Question 1

The Small Business Administration oversees almost 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses through its program known as the

Accepted Answer

The Service Corps of Retired Executives, or SCORE, is a program overseen by the Small Business Administration that provides one-on-one counseling to active and new-to-export businesses. While the other answer choices relate to international trade, they are not specific to counseling and do not accurately describe the program in question.

Question 2

The list provided by the International Trade Administration to a potential exporter with the names and addresses of potential distributors in foreign markets,along with businesses they are in,is called the

Accepted Answer

The "best prospects" list provided by the International Trade Administration includes names and addresses of potential distributors in foreign markets along with the businesses they are in, making it an essential tool for potential exporters to identify potential partners and customers in international markets. The other options listed are not accurate descriptions of this list.

Question 3

A lack of trust between two parties engaged in international trade is exacerbated by the

Accepted Answer

A lack of trust in international trade can be worsened by the difficulties of enforcing contractual obligations through an underdeveloped international legal system. Without a strong legal framework, there is less incentive for parties to trust each other and engage in mutually beneficial transactions.

Question 4

Florida Jetskis,based in Miami,wants to export,but,being a small third generation family business is cautious,particularly with respect to financial risk.The CEO,Armand Millard is contemplating the firm's approach to exporting.Which of the following is a strategic step that you would advise Florida Jetskis to take to increase its probability of exporting successfully?

Accepted Answer

Entering a foreign market on a small scale is a strategic step that can help Florida Jetskis to increase its probability of exporting successfully. This approach allows the company to test the waters and gain valuable experience in a foreign market with lower risk and lower investment. It also enables the company to learn about the market, establish relationships with customers and suppliers and adjust the product to the local needs and preferences. Once the company gains confidence and experience, it can expand its operations and investment in the foreign market. Avoiding the use of export management companies, entering several markets simultaneously, waiting for export opportunities, and avoiding recruitment of local personnel are not necessarily effective or relevant strategies for increasing the probability of exporting successfully, and may even hinder the company's performance and competitiveness in the foreign market.

Question 5

Delios Trading is exporting for the first time to Japan and has contracted with Abe Imports in Tokyo for an initial order valued at $110,000.Delios Trading wants Abe Imports to secure a document from a Tokyo bank that would indicate that the bank would pay Delios Trading $110,000 upon presentation of specified documents by the exporter.What is the name of the document that Delios Trading is asking for?

Accepted Answer

Delios Trading is asking for a letter of credit, which is a document from the importer's bank guaranteeing payment to the exporter upon presentation of specified documents that conform to the terms of the letter of credit.

Question 6

Which of the following is true of a letter of credit?

Accepted Answer

A letter of credit is a document issued by a bank guaranteeing payment to a beneficiary (typically an exporter) upon presentation of specified documents that show the terms of the transaction have been fulfilled. The bank will pay the specified sum of money, usually in a specific currency, to the beneficiary once they have presented the required documents.

Question 7

John Ciro,the CEO of Ciro Products,a small manufacturer,told his employees that he is part of a group that was going abroad along with representatives of the U.S.Department of Commerce and other U.S.businesspeople to meet with qualified agents,distributors,and customers.Ciro was most likely talking about the

Accepted Answer

The matchmaker program involves U.S. businesspeople traveling abroad with representatives of the U.S. Department of Commerce to meet with potential agents, distributors, and customers.

Question 8

The Forlan Group is a firm that acts as an export marketing department for client firms.As an export specialist,The Forlan Group is a(n)

Accepted Answer

The Forlan Group acts as an export marketing department for client firms, which is the core function of an export management company. Hence, the best choice is A. The other options do not accurately reflect the specialization of The Forlan Group.

Question 9

The Forlan Group is an export management company (EMC).It has found that potential clients are often confused as to what an EMC does.Which of the following is a function of an export management company such as The Forlan Group?

Accepted Answer

An export management company such as The Forlan Group acts as an outsourced export department for client firms. It helps firms start exporting operations and guides them through the process until they are well-established, at which point the firm takes over operations. Option A correctly describes this function. Option B describes a service offered by the Export-Import Bank of the United States, not by an EMC. Option C describes a service offered by the U.S. Small Business Administration, not by an EMC. Option D describes functions of government agencies such as Customs and Border Protection and the Federal Reserve, not of an EMC. Option E describes a common service offered by EMCs, but it is not the best choice in this case because it does not clearly differentiate an EMC from other service providers.

Question 10

Southern Products is a ninety-year old,fourth generation family business located in Pooler,Georgia.The company had concentrated on the U.S.market its entire life by selling its products primarily in the southern United States.Due to increased competition in the domestic market,Southern Products now wants to sell abroad.The company and its top management team is hesitant,however.Firms engaged in international trade deal with people they may have never seen,who live in different countries,who speak different languages,and who abide by different legal systems.These factors result in

Accepted Answer

The statement suggests that the company and its management team are hesitant to engage in international trade due to factors such as dealing with people they have never met, who speak different languages, and abide by different legal systems. These factors can result in a lack of trust between the parties involved, making option B the best choice. The other options are not supported by the given information.

Question 11

Which of the following organizations runs the Service Corps of Retired Executives (SCORE)program?

Accepted Answer

The Service Corps of Retired Executives (SCORE) program is run by the Small Business Administration (SBA). The other organizations listed do not have any direct involvement with the SCORE program.

Question 12

Stacy Morgan Apparel is new to exporting and is worried about not getting paid for its goods.Ally Jones,its CFO,is trying to convince the company CEO that by insisting on a letter of credit,Stacy Morgan Apparel is well covered financially.Which of the following aspects of a letter of credit in international trade should convince the company CEO?

Accepted Answer

A letter of credit becomes a financial contract between the trusted third party (usually a bank) and the exporter, ensuring that the bank is liable for paying the exporter when the importer fails to do so. This provides financial cover to the exporter, reducing the risk of non-payment. Choices A, B, D, and E are not entirely relevant or incorrect in this context.

Question 13

Which of the following is a way in which the U.S.Department of Commerce helps potential exporters?

Accepted Answer

The answer of Which of the following is a way...

Question 14

In terms of using a third party in international trade,title to the products is given to a bank by the exporter in the form of a document known as a

Accepted Answer

The answer of In terms of using a third party...

Question 15

Firms engaged in international trade deal with people they may have never seen,who live in different countries,who speak different languages,and who abide by different legal systems.These factors result in

Accepted Answer

The lack of personal and cultural familiarity can lead to a lack of trust between the parties involved in international trade.

Question 16

A firm that enters many markets at once

Accepted Answer

When a firm enters many markets at once, it may spread its limited management resources too thin. It becomes difficult for the firm to focus on every market and manage them effectively, which increases the risk of failure. Focusing on fewer markets allows the firm to allocate more resources and attention to each market and maximize their chances of success.

Question 17

Which of the following is an advantage of having a letter of credit?

Accepted Answer

A letter of credit can help an exporter obtain pre-export financing from a bank. This can be advantageous for small businesses or businesses with limited working capital.

Option A is incorrect as a letter of credit does usually require payment for merchandise before delivery.
Option C and D are incorrect as a letter of credit does not affect the price of goods or shipping costs. 
Option E is incorrect as there is usually a fee associated with obtaining a letter of credit.

Question 18

As an exporter,Delios Trading wants to be paid before a consignment is shipped.Correspondingly,its importer in Japan,Abe Imports,wants to pay only upon receipt of the consignment.These conflicting preferences of Delios Trading and Abe Imports are most likely a manifestation of

Accepted Answer

The conflicting preferences of Delios Trading and Abe Imports regarding payment indicate a lack of trust between them. It is possible that one party is not confident that the other will fulfill their obligations, leading to this disagreement.

Question 19

Omar Arroyo,an international trade attorney,provides free consultations to small businesses on export-related matters as part of a nationwide group coordinated by the Small Business Association.Omar is a member of the group called the

Accepted Answer

The Export Legal Assistance Network (ELAN) is a nationwide group coordinated by the Small Business Association, where attorneys like Omar Arroyo provide free consultations to small businesses on export-related matters.

Question 20

Abby Goodwin,the sales manager of Ark Techno Products is wary of using an export management company (EMC)to get the company on the exporting path.Her CEO,John Mosco is very much in favor of hiring an EMC.Which of the following is a drawback of relying on an export management company (EMC)that Abby Goodwin can use to support her contention?

Accepted Answer

Hiring an EMC can prevent the exporting company from developing its own exporting capabilities. This can lead to over-reliance on the EMC, making the exporting company vulnerable should the EMC choose to withdraw its services or should the EMC fail to perform its duties effectively. Therefore, Abby can use this drawback to support her perspective that relying solely on an EMC is not the best approach for Ark Techno Products. The other options presented do not specifically support this contention.

Quiz 14: Exporting, Importing, and Countertrade