Chapter 16: Exporting, Importing, and Countertrade
34. (p. 438) A draft is sometimes referred to as a: A. bill of exchange. B. letter of credit. C. bill of lading. D. counter purchase. E. payment order.
A
Access International, a British based greeting card company, is interested in importing paper from Canada. Which of these should Access arrange first for the Canadian company to ship the merchandise? A. Letter of credit B. Bill of Lading C. Time draft D. Sight draft E. Way bill
A
According to the United Nations report on trade and development, document and paperwork preparation often amounts to what percentage of the final value of the goods exported? A. Approximately 10 percent B. Over 33 percent C. Less than 2 percent D. Between 40 and 50 percent E. Between 22 and 23 percent
A
As a ______________, a bill of lading specifies that the carrier is obligated to provide a transportation service in return for a certain charge. A. contract B. receipt C. document of title D. letter of credit E. cargo document
A
The combination of ______________ and _____________ explains why exporters still account for only a tiny percentage of U.S. firms. A. unfamiliarity; intimidation B. unpredictability; regulations C. culture; language D. financing; marketing E. size; language
A
Unlike their German and Japanese competitors, Canadian firms are still somewhat ____________ when they seek export opportunities. A. information disadvantaged B. money strapped C. regulation-bound D. much better prepared E. overly cautious
A
When a time draft is drawn on and accepted by a business firm, it is called a(n): A. trade acceptance. B. in-transit. C. banker's acceptance. D. bill of lading. E. commercial acceptance.
A
3M has built its export success on all of these principles except: A. adding additional product lines once export operation is successful. B. cultivating personal relationships with customers. C. hiring local to promote the firm's products. D. entering on a small scale to reduce risks. E. using a first mover strategy
B
A ______________ is simply an order written by an exporter instructing an importer to pay a specified amount of money at a specified time. A. bill of lading B. draft C. letter of credit D. barter E. bank order
B
A reciprocal buying arrangement is known as what? A. a commercial invoice B. counter purchase C. offset D. packing list E. switch trading
B
ABC International's market research identified that Canadian consumers prefer relatively less sugar in their soft drinks whereas Asian consumers prefer more. ABC exported their best selling soft drink in Canada, Tasty, without modification to the Asian market. ABC committed which of the common mistakes of exporting? A. Poor market analysis B. A failure to customize the product C. A poorly executed promotional campaign D. A poor understanding of competitive conditions E. A poor choice of retailers
B
As an exporter, according to the opening case, which of these is a key problem for Megahertz Communications? A. Credibility of foreign governments B. Financing C. Substandard products for foreign markets D. Language E. Country specific technical standards
B
Countertrade is most attractive to: A. medium-sized exporters. B. large multinational enterprises. C. trading houses. D. commodities brokers. E. crown corporations.
B
Great trading houses in Japan are called: A. kaizen. B. sogo shosha. C. MITI. D. guanxi. E. keiratsu.
B
Issued by a bank at the request of an importer, the ________________ states that the bank will pay a specified sum of money to the beneficiary on presentation of particular, specified documents. A. bill of lading B. letter of credit C. time draft D. sight draft E. draft
B
Mechanisms for financing exports and imports have evolved over the centuries in response to a problem that can be particularly acute in international trade: ________________. A. the letter of credit. B. the lack of trust. C. government regulations. D. undeveloped international political system. E. currency exchange rate differences.
B
One reason more firms are not proactive about seeking export opportunities is that: A. they are very familiar with foreign market opportunities. B. they are intimidated by complexities and mechanics of exporting. C. there are too many opportunities available domestically. D. they have concluded foreign markets are not profitable. E. they do not have enough time to serve both the domestic and export markets.
B
What federal agency supports the development of trade by providing services to exporters, developing policy, and attracting investment to Canada? A. The UN B. DFAIT C. CITP D. FITT E. EMC
B
When a firm agrees to purchase a certain amount of materials back from a country to which a sale is made, it is called: A. barter. B. counter-purchase. C. offset. D. switch trading. E. buybacks.
B
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. The exporter's bank is the drawee; the importer's bank is the payee.
B
Which of these allows for a delay in payment? A. Sight draft B. Time draft C. Bill of lading D. Barter E. Post-dated draft
B
Which of these is payable on presentation to the drawee? A. Bill of lading B. Sight draft C. L/C D. Time draft E. Banker's draft
B
A bill of lading serves what purpose? A. a receipt B. a contract C. a document of title D. A, B and C are correct E. none of the answers are correct
C
A firm can increase the probability of exporting successfully by taking which of these steps? A. Avoid hiring EMCs to contain costs B. Hire home country personnel to build commitment C. Enter on a small scale D. Wait for the export opportunities to come to you E. Make extensive investments in building regional contacts
C
A typical international trade transaction involves ____________ steps. A. 6 B. 21 C. 13 D. 11 E. 14
C
In an international transaction between an Asian exporter and a German importer, the German company will request a ____________ whereas the Asian company will issue a ____________. A. draft; letter of credit B. bill of lading; letter of credit C. letter of credit; draft D. bill of exchange; bill of lading E. bill of lading; banker's order
C
In the United States, what percent of firms export, according to the U.S. Small Business Administration? A. Nearly 98 percent B. About 23 percent C. Less than 2 percent D. A little under 50 percent E. Over 50 percent
C
The letter of credit is issued by a bank at the request of a(n): A. exporter. B. government. C. importer. D. shipping company. E. exporter's bank.
C
The way to overcome ignorance about export opportunities is _________? A. to start importing B. to DFAIT C. to collect information D. to use barter transactions E. to use countertrade
C
Time drafts: A. have no value given the deferred nature of document. B. are generally not preferable in international transaction. C. are negotiable instruments. D. are also called bill of ladings. E. are replaced by sight drafts after all conditions are met.
C
Toddler Toys, which recently opened for business, has 45 employees and about $10 million in sales. Given the small size of the firm, according to studies, Toddler Toys would be ___________ seeking opportunities for profitable exporting. A. proactive about B. prohibited from C. reactive about D. government-driven for E. discouraged from
C
What percent of world trade by value in 1998 was in the form of countertrade? A. Less than 5 percent B. Approximately 42 percent C. More than 20 percent D. About 33 percent E. About 12 percent
C
Which of these countries is considered as one of the World's most successful exporting nation? A. Australia B. The Philippines C. Germany D. The U.K. E. Canada
C
A bill of lading is a: A. receipt. B. contract. C. document of title. D. transportation agreement. E. all of these answers are correct.
D
A good EMC will have all of these except: A. a network of contacts in potential markets. B. a good knowledge of different business mores. C. multilingual employees. D. the financing available for client firms. E. an understanding of the ins and outs of the exporting process
D
A) ____________'s principle is to trade goods and services when they cannot be traded for money. A. Letter of credit B. Draft C. Bill of exchange D. Countertrade E. Switch Trading
D
As a receipt, the _______________ indicates that the carrier has received the merchandise described on the face of the document. A. letter of credit B. time draft C. sight draft D. bill of lading E. trade acceptance
D
Common pitfalls of exporting include all of these except: A. poor understanding of competitive conditions. B. problems securing financing. C. poor market analysis. D. intimidating the foreign customers. E. failure to customize the product
D
For the service of providing letter of credit, the bank's service charge ranges between ____________ of the value of L/C. A. 5 to 7 percent B. 10 to 15 percent C. 3 to 4 percent D. 0.5 to 2 percent E. 1 to 3 percent
D
Global Trading, Inc. is considering export operations for the first time. It can increase the probability of success by taking all of these steps except: A. be proactive about seeking export opportunities. B. hire an EMC. C. focus on one market. D. hire the home country personnel to build commitment. E. enter on a small scale.
D
Large firms generally tend to be ______________ about seeking opportunities for profitable exporting, whereas medium-sized and small firms are ____________. A. passive; aggressive B. reactive; proactive C. discouraged; encouraged D. proactive; reactive E. aggressive; discouraged
D
The person or business initiating the draft is known as the ____________. A. drawee B. importer C. importer's agent D. maker E. banker
D
Until recently, Canada was mostly a(n) ____________ when it came to international trade. A. market leader. B. economy where exports played a major role C. economy built on countertrade D. self-contained economy E. example of the world's most successful exporting nations
D
When a firm builds a plant in a country—or supplies technology, equipment, training, or other services to the country—and agrees to take a certain percentage of the plant's output as partial payment for the contract, it is called: A. counter-purchase. B. offset. C. switch trading. D. buyback. E. industrial barter.
D
____________ are export specialist who act as the export marketing department or international department for their client firms. A. Trade Commissioners B. The foreign country embassies C. The WTO and the World Bank D. EMCs E. Team Canada members
D
According to the UN report on trade and development, a typical international trade transaction may involve __________ parties, ___________ original documents, and ___________ document copies. A. 25; 35; 225 B. 2; 9; 18 C. 10; 3; 30 D. 15; 180; 60 E. 30; 60; 360
E
Completion of FITT's eight training modules leads to the _____ designation: A. DFAIT B. ITC C. CFIT D. FITT E. CITP
E
Exporting is: A. profitable if little investment is needed. B. an end in itself. C. a resource drainer for small businesses and therefore should be avoided. D. successful when used on a "shot gun" approach. E. merely a step on the road toward establishment of foreign production.
E
For Canadian firms, one of the most comprehensive sources of export opportunities information is/are the: A. Trade Commissioners. B. the United Nations. C. Team Canada. D. foreign embassies. E. Industry Canada.
E
Heublein, a manufacturer of liqueurs, decided to use the U.S. name for their cranberry liqueur when they started exporting to the U.K. Sales were very slow and only later did they understand that the name they were using was slang for privy in Britain. This is an example of what common exporting pitfall? A. poor distribution and retailing B. unfamiliarity with British markets C. cultural similarities D. different business practices E. lack of product adaptation
E
International Trade Centres also promote international trade through what? A. the United Nations B. EMC C. Trade Commissioners D. Team Canada E. FITT
E
The Department of Foreign Affairs provides the potential exporter with all of these services except: A. market reports B. trade strategies C. cultural reports D. virtual trade commissioner E. international trade logistics
E
The most restrictive countertrade arrangement is: A. counter-purchase. B. offset. C. buybacks. D. switch trading. E. barter.
E
When a specialized third-party trading house is used in a countertrade arrangement, it is called: A. counter-purchase. B. offset. C. managed barter. D. buyback. E. switch trading.
E
Which of these stands at the centre of international commercial transactions? A. Bill of lading B. Time draft C. Way bill D. Sight draft E. Letter of credit
E
