Question 1

Why would an exporter use a sales representative or a distributor? Why would the exporter be reluctant to offer an open account payment method?

Accepted Answer

The answer of Why would an exporter use a sales...

Question 2

What is countertrade? Explain the concept of buyback as a type of countertrade,and discuss buyback as a joint venture configuration.

Accepted Answer

The answer of What is countertrade? Explain the concept of...

Question 3

Distributors are firms who take ownership of the merchandise when it enters their country.

Accepted Answer

Distributors are responsible for taking ownership of the merchandise when it enters their country.

Question 4

________ take ownership of the merchandise when it enters their country and accept all the risks associated with generating local sales.

Accepted Answer

Distributors take ownership of the merchandise when it enters their country and accept all the risks associated with generating local sales. Agents and sales representatives are typically not responsible for physical ownership of the goods, while freight forwarders are responsible for organizing the transportation of goods but do not take ownership of them.

Question 5

A(n)________ exports products on behalf of an indirect exporter.

Accepted Answer

An export management company (EMC) exports products on behalf of an indirect exporter. EMCs act as intermediaries between a company that wants to export its goods and foreign buyers who need those goods. They handle the entire export process, including identifying potential markets, finding buyers, arranging shipping, and handling documentation. Local distributors, subsidiaries, and sales representatives may also be involved in the export process but do not typically export products on behalf of an indirect exporter as their primary role.

Question 6

A confirmed letter of credit is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import.

Accepted Answer

A confirmed letter of credit involves the confirmation of the exporter's bank by the importer's bank, which ensures the payment to the exporter even if the importer fails to fulfill their payment obligations. Therefore, it is true that a confirmed letter of credit is guaranteed by both banks.

Question 7

Agency relationships are popular among exporters because they are easy to terminate should difficulties arise.

Accepted Answer

Agency relationships can often involve legal agreements and contracts, and terminating them may not be as simple as just deciding to end the partnership. Additionally, difficulties can also arise during the termination process, making it more complex and potentially costly.

Question 8

Direct exporting is when a company sells its products directly to buyers in a target market.Indirect exporting occurs when a company sells its products to intermediaries who then resell to buyers in a target market.

Accepted Answer

Direct exporting refers to selling products directly to buyers in a target market, while indirect exporting involves selling products to intermediaries who then resell to buyers in the target market.

Question 9

Companies can achieve economies of scale in production by expanding into international markets.

Accepted Answer

By expanding into international markets, companies can increase their production output, leading to cost savings due to the larger production volume. This is achieved by spreading fixed costs (like factory overheads) over a larger number of units produced, resulting in a lower cost per unit. Furthermore, companies may also benefit from lower raw materials and labor costs in certain countries, further supporting economies of scale in production.

Question 10

Buyback is the export of industrial equipment in return for products produced by that equipment.

Accepted Answer

Buyback is a business arrangement in which a company exports industrial equipment to another country and receives payment in the form of products produced by that equipment.

Question 11

Letters of credit are popular among traders because it reduces the risk of non-shipment.

Accepted Answer

Letters of Credit (LCs) ensure that the seller receives payment from the buyer only if the seller meets the specified conditions like documents, quantity, quality, and time. As the payment is guaranteed, there is a lower risk of non-shipment or default. Hence, LCs are popular among traders who deal with international trade.

Question 12

Commonly licensed intangible property includes patents,copyrights,special formulas and designs,trademarks,and brand names.

Accepted Answer

The statement is true. These are all examples of intangible properties that can be licensed.

Question 13

Scenario: Wang's Techno Toys
Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market. Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports.
-Which of the following will most likely help Techno Toys sell its toys directly to buyers in the target market?

Accepted Answer

Sales representatives would be the best choice as they directly represent Techno Toys in the target market, and can communicate effectively with buyers and promote the products. The other options such as agents, export management companies and export trading companies may also be useful, but they involve intermediaries and may not work as effectively in selling the products directly to buyers.

Question 14

Countertrade provides a way for firms to trade either by using a small amount of hard currency or even none at all.

Accepted Answer

Countertrade involves using non-monetary means of payment or exchanging goods and services instead of money, making it possible for firms to trade even without hard currency or with a small amount of it. Therefore, the statement is true.

Question 15

Typically,indirect exporting relies on local sales representatives or distributors.

Accepted Answer

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Question 16

Explain why companies consider exporting.Describe the four-step model of developing a successful export strategy.

Accepted Answer

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Question 17

Countertrade is not an option for smaller companies because of the cash outlays involved.

Accepted Answer

Countertrade can be a viable option for smaller companies to trade goods or services, especially if they lack access to traditional financing. Countertrade involves exchanging goods or services for other goods or services, rather than using cash. This means that smaller companies can participate without requiring significant cash outlays.

Question 18

The most common method used for buying and selling goods internationally is exporting.

Accepted Answer

Exporting is the most common method used for buying and selling goods internationally as it involves selling goods produced in one country to buyers in another country. Other methods include importation, licensing, franchising, and foreign direct investment (FDI).

Question 19

Scenario: Wang's Techno Toys
Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market. Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports.
-Which of the following occurs when a company sells its products to buyers in a target market without going through intermediary companies?

Accepted Answer

Direct export occurs when a company sells its products directly to buyers in a target market without going through intermediary companies. This is the most appropriate choice for Wang's Techno Toys as they have decided to enter international markets through direct exports to compete with increasing domestic competition.

Question 20

Most large companies use exporting to increase sales and open up new markets when the domestic market has become saturated.

Accepted Answer

Exporting allows large companies to expand their customer base and tap into international markets when the domestic market has become saturated or reached its maximum potential. This helps to increase sales and diversify revenue streams.

Quiz 13: Selecting and Managing Entry Modes