Deck 15: Exporting,Importing,and Countertrade

Question 1

U.S.firms interested in exporting can acquire a "best prospects" list of opportunities from the U.S.Department of Commerce and its district offices all over the country.

Answer 1

True

Question 2

Many firms are not proactive simply because of their ignorance of foreign market opportunities.

Answer 2

True

Question 3

EMCs are experienced specialists who can help the neophyte exporter avoid common pitfalls.

Answer 3

True

Question 4

Typically,large companies are not very proactive in seeking opportunities for profitable exporting.

Question 5

As exporting has become easier,the volume of export activity in the world economy has been rising.

Question 6

Large revenue and profit opportunities are typically available in foreign markets.

Question 7

According to the UN,a typical international trade transaction can involve 50 different parties.

Question 8

Entering a foreign market on a large scale provides the opportunity to learn about the foreign country.

Question 9

Proactive firms do not consider exporting until their domestic market is saturated and the emergence of excess productive capacity at home forces them to look for growth opportunities in foreign markets.

Question 10

Many small and medium-sized firms tend to go out into the world to seek opportunities,rather than wait for the world to come to them.

Question 11

The Small Business Administration is a good source of export assistance.

Question 12

Many foreign customers require face-to-face negotiations on their home turf.

Question 13

A shotgun approach to exporting will almost always result in that firm becoming established in any one market.

Question 14

The letter of credit system has evolved to create a less risky environment for international trade.

Question 15

An export management company is an export specialist who acts as the export marketing department or international department for their client firms.

Question 16

Unlike their American and Japanese counterparts,German firms are at a disadvantage when it comes to assistance in seeking export opportunities.

Question 17

To export successfully,it often makes sense to focus initially on a handful of markets.

Question 18

A big impediment to exporting is the simple lack of knowledge of the opportunities available.

Question 19

One of the reasons for the lack of trust between firms engaged in international trade is due to the problems of using an underdeveloped international legal system to enforce contractual obligations.

Question 20

For American companies,the most comprehensive source of export information is the local government trade department.

Question 21

When conventional means of payment are difficult,a firm might turn to countertrade as a means of structuring an international sale.

Question 22

The sight draft specifies that the bank will pay a specified sum of money to the exporter upon the presentation of specified documents.

Question 23

Time drafts are negotiable instruments.

Question 24

The mission of the Eximbank is to provide financing aid that will facilitate exports,imports,and the exchange of commodities between the U.S.and other countries.

Question 25

Once a time draft is stamped with an acceptance,the maker can sell the draft at a premium to its face value.

Question 26

Firms use countertrade to trade goods and services for other goods and services when they cannot be traded for money.

Question 27

Unless there is no alternative,large,diverse multinational enterprises should probably try to avoid countertrade deals.

Question 28

The bill of lading can act as collateral against which the exporter can draw funds.

Question 29

The Eximbank is a part of the WTO's efforts to facilitate trade between nations.

Question 30

Countertrade contracts may involve the exchange of poor-quality goods that the firm cannot dispose of profitably.

Question 31

The bill of lading acts as a receipt,a contract,and a document of title.

Question 32

The letter of credit is issued by the bank at the request of an exporter.

Question 33

An offset agreement occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.

Question 34

Countertrading is a common solution for nonconvertibility of currency.

Question 35

Because of the lack of trust in international transactions,payment or a formal promise to pay is required before the buyer can obtain the merchandise.

Question 36

International transactions are usually settled using drafts.

Question 37

American exporters can minimize their risk by purchasing insurance from the Foreign Credit Insurance Association.

Question 38

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

Question 39

Barter is the simplest form of countertrade.

Question 40

The letter of credit system effectively transfers the issue of trust to the bank.

Question 41

_____ is an export specialist who acts as the export marketing department or international department for its client firm.

A)An Eximbank
B)An import trading company
C)A sogo shosha
D)An export management company

Question 42

Which of the following is a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters?

A)EMC
B)SBA
C)ELAN
D)SCORE

Question 43

A firm can increase the probability of exporting successfully by taking which of these steps?

A)Avoiding hiring EMCs to lower head counts
B)Hiring only home country personnel to build commitment
C)Entering on a small scale
D)Waiting for the export opportunities to come

Question 44

A "best prospects" list:

A)gives the names and addresses of potential distributors in the domestic market.
B)is provided by the United States and Foreign Commercial Service Agency.
C)can provide a firm free,customized market research survey on any product.
D)provides information gathering,technical assistance,and export subsidies.

Question 45

One drawback of relying on EMCs is that:

A)they are not conversant with the ins and outs of the exporting process.
B)they have no knowledge of different business mores.
C)the company can fail to develop its own exporting capabilities.
D)the company is unable to avoid common pitfalls.

Question 46

Great trading houses in Japan are called:

A)kaizen.
B)sogo shosha.
C)MITI.
D)gaunxi.

Question 47

In terms of seeking export opportunities,studies have shown that:

A)almost all small firms tend to be proactive about seeking profitable export opportunities.
B)most large firms tend to be reactive about seeking export opportunities.
C)most small firms systematically scan foreign markets to see where the opportunities lie.
D)many medium-sized and small firms are very reactive.

Question 48

In theory,the advantage of EMCs is that they:

A)provide export subsides to the exporting firms.
B)are not-for-profit organizations,hence provide free service.
C)are subsidized by the Department of Commerce.
D)are experienced specialists who can help the neophyte exporter.

Question 49

In terms of international comparisons,which of the following statement is false?

A)Japanese firms can draw on the large reservoirs of experience of its export-oriented institutions.
B)The United States has been a relatively self-contained continental economy until recently.
C)Many German firms are relatively blind when they seek export opportunities.
D)Japan has long made its living as a trading nation.

Question 50

Unlike their German and Japanese competitors,U.S.firms are _____ when they see export opportunities.

A)information-disadvantaged
B)money-strapped
C)regulation-bound
D)much better prepared

Question 51

Through its _____ program,the SBA oversees some 850 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses.

A)EMC
B)SCORE
C)ELAN
D)International Trade Administration The SBA employs 76 district international trade officers and 10 regional international trade officers throughout the United States as well as a 10-person international trade staff in Washington,
D)C.

Question 52

Which of the following statements about the SBA is false?

A)It is the most comprehensive source of export opportunities information.
B)It employs 10 regional international trade officers throughout the United States.
C)It employs a 10-person international trade staff in Washington,
D)It oversees some 850 volunteers to provide one-on-one counseling to active and new-to-export businesses.
D)C.

Question 53

For U.S.firms,the most comprehensive source of export opportunities information is the:

A)Small Business Administration.
B)U.S.Department of Commerce.
C)Federal Trade Commission.
D)foreign embassy.

Question 54

The agencies of the U.S.Department of Commerce provide the potential exporter with all of these services except:

A)matchmaker programs.
B)trade events and exhibitions.
C)best prospects lists.
D)export subsidies.

Question 55

Which of the following is true of exporting?

A)It helps firm achieve economies of scale
B)It creates diseconomies of scale
C)It increases unit costs
D)It creates diseconomies of scope

Question 56

Which of the following helps explain why exporters still account for only a tiny percentage of U.S.firms?

A)Lack of export opportunities; buoyant demand within U.S.
B)Tariffs; FDI restrictions
C)Unfamiliarity; intimidation by the complexities
D)Regulatory burden; barriers to free trade

Question 57

The Department of Commerce has a _____ program,in which department representatives accompany groups of U.S.businesspeople abroad to meet with qualified agents,distributors,and customers.

A)best prospects
B)matchmaker
C)trade events
D)comparison shopping

Question 58

Which of the following is not provided by the Department of Commerce?

A)It provides the potential exporter with a "best prospects" list,which gives the names and addresses of potential distributors in foreign markets.
B)It has assembled a "comparison shopping service" for 14 countries that are major markets for U.S.exports.
C)It coordinates the Export Legal Assistance Network (ELAN),a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.
D)It organizes trade events that help potential exporters make foreign contacts and explore export opportunities.

Question 59

Japanese exporters get assistance in identifying export opportunities from:

A)MITI.
B)the Japanese Outreach Program.
C)guanxi.
D)chaebol.

Question 60

Which of the following is true of reactive firms?

A)They may not even consider exporting until their domestic market is saturated
B)They create excess productive capacity and actively hunt for opportunities in foreign markets
C)Almost all large firms fall under this category
D)They systematically scan foreign markets for profitable export opportunities

Question 61

A _____ allows for a delay in payment.

A)bill of lading
B)time draft
C)banker's acceptance
D)sight draft

Question 62

All of the following are true of the Export-Import Bank except:

A)it provides total coverage against political risks.
B)it is an independent agency of the U.S.government.
C)it is also known as Eximbank.
D)it has a direct lending operation.

Question 63

A key challenge facing export and import financing is:

A)limited market opportunities.
B)lack of export assistance.
C)lack of qualified EMCs.
D)the lack of trust.

Question 64

The bill of lading serves all of the following purposes except:

A)it is a receipt.
B)it is a bank note.
C)it is a contract.
D)it is a document of title.

Question 65

When conventional means of payment are difficult,costly,or nonexistent,a firm is more likely to use:

A)a letter of credit.
B)a time draft.
C)countertrade.
D)a sight draft.

Question 66

In a letter of credit transaction,the importer secures the letter of credit

A)before product shipment.
B)after product shipment.
C)from the exporter's bank.
D)after receiving the product.

Question 67

What is the biggest advantage of using a letter of credit system?

A)The exporter is guaranteed pre-export financing.
B)It allows the importer time to resell the merchandise before requiring payment.
C)The trust is established,for the importer and exporter,because of a reputable bank.
D)It guarantees the importer extra funds for other purposes.

Question 68

What is the drawback of using a letter of credit system?

A)The exporter is no longer entitled to preexport financing
B)The importer no longer trusts the exporter
C)The exporter is not guaranteed any payment
D)The importer must pay the bank a fee for the letter of credit

Question 69

The person or business initiating a draft is known as the:

A)beneficiary.
B)drawee.
C)maker.
D)trustor.

Question 70

The most restrictive form of countertrade is:

A)switch trading.
B)barter.
C)buyback.
D)counterpurchase.

Question 71

Which of the following is not true about exporting?

A)A firm needs to be proactive about seeking export opportunities
B)Exporting is almost always an end in itself
C)It is important for the exporter to retain the option of local production
D)Localization can lead to greater market acceptance

Question 72

In a letter of credit transaction,the exporter ships the product

A)after the letter of credit is issued.
B)before the letter of credit is issued.
C)upon receipt of payment.
D)with the bill of lading.

Question 73

A banker's acceptance:

A)is payable immediately on presentation to the drawee.
B)allows a buyer possession of the merchandise without signing a formal document.
C)is a time draft that has been drawn on and accepted by a bank.
D)is the same as a sight draft.

Question 74

A bill of lading:

A)is the same as a letter of credit.
B)is received from the importer prior to product shipment.
C)is a financial note issued by a bank.
D)gives title to the goods.

Question 75

Which of the following is also referred to as a "bill of exchange"?

A)A letter of credit
B)A bill of lading
C)A draft
D)A promissory note

Question 76

_____ involves trading goods and services for other goods and services when they cannot be traded for money.

A)Countertrade
B)Forfeiting
C)A sight draft
D)A time draft

Question 77

A draft:

A)is a document requesting payment.
B)is the same as a letter of credit.
C)is a reciprocal buying agreement.
D)gives title to shipped goods.

Question 78

In a letter of credit transaction,the exporter receives its payment from

A)the importer.
B)the importer's bank.
C)the exporter's bank.
D)the government.

Question 79

A _____ is payable on presentation to the drawee.

A)time draft
B)bill of lading
C)sight draft
D)trade acceptance

Question 80

Which of the following states that the bank will pay a specified sum of money to a beneficiary on presentation of particular,specified documents?

A)A draft
B)A bill of lading
C)A letter of credit
D)A promissory note