

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

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

Countertrade may involve the exchange of unusable goods.

Which of the following statements is true of countertrade?

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

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

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.

Draft

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

ELAN

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

ELAN

Which of the following statements is true of EMCs?

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

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

Export Management Companies

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

Exporters often face voluminous paperwork and complex formalities.

A counterpurchase gives exporters more flexibility than an offset.

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.

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.

False

Countertrade is least attractive to large, diverse multinational enterprises

False

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

False

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

False

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

False

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

False

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

Foreign borrowers

A banker's acceptance:

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

Which of the following statements is true of exporting?

It helps a firm achieve economies of scale.

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

It helps international traders engage in trade with trust.

Which of the following is an advantage of countertrade?

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

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

Letter of credit

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

Letter of credit

Importers usually issue a _____ to importers in international transactions.

Letter of credit

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

Maker

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.

Offset

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

Reputable bank

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.

Score

A _____ is payable on presentation to the drawee.

Sight Draft

Bank charges on letters of credit will depend on the:

Size of the transaction

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

Soviet Union and the Communist states of Eastern Europe

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

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.

Switch Trading

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

The FCIA provides coverage against commercial risks and political risks.

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

The SBA employs trade officers throughout the United States.

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

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

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

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 statements is true of reactive firms?

They consider exporting only after their domestic market is saturated.

A _____ allows for a delay in payment.

Time Draft

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

Time Draft

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

True

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

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.

True

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

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.

True

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

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.

True

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

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.

True

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

U.S government

The Foreign Credit Insurance Association provides coverage:

against commercial risks and political risks faced by exporters.

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

before product shipment.

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

experienced specialists who can help the neophyte exporter.

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

export management company

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

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

In a typical international trade transaction, the:

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

A draft used in international transactions:

is a document requesting payment

The great promise of exporting is that:

large revenue opportunities are often found in foreign markets.

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.

matchmaker

Countertrade is:

most attractive to large, diverse multinational enterprises.

The Export-Import Bank:

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

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 _____.

sogo shosha

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

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