Deck 13: Exporting, Importing, and Countertrade

Question 1

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

Answer 1

C

Question 2

Great trading houses in Japan are called:

A)kaizen.
B)sogo shosha.
C)MITI.
D)guanxi.
E)keiratsu.

Answer 2

B

Question 3

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.

Answer 3

B

Question 4

International Trade Centres also promote international trade through what?

A)the United Nations
B)EMC
C)Trade Commissioners
D)Team Canada
E)FITT

Question 5

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.

Question 6

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

Question 7

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

Question 8

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

Question 9

Completion of FITT's eight training modules leads to the _____ designation:

A)DFAIT
B)ITC
C)CFIT
D)FITT
E)CITP

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

The person or business initiating the draft is known as the ____________.

A)drawee
B)importer
C)importer's agent
D)maker
E)banker

Question 28

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

Question 29

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.

Question 30

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.

Question 31

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.

Question 32

____________ 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

Question 33

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

Question 34

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.

Question 35

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.

Question 36

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

Question 37

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

Question 38

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

Question 39

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.

Question 40

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

Question 41

The volume of export activity in the world economy is declining as exporting has become more difficult and regulated.

Question 42

A bill of lading is a:

A)receipt.
B)contract.
C)document of title.
D)transportation agreement.
E)all of these answers are correct.

Question 43

Neophyte exporters tend to underestimate the time and expertise needed to cultivate business in foreign countries.

Question 44

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

Question 45

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.

Question 46

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.

Question 47

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.

Question 48

Megahertz International's export strategy, according to the opening case was to provide a turnkey solution to emerging broadcast and media ethics in Africa, the Middle East, and Eastern Europe.

Question 49

A typical international trade transaction involves ____________ steps.

A)6
B)21
C)13
D)11
E)14

Question 50

The most restrictive countertrade arrangement is:

A)counter-purchase.
B)offset.
C)buybacks.
D)switch trading.
E)barter.

Question 51

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

Question 52

(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

Question 53

Unlike large firms, small and medium-sized firms tend to go out into the world to seek opportunities.

Question 54

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

Question 55

According to the UN, the time involved in preparing documentation and costs of common errors in paper work often amounts to 25 percent of the final value of goods exported.

Question 56

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.

Question 57

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.

Question 58

A reciprocal buying arrangement is known as what?

A)a commercial invoice
B)counter purchase
C)offset
D)packing list
E)switch trading

Question 59

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

Question 60

Countertrade is most attractive to:

A)medium-sized exporters.
B)large multinational enterprises.
C)trading houses.
D)commodities brokers.
E)crown corporations.

Question 61

The probability of exporting successfully can be increased dramatically by taking eight strategic steps.What are these steps?

Question 62

The way to overcome ignorance in exporting is to collect information.

Question 63

Most exporters understand the amount of management resources that must be dedicated to exporting.

Question 64

When it comes to bank's service charge for providing a L/C, the larger the transaction, the higher the percentage.

Question 65

Germany is one of the world's most successful exporting nations.

Question 66

Barter is primarily used with trading partners who are not creditworthy or trustworthy.

Question 67

Lack of trust in international trade is exacerbated by the distance between two parties in space, language, and culture.

Question 68

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

Question 69

Given the financial and other risks, today, governments at all levels in Canada are not willing to assist small firms in starting export operations.

Question 70

How can Canadian firms increase their awareness of export opportunities? What agencies can be used? What do they provide?

Question 71

A sight draft allows for a delay in payment.

Question 72

Why do many neophyte exporters have problems when first trying to do business abroad? What are the common pitfalls of neophyte exporters?

Question 73

Describe the mechanisms for financing export and imports.Do you believe that the complexity of export financing deters small firms from becoming involved in exporting? Explain your answer.

Question 74

For novice exporters, it is recommended that they hire an EMC to help identify opportunities and navigate through the web of paperwork and regulations.

Question 75

From an exporter's perspective, an offset agreement is more attractive than a straight counter-purchase agreement because it gives the exporter greater flexibility to choose the goods that it wishes to purchase.

Question 76

Countertrade is an alternative means of structuring an international sale.

Question 77

Switch trading involves the direct exchange of goods and/or services between two parties without a cash transaction.

Question 78

The bill of lading can function as collateral against which funds may be advanced to the exporter by its local bank before final payments by the importer.

Question 79

The Business Development Bank of Canada focuses on Canadian exporting businesses in the technology sector and provides financial assistance mainly for export specific purposes as a way to facilitate the exchange of commodities between Canada and other countries.

Question 80

Time drafts are negotiable instruments.