BUS 361 Exam 1

Top 5 importers
1. US
2. China
3. Germany
4. Japan
5. United Kingdom
Top 5 Exporters
1. China
2. US
3. Germany
4. Japan
5. Netherlands
Main currency of EU
Table 1.4
NAFTA – (Canada, Mexico, US)
What was created at Brettonwoods Conference (pg 5)
The international Monetary Fund (IMF) which established intl system of payment and stable currency exchange rates

The General Agreement on Tariffs and Trade (GATT) which decreased duty rates from over 40% in 1947 to 4% in 2008

How a competitor may introduce lower price by producing abroad and importing (7-8)
when a new overseas competitor enters a company’s home market, the company may “retaliate” by going overseas an in turn competing in that newcomer’s home market. (ex: the Gap eneter Italy after Betton entered US)
Smith’s theory of absolute advantage (pg 11-12)
When a nation can produce a certain type of good more efficiently that other countries it will trade w/ countries that produce other goods more efficiently
Hexer Ollen Theory four factors
Land, labor, capital, entrepreneurship
Porter’s cluster theory
Firm can develop competitive advantage when a cluster of competitors and suppliers are located in close proximity
Containers are also known as
Creator of the container
Malcolm McLean 1956
Inventory in the 1980’s and why companies started to manage them more closely (pg 26)
Interest rates rose to unprecedented heights and triggered a concern about all the money immobilized in inventory
DRP – what kind of system it is (pg 26-27)
Distribution Resources Planning – computer based management tool that uses final consumer sales date to “pull” products through the distribution channel
Challenges of int’l logistics (31-33)
Differences in environment (infrastructure, culture, language)
more complicated transportation
increased intermediaries
intn’l shipping hazards
more complex insurance, payment, terms of trade
border crossing
Individuals who handle goods in ports
Consequence of increased air transport (25)
customer had higher delivery expectations
figure 2.3 (28)
North America has lower focus on green practices. Asia pacific has higher
What happens to returns? figure 2.8 (36)
quality is assessed an it recycled or trash if no market value exists, if market value does exist, it fixed and reused
Definition of logistics infrastructure (pg 41)
Infrastructure is a collective term that refers to all of the elements in place to facilitate transportation, communication, and business exchanges
Width of post panamax ships resulted in what?
issues loading/unloading containers

berths allow ships to be unloaded from both sides

How ports have become increasingly limited in how the handle large ships and what happens as a result (pg 43) under bridge clearance
large ships do not an air draft that allows them to fit under bridges and access ports
What the busiest cargo airport in the world is (pg 53-55)
Chek Lap Kok Airport, Hong Kong (3.6 million tons in 2008)
Factors that contributed to rise of US freight railroads since 1980 (pg 56)
-the congestion of roads has worsened
-concerns about pollution and noise
-creation of the multimodal container has eliminated need to load/unload merch from traditional boxcars
What the goal for mail delivery is if sent to intl address (pg 62)
received 2 days after is mailed
countries with traditional poor phone systems are developed through (pg 63-65)
“leap frogging” – poor land based telephone structure has been bypassed by cel phones
infrastructure problems with electrical supply (66-67)
-supply and demand problems lead to blackouts
-theft of cables in russia
-un-mettered usaged
first problems faced by intl logistics manager has to do with what?
Water link between black sea and oceans is what link? (pg 50)
The Bosporus Strait in Turkey
Railroad and infrastructure and what countries did? (military/evading troops?) (pg 55)
incompatible railroad gauges amongst countries
Japanese trading companies
“sogo shosha”
Mitsubishi, Mitsui, Itochu, Marubeni, and Sumitomo
If a company grows in exporting sophistication it probably should not become involved with export trading company. Why? (Pg 72-73)
the customers abroad are not the customer of the exporter but of ETC, and may not be known to the exporter
How export management earns its revenue through
a commission for handling all of the details of the sale or a commision on the sale and fixed fees for the remainder of its efforts
what is exporter know as? (75)
Agents/individuals are small firms and thus gov put them under something (pg 77)
protection of labor law
where/how exporter has most control over its foreign sales (78)
marketing subsidiary
When manufacturing costs are lower abroad, when shipping costs are prohibitive and when domestic capacity is reached or when product has significant tangible content a company will consider something? (pg 80-81)
start operations abroad
What is not truly a method of entry into a country for an exporter (pg 81)
contract manufacturing
When a firm wants to exploit the possibilities that sales abroad can bring and decides to become directly involved in exporting activities it is said to be involved in something (pg 74)
“active exporting”
How one company enters a foreign market and tells suppliers it needs to do something because of their movement is called what type of exporting? (pg 73-74)
piggy backing
Reducing business practices that include corruption etc. What organization does this? (pg 89)
The organization for economic corruption
When a company has a subsidiary in a foreign country, as far as the foreign country is concerned that subsidiary is what? (pg 78)
marketing subsidiary
Foreign sales corporation and different percentages required to be considered a FSC (Pg 80)
company had to export products with a 50% US content and a subsidiary in pre approved foreign location
Licensee pays a licensor for use of IP, what is the fee called? (pg 82)
Maquilladoras (89)
companies in Mexico with a customs status similar to that of an FTZ located both in Mexico and in the US. Goods are assessed solely on value added when exported
most sensitive issue as it relates to intl distribution contract
issue of termination
popular way of settling disputes
Lex Mercatoria
sum total of all intnl agreements/conventions/laws to which all intl trade transactions are subject too
2 criteria for contract to be international
economic-involved transfer of funds
judicial-“links” to the laws of different states
When agent/distributor is granted monopoly
exclusive representative
termination for convenience is
a unilateral decision for reasons unrelated to the performance of the contract
Under UN convention on contracts (CISG) when an offer is made it can be withdrawn when? (pg 96)
Under CISG, offer can’t be withdrawn before expiration date
Principle of perfect tender
goods must exactly conform to the goods contracted and be delivered w/ the framework specified in the contracts
increasing number of disputes are settled by
force majeure clause
event beyond the control of any of the parties in an agreement that prevents one party from fulfilling commitment
contracts between exported and agent or exporter and distributor are called (97)
distribution contract
when someone is looking for loopholes in agreement
trying to dupe each other (not acting in good faith)