Question 1

When sourcing offshore:

Accepted Answer

Understanding the culture, customs, norms, taboos, and history of the supplier's country is crucial when sourcing offshore. It helps the buyer to avoid misunderstandings, build strong relationships, and navigate any cultural differences that may impact the business relationship.

Question 2

In international buying,the entity that makes a contract with the buyer and then buys the product in its name from the foreign supplier,takes title,delivers to the place agreed on with the buyer,and then bills the buyer for the agreed-on price,is a(n):

Accepted Answer

An import merchant operates by purchasing products in their own name from foreign suppliers and then selling these products to buyers in their home country, taking on both the ownership and the risks associated with the transaction.

Question 3

When dealing with an international supplier,a knowledgeable buyer:

Accepted Answer

A knowledgeable buyer may decide to deal in international currency options to hedge against currency exchange rate fluctuations, which can affect the cost of international transactions.

Question 4

A document which is drawn by the buyer's bank at the buyer's request,and guarantees that the bank will pay the agreed-on amount when all prescribed conditions,such as satisfactory delivery,have been completed,is called a:

Accepted Answer

A letter of credit is a document issued by a buyer's bank at the buyer's request, which serves as a guarantee that the bank will pay the agreed-on amount to the seller when all prescribed conditions, such as satisfactory delivery, have been completed. This provides assurance to the seller that they will receive payment for their goods or services. A bill of exchange is a negotiable instrument, similar to a check, used in international trade transactions. A bill of material is a document that lists the materials needed to manufacture a product. A sight draft is a type of bill of exchange that is payable on demand. A letter of exchange is another term for a bill of exchange.

Question 5

The United Nations Convention for the International Sale of Goods (CISG):

Accepted Answer

The CISG is automatically applied if both nations have adopted it, but the parties can agree to another body of law in the contract. It does not always put the United States buyer at an advantage and should not always be the preference for a buyer from the United States. It also does not replace the UCC as the worldwide body of law governing international trade.

Question 6

When one condition of a countertrade agreement is that government and/or military-related exports be purchased,this is called:

Accepted Answer

This condition is part of an offset arrangement, which is a type of countertrade where an exporter agrees to purchase goods or services from the importing country in exchange for government and/or military-related exports being purchased. The other options (A, B, C, E) do not refer specifically to this condition.

Question 7

A U.S.buyer may be discouraged from sourcing offshore if:

Accepted Answer

Political instability or questionable situation in the country of interest can raise concerns about the reliability and consistency of the supply chain. This can lead to uncertainty and risks for the buyer, which can discourage them from sourcing offshore.

Question 8

The governing convention on shipping terms and responsibilities involved in international transportation is called:

Accepted Answer

The governing convention on shipping terms and responsibilities involved in international transportation is called INCOTERMS (International Commercial Terms). INCOTERMS provide a common set of rules for international trade, outlining the responsibilities of buyers and sellers in terms of costs, delivery, and risk during the transportation of goods. The other options mentioned are specific terms within the INCOTERMS rules.

Question 9

When there is a large number of common requirements across facilities or business units,and the supply base is dispersed geographically,an appropriate global sourcing structure is:

Accepted Answer

A global commodity management structure would allow for coordination and consolidation of common requirements across facilities or business units, while also effectively managing a dispersed supply base. Regional purchasing offices and a centralized international purchasing office may not provide sufficient coverage, while a decentralized structure would not promote coordination or consolidation. A centrally managed global sourcing office may not be the most efficient or effective option.

Question 10

Which of the following would encourage countertrade?

Accepted Answer

The need to develop export markets for new products is likely to encourage countertrade, as it provides an alternative way to access foreign markets when traditional payment methods may be difficult or restricted. Countertrade can help reduce the reliance on cash payments and can be used as a means of payment for imports or as a way to offset trade deficits. Excess foreign exchange, readily available credit, a well-developed domestic economy, and a strong base of suppliers may also impact international trade, but they do not necessarily encourage countertrade specifically.

Quiz 14: Global Supply Management