Chapter 8
A duty that represents a certain percentage of the value of a particular product is a(n): A) specific duty. B) ad valorem duty. C) BTN duty. D) "schedule B" duty. E) antidumping duty.
B) ad valorem duty.
Which of the following refers to a system of farm subsidies in Europe? A) CVD B) FSC C) CAP D) HTS E) NTR
C) CAP
________ is sometimes called a mother hen, a piggyback exporter, or an export vendor A) Export broker B) Export merchant C) Cooperative exporter D) Export manager E) Manufacturer's agent
C) Cooperative exporter
Which of the following was a major U.S. tax incentive for exporters that the WTO recently ruled was an illegal subsidy? A) NTR B) CVD C) FSC D) NTB E) HTS
C) FSC
According to research, exporting is essentially a developmental process starting with the first stage when the firm exports to one or more markets on a trial basis.
False
CVDs are additional duties levied by exporting countries on imported videodiscs.
False
Direct representation identifies that the exporter is selling directly to the consumer or customer.
False
Export management company (EMC) is an independent marketing intermediary that acts as the export department for two or more manufacturers (principals) whose product lines compete with each other.
False
Foreign purchasing agents are also referred to as jobbers.
False
In his 2010 State of the Union address, U.S. President Barack Obama had vowed to double U.S. exports by 2015; doing so would require boosting exports 25 percent annually.
False
Outsourcing means shifting undesirable jobs or work assignments to another company to cut costs. When the outsourced work moves to another country, the terms "global outsourcing" or "offshoring" are used.
False
Tariffs can be thought of as the "three R's" of global business: rules, rigor, and regulations of individual countries.
False
Duty drawback refers to refunds of duties paid on imports that are processed or incorporated into other goods and then re-exported.
True
The Fly American Act is an example of a nontariff barrier.
True
The sale of merchandise in export markets at unfair prices is known as: A) dumping. B) countervailing. C) tariff. D) ad valorem. E) transaction.
A) dumping.
Which of the following can be referred to as a "buyer for export" or an "export commission house" and operates on behalf of a buyer from a foreign country? A) foreign purchasing agent B) export broker C) export merchant D) export management company E) freight forwarder
A) foreign purchasing agent
Officially, the EU tariffs on Chinese and Vietnamese shoe imports are known as: A) countervailing duties. B) antidumping duties. C) specific duties. D) ad valorem duties. E) temporary surcharges.
B) antidumping duties.
An irrevocable letter of credit transfers the payment obligation for an export deal from the buyer to the buyer's: A) in-house export organization. B) bank. C) freight forwarder. D) credit union. E) checking account.
B) bank.
The organizational decision to purchase production inputs, components, or finished goods from domestic or foreign producers is known as the ________ decision. A) import/export B) NTB C) preferential D) sourcing E) security
D) sourcing
Which of the following establishes classification numbers that must be used by importers and exporters? A) NTR B) CVD C) FSC D) NTB E) HTS
E) HTS
In the last stage of the developmental process for exporting, a firm evaluates global market potential before screening for the "best" target markets to include in its marketing strategy and plan.
True
Overall, Italy's retail sector has pursued very little international expansion; by contrast, other European supermarket chains such as Tesco (UK), Metro (Germany), and Carrefour (France) took local products and brands with them as they expanded around the globe.
True
Potential export problems include packaging, government red tape, warehousing, advertising, and trade restrictions.
True
Representatives of the apparel, footwear, and textile industries in many countries are deeply concerned about the impact that increased trade with China will have on these sectors.
True
Research discovered that even the most experienced exporters express lack of confidence in their knowledge about shipping arrangements, payment procedures, and regulations.
True
Switzerland exports 51 percent of their GDP, compared to the United States, which exports only about 14 percent.
True
The international standard by which letters of credit (L/Cs) are interpreted is known as the ________ 500. A) UCP B) NTR C) FSC D) NTB E) HTS
A) UCP
Which of the following offers a company the best assurance of being paid for exported goods? A) a letter of credit B) a "piggyback" arrangement C) a swap D) an in-house export organization E) a certified check
A) a letter of credit
Which of the following documents represents title to goods in an export transaction? A) bill of lading B) invoice C) packing list D) certificate of origin E) insurance certificates
A) bill of lading
After the aftermath of the tragedy involving fire in garment factories in Bangladesh, it was found that the buildings were inspected by: A) Dhaka's building-safety authority. B) Business Social Compliance Initiative (BSCI). C) Walmart's approved contractors. D) Worker Rights Consortium. E) Interfaith Center for Corporate Responsibility.
B) Business Social Compliance Initiative (BSCI).
In the post-September 11 business environment in the United States, imports have come under increased security. One of the initiatives taken in the interest of national security is: A) NAFTA. B) C-TPAT. C) WTO. D) NTB. E) FSC.
B) C-TPAT.
Representatives of the apparel, footwear, furniture, and textile industries in many countries are deeply concerned about the impact that increased trade with ________ will have on these sectors. A) Hong Kong B) China C) Italy D) India E) Bangladesh
B) China
The top ranked country among those exporting to the United States is: A) Taiwan. B) China. C) Mexico. D) India. E) Honduras.
B) China.
________ is the most important aspect of a company's international orientation. A) Experience B) Commitment C) Dynamism D) Confidence
B) Commitment
The United States has given Normal Trade Relations (NTR) status to some 180 countries. In actuality only four countries are excluded from this status which includes all of the following countries except: A) North Korea. B) Iraq. C) Iran. D) Cuba. E) Libya.
B) Iraq.
The so-called "China Triangle" includes: A) Hong Kong, Republic of China, and Singapore B) Republic of China, Taiwan, and Hong Kong C) Republic of China, Taiwan, and South Korea D) Taiwan, Hong Kong, and Republic of China E) Singapore, China, and Republic of China
B) Republic of China, Taiwan, and Hong Kong
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) none of the above
B) The exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing bank.
Which of the following incorrectly states the role of banks in import/export transactions involving a letter of credit (L/C)? A) The exporter's bank is the advising and/or confirming bank. B) The importer's bank is the advising and/or confirming bank. C) The importer's bank is the advising, confirming, and issuing bank. D) The exporter's bank is the advising, confirming, and issuing bank. E) The importer's bank is neither advising nor confirming bank.
B) The importer's bank is the advising and/or confirming bank.
Which set of documents generally represents the minimum documentation required to clear a shipment through customs? A) packing list, commercial invoice B) bill of exchange, commercial invoice C) certificate of origin, bill of exchange D) packing list, insurance certificate E) letter of credit, commercial invoice
B) bill of exchange, commercial invoice
Which of the following types of duties would be imposed on a company whose home-country government provides export subsidies? A) ad valorem duty B) countervailing duty C) antidumping duty D) specific duty E) customs duty
B) countervailing duty
Which of the following receives a fee for bringing together an exporter and a buyer in another country? A) foreign purchasing agent B) export broker C) export merchant D) export management company E) freight forwarder
B) export broker
Governmental actions that discourage imports and block markets include all of the following except: A) tariffs. B) free trade zones C) subsidies. D) tax incentives. E) duties.
B) free trade zones
Developed under the auspices of the Custom Cooperation Council (now the World Customs Organization) the system which took effect is referred to as: A) preferential tariffs. B) harmonized tariff. C) BTN duty. D) specialized tariff. E) antidumping duty.
B) harmonized tariff.
In an effort to attract assembly operations, Brazil allows certain product components to be imported at reduced tariff rates. This is an example of: A) offsets. B) preferential tariffs. C) the effect of the Customs Valuation Code. D) an EMC. E) discriminatory procurement.
B) preferential tariffs.
Which of the following is described as the three R's of global business: rules, rate schedules, and regulations? A) quotas B) tariffs C) NTBs D) NTR E) duties
B) tariffs
In which of the following forms of export financing does a bank assume a financial obligation? A) with an L/C but not a documentary collection B) with a documentary collection but not an L/C C) neither an L/C nor a documentary collection requires a bank to assume financial obligation D) with either an L/C or a collection letter E) with both an L/C and a documentary collection
B) with a documentary collection but not an L/C
The furniture industry has become one of the fastest-growing sectors of China's economy. Furniture imports are flooding into the United States from China. This can be attributed to: A) the quality of furniture is better than that made in Europe. B) American tastes in décor have changed. C) China's low labor rates translate into reasonable prices for consumers. D) China can survive tough competition. E) replacement parts are readily available from China.
C) China's low labor rates translate into reasonable prices for consumers.
________ are variously referred to as buyer for export, export commission house, or export confirming house. A) Export brokers B) Export merchants C) Foreign purchasing agents D) Export managers E) Manufacturer's agents
C) Foreign purchasing agents
Agricultural subsidies are particularly controversial because, although they protect the interests of farmers in some countries, they work to the detriment of farmers in countries such as: A) Singapore. B) the United States. C) India. D) Switzerland. E) Japan.
C) India.
The possible arrangements for handling exports include all of the following except: A) as a part-time activity performed by domestic employees. B) through an export partner affiliated with the domestic marketing structure that takes possession of the goods before they leave the country. C) as a low-cost arrangement requiring no additional personnel. D) through an export department within an international division. E) for multidivisional companies, each of the preceding options is available.
C) as a low-cost arrangement requiring no additional personnel.
Which of the following completely eliminates the risk of nonpayment by an importer or a bank in an international transaction? A) documentary credit (letter of credit) B) documentary collection C) cash in advance D) sales on open account E) draft
C) cash in advance
The advantages of a market visit include all of the following except: A) confirm market potential. B) contradict market potential. C) gain confidence in firm's ability for exporting. D) gather additional data to reach final decision. E) build confidence in firm's ability for exporting.
C) gain confidence in firm's ability for exporting.
Research has shown that exporting is essentially a developmental process that proceeds in different stages. Before a firm reaches stage 4, it must do which one of the following activities? A) explore the feasibility of exporting B) commit resources for exporting C) receive unsolicited export orders D) believe in attractiveness of exporting E) build confidence in firm's ability for exporting
C) receive unsolicited export orders
The chief executives of Swiss Swatch Group and Japanese Canon would like to: A) outsource all of the manufacturing units overseas in order to save money. B) outsource a majority of the manufacturing functions overseas. C) retain a majority, if not all, of the manufacturing in their home country. D) establish "call centers" in developing countries in order to save labor costs. E) outsource a full line of new products only.
C) retain a majority, if not all, of the manufacturing in their home country.
Which of the following financing methods would be used by an exporter that enjoys good relations with a buyer in a well-established market? A) letter of credit B) cash in advance C) sales on open account D) barter E) arrival draft
C) sales on open account
If the dollar, the yen, or the euro becomes seriously overvalued, a company with a production capacity in other locations can achieve competitive advantage by: A) buying different currencies before major fluctuations take place. B) conducting transactions in different currencies of the world. C) shifting production among different sites. D) cutting down production and waiting until the currency rate is reasonable. E) reducing production and labor force simultaneously.
C) shifting production among different sites.
After the aftermath of the tragedy involving fire in garment factories in Bangladesh, Walmart implemented a "zero-tolerance policy." The Workers Rights Consortium, the International Labor Organization and other groups monitoring labor issues are stepping up pressure on companies that participate in the global garment supply chain due to the following reasons, except: A) retailers pay lip service to concerns about factory safety. B) retailers continue to focus on low prices. C) those auditing facilities are audited by BSCI's qualified engineers. D) the buyers and consumer are willing to pay more for garments. E) retailers do not provide funds for fire safety training.
C) those auditing facilities are audited by BSCI's qualified engineers.
Sweden applies a system to certain categories of imported agricultural products referred to as: A) temporary surcharges. B) ad valorem duty. C) variable import levies. D) specific duty. E) countervailing duty.
C) variable import levies.
________ is an independent marketing intermediary that acts as the export department for two or more manufacturers whose product lines do not compete with each other. A) Manufacturer's export agent B) Export commission representative C) Export merchant D) Export management company E) Cooperative exporter
D) Export management company
________ are licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules. They can be considered as the travel agents for handling export goods. A) Foreign purchasing agents B) Export brokers C) Export merchants D) Freight forwarders E) Cooperative exporters
D) Freight forwarders
Which of the following arranges export financing payment methods in descending order starting with the most secure/reliable and ending with the least secure/reliable? A) sales on open account→cash in advance→documentary credit (L/C)→documentary collection (draft) B) documentary credit (L/C)→sales on open account→documentary collection (draft)→cash in advance C) documentary collection (draft)→documentary credit (L/C)→cash in advance→sales on open account D) cash in advance→documentary credit (L/C)→documentary collection (draft)→sales on open account E) none of the above
D) cash in advance→documentary credit (L/C)→documentary collection (draft)→sales on open account
Restrictive administrative and technical regulations can create barriers to trade which may take all of the following forms except: A) antidumping regulations. B) product size regulations. C) safety and health regulations. D) common agricultural policies. E) safety and pollution regulations.
D) common agricultural policies.
The export and import process can entail red tape and bureaucratic delays. In an effort to facilitate exports, countries are designating certain areas as: A) import control zones. B) special tariff zones. C) global business zones. D) free trade zones. E) duty free zones.
D) free trade zones.
The only marketing mix element that is applicable in export selling is: A) price. B) product. C) promotion. D) place. E) process.
D) place.
Which of the following methods of financing would be used if the exporting and importing parties had a strong, long-standing relationship? A) documentary credit (letter of credit) B) documentary collection C) cash in advance D) sales on open account E) bank draft
D) sales on open account
Which of the following is not true about a personal visit to size up the market firsthand and begin the development of an actual export-marketing program? A) Confirm assumptions regarding market potential B) Contradict assumptions regarding market potential C) Gather additional data to help make decisions D) Develop a marketing plan in cooperation with local agents E) Arrange a face-to-face meeting and avoid going to trade shows
E) Arrange a face-to-face meeting and avoid going to trade shows
________ is an independent marketing intermediary that acts as the export department for two or more manufacturers whose product lines do not compete with each other. A) Export commission B) Manufacturer's export agent C) Cooperative exporter D) Freight forwarders E) Export Management Company
E) Export Management Company
The Ministry of International Trade and Industry (MITI) has helped devise export strategies for companies in: A) Singapore. B) South Korea. C) Taiwan. D) Hong Kong. E) Japan.
E) Japan.
The four tigers-Singapore, South Korea, Taiwan, and Hong Kong-learned from the ________ experience and built strong export-based economies of their own. A) Chinese B) Indian C) German D) American E) Japanese
E) Japanese
A number of explanations have been offered for the low level of U.S. exports relative to other countries. All of the following can be considered as reasons for low level of exports except: A) limited ambition by many American business owners. B) lack of knowledge of market opportunities abroad. C) perceived lack of necessary resources. D) marketing to home-country users is easier than exporting. E) a strong U.S. dollar translates into less affordable prices in export markets.
E) a strong U.S. dollar translates into less affordable prices in export markets.
A nontariff barrier (NTB) includes all of the following except: A) quotas. B) discriminatory procurement policies. C) restrictive administrative policies. D) restrictive technical regulations. E) ad valorem duty.
E) ad valorem duty.
Direct representation, as opposed to representation by independent intermediaries, for exporting by the market country, has several advantages which do not include: A) facilitates control and communications. B) allows decisions concerning program development and resource allocation. C) benefits when a product is not yet established in a market. D) ensures marketer's interest and special efforts. E) helps selling products directly to the consumer in the market country.
E) helps selling products directly to the consumer in the market country.
After the research effort has zeroed in on potential markets, marketers should: A) work on understanding the target market environment. B) modify methods used for marketing research. C) identify products that can be marketed. D) make decisions concerning product design. E) plan a personal visit.
E) plan a personal visit.
Export marketing requires all of the following except: A) an understanding of the target market environment. B) the use of marketing research. C) identification of market potential. D) decisions concerning product design. E) reaching retail customers.
E) reaching retail customers.
The possible arrangements of the responsibilities for handling exports include all of the following except: A) as a part-time activity performed by domestic employees. B) through an export partner affiliated with the domestic marketing structure. C) through an export department within an international division. D) through an export department that is independent of the domestic marketing structure. E) through an export department of an embassy in a foreign country.
E) through an export department of an embassy in a foreign country.
Governments commonly use activities to support and encourage firms that engage in exporting. Such activities include all of the following except: A) tax incentives. B) subsidies. C) export assistance. D) free trade zones. E) voting rights.
E) voting rights.
"Export selling" involves tailoring various elements of the marketing mix to global market requirements.
False
"Piggyback exporter," "cooperative exporter," and "export vendor" are all terms used to describe an export broker.
False
The Common Agricultural Policy (CAP) determines the level of subsidies granted to farmers in Latin America.
False
The Harmonized Tariff System (HTS) has eliminated virtually all problems associated with assigning tariff classifications to new products.
False
The export marketer takes the domestic product "as is" and sells it to international customers.
False
The terms "export selling" and "export marketing" are interchangeable.
False
A company that assigns a sufficiently high priority to its export business will establish an in-house organization. It then faces the question of how to organize it effectively.
True
A nontariff barrier (NTB) is a hidden trade barrier that is a deterrent or obstacle to the sale of products in a foreign market.
True
According to President Obama, "The more American companies export, the more they produce. And the more they produce, the more people they hire-and that means more jobs."
True
According to the recent import regulations in the United States, action figures that represent non-human creatures such as monsters or robots are categorized as toys and qualify for lower duties than human figures that are classified as dolls.
True
After research has zeroed in on potential markets, there is no substitute for a personal visit to size up the market firsthand and begin the development of an actual export marketing program.
True
An ad valorem duty is expressed as a percentage of the value of goods.
True
China has imposed tariffs as high as 28% on foreign-made auto parts.
True
In 2013, U.S. goods and services exports totaled $2.3 trillion, which comes to about 15 percent of the GDP. This means that nearly 85 percent of the goods and services produced in the United States are consumed at home.
True
In an effort to facilitate exports, countries are designating certain areas as "free trade zones" (FTZ) or "special economic zones" (SEZ).
True
In an export/import transaction requiring a letter of credit (L/C), the exporter's (seller's) bank can be known as the "advising" bank, the "confirming" bank, or both.
True
Tax incentives, subsidies, export assistance, and free trade zones are common support provided by governments to firms that engage in exporting.
True
The Buy American Act of 1933, which stipulates that U.S. federal agencies must buy articles produced in the United States unless domestically produced goods are not available, is an example of discriminatory procurement policies.
True
The Customs Trade Partnership Against Terrorism (C-TPAT) recognizes that U.S. Customs and Border Protection (CBP) is responsible for screening import cargo transactions.
True
The Harmonized Tariff System (HTS) is currently the dominant system for determining the correct classification number.
True
The MEA can act as an export distributor or as an export commission representative. However, the MEA does not perform the functions of an export department, and the scope of market activities is usually limited to a few countries.
True
The four tigers—Singapore, South Korea, Taiwan, and Hong Kong—learned from the Japanese experience and built strong export-based economies of their own.
True
Volkswagen's business environment includes a significant wage differential between Mexico and Germany.
True
When Honda's U.S. manufacturing subsidiaries purchase parts from Japan, customs authorities in the United States have the right to scrutinize the transfer price to make sure it is a fair reflection of market value.
True
