Chapter 16 International business

False
Proactive firms do not consider exporting until their domestic market is saturated.
True
Exporters often face voluminous paperwork and complex formalities.
True
The U.S. Department of Commerce organizes trade events that help potential exporters make foreign contacts and explore export opportunities
True
Nearly every state in the U.S. maintains active trade commissions to promote exports.
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.
False
A letter of credit states that an exporter has availed credit from the bank to manufacture goods.
True
The bank promises to pay on behalf of the importer when a bank is used as a third party in international transactions.
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
False
A sight draft allows for a delay in payment.
True
When a time draft is drawn on and accepted by a business firm, it is called a trade acceptance.
False
Time drafts cannot be sold to investors at a discount from its face value.
False
The bill of lading does not serve as a document of title as such.
True
The bill of lading can function as collateral against which funds may be advanced to the exporter by its local bank.
True
U.S. organizations can get financing aid from the Export-Import Bank.
True
Ex-Im Bank has a direct lending operation under which it lends dollars to foreign borrowers.
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
Countertrade denotes a whole range of agreements that involve financial exchanges.
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
A counterpurchase gives exporters more flexibility than an offset.
True
The term switch trading refers to the use of a specialized third-party trading house in a countertrade arrangement.
False
Countertrade is least attractive to large, diverse multinational enterprises
A common pitfall of exporting is a poor understanding of competitive conditions in the foreign market.
Which of the following is true of exporting?
sogo shosha
Japan’s great trading houses are called _____.
ELAN
_____ is a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.
Export Management Companies
_____ are export specialists that act as the export marketing department or international department for their client firms.
Reputable bank
Firms commonly employ a(n) _____ as third party in international transactions.
Letter of credit
Importers usually issue a _____ to importers in international transactions.
Draft
A ____ is the instrument normally used in international commerce to effect payment.
Time Draft
A _____ allows for a delay in payment—normally 30, 60, 90, or 120 days.
Bill of lading
The _____ 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.
Letter of credit
An importer obtains a _____ from a local bank in a typical international transaction.
U.S government
The Export-Import Bank is an independent agency of the _____.
Foreign borrowers
_____ can avail loans from Ex-Im Bank to pay U.S. suppliers.
against commercial risks and political risks faced by exporters.
The Foreign Credit Insurance Association provides coverage:
Countertrade
_____ is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.
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.
Barter
_____ is viewed as the most restrictive countertrade arrangement.
Barter
_____ is primarily used for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy.
Counterpurchase
_____ occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.
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.
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.
It helps a firm achieve economies of scale.
Which of the following statements is true of exporting?
large revenue opportunities are often found in foreign markets.
The great promise of exporting is that:
They consider exporting only after their domestic market is saturated.
Which of the following statements is true of reactive firms?
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?
sogo shosha
Japan’s _____ have offices all over the world, and they proactively, continuously seek export opportunities for their affiliated companies large and small.
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.
The SBA employs trade officers throughout the United States.
Which of the following statements is true about Small Business Administration (SBA)?
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?
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.
EMCs are export specialists that act on behalf of their client firms
Which of the following statements is true of EMCs?
experienced specialists who can help the neophyte exporter.
In theory, the advantage of EMCs is that they are:
Add additional products once exporting becomes successful
Which of the following is a successful exporting strategy used by 3M?
before product shipment.
In a letter of credit transaction, the importer secures the letter of credit:
Bill of lading
Which of the following is a document used to give the title of the products to a bank?
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.
Size of the transaction
Bank charges on letters of credit will depend on the:
is a document requesting payment
A draft used in international transactions:
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:
It helps international traders engage in trade with trust.
Which of the following is a major advantage of using a letter of credit?
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)?
Maker
The person or business initiating a draft is known as the ____.
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.
Sight Draft
A _____ is payable on presentation to the drawee.
Time Draft
A _____ allows for a delay in payment.
Is a time draft that has been drawn on and accepted by a bank.
A banker’s acceptance:
Bill of lading
A _____ is issued to the exporter by the common carrier transporting the merchandise.
has obtained the merchandise described on the face of the document.
As a receipt, the bill of lading indicates that the carrier:
importer’s bank sends a letter of credit to the exporter’s bank.
In a typical international trade transaction, the:
provides finance to facilitate trade between United States and other countries.
The Export-Import Bank:
The FCIA provides coverage against commercial risks and political risks.
Which of the following statements is true of export credit insurance?
Countertrade
_____ is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.
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 occurs when goods and services are traded for other goods and services.
Which of the following statements is true of countertrade?
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.
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.
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.
Switch Trading
Which of the following terms refers to the use of a specialized third-party trading house in a countertrade arrangement?
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.
It is an effective way of doing business with developing nations.
Which of the following is an advantage of countertrade?
Countertrade may involve the exchange of unusable goods.
Which of the following is a major drawback of engaging in countertrade?
most attractive to large, diverse multinational enterprises.
Countertrade is:
export management company
A(n) _____ can help new exporters identify opportunities and avoid common pitfalls.
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.
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.
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.
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 contracts may involve the exchange of unusable or poor-quality.
Which of the following is a disadvantage of countertrade?
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?