Question 1

What is the Ex-Im Bank? What is its mission and how does it pursue it?

Accepted Answer

The answer of What is the Ex-Im Bank? What is...

Question 2

The use of a specialized third-party trading house in a countertrade arrangement is known as
A)counterpurchase.
B)offset.
C)switch trading.
D)buyback.
E)barter.

Accepted Answer

Switch trading involves the use of a specialized third-party trading house in a countertrade arrangement. This third-party trading house helps facilitate the exchange of goods between two parties by acting as an intermediary, usually working with two or more companies in different countries. The trading house helps coordinate the logistics, financing, and other aspects of the trade.

Question 3

A firm concludes a counterpurchase agreement with a foreign country for which it receives some counterpurchase credits for purchasing its goods.The firm does not want any foreign goods,however,so it sells the credits to a third-party trading house at a discount.The trading house finds a firm that can use the credits and sells them at a profit.This is an example of
A)barter.
B)switch trading.
C)an offset.
D)a buyback.
E)compensation.

Accepted Answer

This scenario describes switch trading, which involves a company trading their counterpurchase credits to a third-party trading house, who then find another company that can use the credits and sells them for a profit. This enables the original company to avoid taking on foreign goods they do not want while still benefiting from the counterpurchase agreement.

Question 4

What are export management companies? What are their advantages and disadvantages?

Accepted Answer

The answer of What are export management companies? What are...

Question 5

From an exporter's perspective,why is an offset more attractive than a straight counterpurchase agreement?
A)It is the simplest countertrade arrangement.
B)It gives the exporter greater flexibility to choose the goods that it wishes to purchase.
C)It allows the use of a specialized third-party trading house.
D)It gives the exporter counterpurchase credits,which can be used to purchase goods from another country.
E)It allows direct exchange of goods and/or services between two parties without a cash transaction.

Accepted Answer

An offset agreement allows the exporter greater flexibility to choose the goods they wish to purchase, unlike a straight counterpurchase which requires buying specific goods from the importing country.

Question 6

What does the term sogo shosha mean? How do they help Japanese exporters and what role do they play in countertrade?

Accepted Answer

The answer of What does the term sogo shosha mean?...

Question 7

What is the difference between a sight draft and a time draft?

Accepted Answer

The answer of What is the difference between a sight...

Question 8

Describe the role of the U.S.Department of Commerce in helping U.S.firms increase their knowledge of export opportunities.

Accepted Answer

The answer of Describe the role of the U.S.Department of...

Question 9

A firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.This type of countertrade is called a(n)
A)counterpurchase.
B)offset.
C)switch trade.
D)buyback.
E)barter.

Accepted Answer

This type of countertrade is called a buyback, where the firm agrees to take a certain percentage of the plant's output as partial payment for the contract. Counterpurchase involves the supplier agreeing to purchase goods or services from the buying country in return for the original sale. Offset involves the seller agreeing to purchase goods or services from the buying country to reduce the trade imbalance. Switch trade involves switching the destination of goods or services in the middle of a contract. Barter involves the exchange of goods or services without the use of money.

Question 10

Briefly describe the strategic steps that novice exporters can take to increase the probability of exporting successfully.

Accepted Answer

The answer of Briefly describe the strategic steps that novice...

Question 11

Why do many neophyte exporters have problems when trying to do business abroad for the first time? What are the common pitfalls experienced by such exporters?

Accepted Answer

The answer of Why do many neophyte exporters have problems...

Question 12

Briefly describe the different forms of government-backed assistance that help potential U.S.exporters finance their export programs.

Accepted Answer

The answer of Briefly describe the different forms of government-backed...

Question 13

Briefly describe the various financial devices that help exporters solve the problem of a lack of trust in international trade.

Accepted Answer

The answer of Briefly describe the various financial devices that...

Question 14

How does a lack of trust affect firms engaged in international trade? How can the problem be solved?

Accepted Answer

The answer of How does a lack of trust affect...

Question 15

Countertrade is most attractive to
A)small exporters.
B)large multinational enterprises.
C)only U.S.firms.
D)any firm in democratic nations.
E)new companies.

Accepted Answer

Countertrade is most attractive to large multinational enterprises because they have the resources and global reach to manage and benefit from complex trade arrangements that involve exchanging goods and services instead of using cash.

Question 16

A drawback of countertrade is that
A)it fails to enable firms to finance an export deal.
B)it is detrimental to the economy of the importing country.
C)developing nations have trouble raising the foreign exchange necessary to pay for imports.
D)it does not allow firms to invest in an in-house trading department dedicated to arranging and managing deals.
E)it may involve the exchange of poor-quality goods that cannot be disposed of profitably.

Accepted Answer

The answer of A drawback of countertrade is that
A)it fails...

Question 17

TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would build several ammonia plants in the foreign country and receive ammonia as partial payment over a 20-year period.This is an example of
A)switch trading.
B)a buyback.
C)a counterpurchase.
D)an offset.
E)barter.

Accepted Answer

A buyback is a type of countertrade where a firm builds a plant in a foreign 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.

Question 18

A type of countertrade where a third-party trading house buys the firm's counterpurchase credits and sells them to another firm that can better use them is called
A)barter.
B)switch trading.
C)offset.
D)buyback.
E)compensation.

Accepted Answer

This type of countertrade is known as switch trading, where a third-party trading house buys the counterpurchase credits and then sells them to another firm that can use them more effectively. This allows the firm to fulfill its obligation while still receiving payment in cash or another form that is more desirable.

Question 19

Which of the following is a drawback of a countertrade agreement?
A)It fails to give firms a way to finance an export deal.
B)It requires an in-house trading department to be maintained,which can be expensive and time-consuming.
C)It is detrimental to the economy of the importing country.
D)Developing nations may have trouble raising the foreign exchange necessary to pay for imports.
E)It is not an acceptable means of trading in most developing countries.

Accepted Answer

Countertrade agreements often require companies to maintain an in-house trading department to manage the complexities of barter and countertrade deals, which can be both costly and time-consuming.

Question 20

How does the Small Business Administration (SBA)help potential exporters.D.C.Through its Service Corps of Retired Executives (SCORE)program,the SBA oversees some 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses.The SBA also 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.

Accepted Answer

The answer of How does the Small Business Administration (SBA)help...

Quiz 14: Exporting, Importing, and Countertrade

What is the Ex-Im Bank? What is its mission and how does it pursue it?

The use of a specialized third-party trading house in a countertrade arrangement is known as

What are export management companies? What are their advantages and disadvantages?

From an exporter's perspective,why is an offset more attractive than a straight counterpurchase agreement?

What does the term sogo shosha mean? How do they help Japanese exporters and what role do they play in countertrade?

What is the difference between a sight draft and a time draft?

Describe the role of the U.S.Department of Commerce in helping U.S.firms increase their knowledge of export opportunities.

A firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.This type of countertrade is called a(n)

Briefly describe the strategic steps that novice exporters can take to increase the probability of exporting successfully.

Why do many neophyte exporters have problems when trying to do business abroad for the first time? What are the common pitfalls experienced by such exporters?

Briefly describe the different forms of government-backed assistance that help potential U.S.exporters finance their export programs.

Briefly describe the various financial devices that help exporters solve the problem of a lack of trust in international trade.

How does a lack of trust affect firms engaged in international trade? How can the problem be solved?

Countertrade is most attractive to

A drawback of countertrade is that

TruWorth Petroleum negotiated a deal with a foreign country in which TruWorth would build several ammonia plants in the foreign country and receive ammonia as partial payment over a 20-year period.This is an example of

A type of countertrade where a third-party trading house buys the firm's counterpurchase credits and sells them to another firm that can better use them is called

Which of the following is a drawback of a countertrade agreement?