Deck 9: Exporting, Importing, and Global Sourcing

Question 1

The carbon-footprint measure focuses on distance rather than looking at all the fossil fuels used in the manufacture of an item.

Answer 1

False

Question 2

One of the drawbacks of countertrade is the quality of goods received which are often useless or of poor quality.

Answer 2

True

Question 3

The sight draft is payable at a later time, typically 30, 60, 90, or 120 days in the future as specified by the draft.

Answer 3

False

Question 4

Under a licensing agreement, a multinational firm provides a bundle of services and products to a foreign company.

Question 5

Customs administration offices in both the home country and the country to which the item is being exported are involved in the transaction of goods.

Question 6

The draft that allows a period of 120 days to pay is very attractive for the importer because it allows time for the importer to sell the goods before having to pay for them.

Question 7

Global sourcing is defined as the sale of products and services in foreign countries that are sourced or made in the home country.

Question 8

Letters of credit are trusted forms of payment in international trade because the bank promises to make the payment on behalf of the importer.

Question 9

Licensing makes for a flatter world, because it creates a legal vehicle for taking a product or service delivered in one country and providing a nearly identical version of that product or service in another country.

Question 10

In global sourcing, ocean transport has a higher carbon footprint compared to transporting goods by air and truck.

Question 11

The customs invoice acts as proof that the shipment was made and that the goods have been received.

Question 12

Countertrade also can mitigate the risk of price movements or currency-exchange-rate fluctuations.

Question 13

An export management company is a government organization that ensures sound development of a country's export trade through quality control and inspection.

Question 14

Most companies consider licensing to be a low-risk market-entry option because there is typically no upfront investment.

Question 15

Distributors or export intermediaries are barred from taking title to the goods and then reselling them.

Question 16

Under a licensing agreement, the licenser is normally paid a royalty on each unit produced and sold.

Question 17

Entrepreneurs benefit from outsourcing because they can acquire services as needed, without having to build those capabilities internally.

Question 18

Companies use distributors because distributors know the local market and are a cost-effective way to enter that market.

Question 19

Import duties are lower for countries that are designated as a "most favored nation."

Question 20

Governments use bills of lading to determine the value of the goods for customs-valuation purposes.

Question 21

_____ refers to buying goods and services from foreign sources and bringing them back into the home country.

A) Open sourcing
B) Offshoring
C) Exporting
D) Importing
E) Farmshoring

Question 22

_____ refers to the granting of permission by one party to another party to use intellectual property rights, such as trademarks, patents, brand names, or technology, to a foreign company under defined conditions along with providing a bundle of services and products.

A) Joint venture
B) Licensing
C) Leasing
D) Acquisition
E) Franchising

Question 23

Under a licensing agreement, the multinational firm grants rights on its intangible property to a foreign company for a specified period of time.

Question 24

Which of the following statements is true about ISO 14000 certification?

A) It certifies that the company works to minimize the use of child labor in all its business establishments.
B) It certifies that the company works to ensure equal pay for all irrespective of the gender.
C) It certifies that the company works to minimize any harmful effects it may have on the environment.
D) It certifies that the company works to ensure the incorporation of the best anti-discrimination practices in its business establishments.
E) It certifies that the company works to minimize the use of unskilled labor in its business establishments.

Question 25

In _____ the company delegates an entire process (e.g., accounts payable) to an outsource vendor.

A) importing
B) open sourcing
C) insourcing
D) outsourcing
E) exporting

Question 26

Most companies consider the market-entry option of licensing to be a high-risk option because of the heavy upfront investment.

Question 27

In a(n) _____ structure, the seller receives cash contingent on the seller buying local products or services in the amount of (or a percentage of) the cash.

A) counter purchase
B) barter
C) switch trading
D) buyback
E) offset

Question 28

Multinational companies may purchase a local supplier to directly control the supply of raw materials. This is known as:

A) horizontal integration.
B) diversification.
C) vertical integration.
D) branding.
E) underwriting.

Question 29

_____ refers to a company establishing a new, wholly owned subsidiary from scratch where no previous facilities exist. HYPERLINK "http://glossary.reuters.com/index.php/Greenfield_Investment"

A) Franchising
B) Brownfield venture
C) Joint venture
D) Greenfield venture
E) Licensing

Question 30

_____ is defined as the sale of products and services in foreign countries that are sourced or made in the home country.

A) Open sourcing
B) Offshoring
C) Exporting
D) Importing
E) Farmshoring

Question 31

_____ refers to the granting of permission by one party to another party to use intellectual property rights, such as trademarks, patents, brand names, or technology, under defined conditions without providing any other service or product.

A) Joint venture
B) Licensing
C) Leasing
D) Acquisition
E) Franchising

Question 32

_____ refers to the measure of the impact that activities like transportation and manufacturing have on the environment, especially on climate change.

A) Depensation
B) Coriolis Effect
C) Baldwin Effect
D) Carbon footprint
E) Commensalism

Question 33

An export management company is an independent company that handles the necessary documentation, finds buyers for the export, and takes title of the goods for direct export.

Question 34

A(n) _____ is an independent company that performs the duties that a firm's own export department would execute.

A) export management company
B) import management company
C) foreign institutional investor
D) export promotion council
E) export inspection agency

Question 35

Which of the following statements holds true for contract manufacturing?

A) It refers to the issue of tenders leading to the awarding of contracts to manufacturing companies.
B) It refers to the insourcing of manufacturing activities of an organization.
C) It refers to the outsourcing of manufacturing activities of an organization.
D) It refers to the laying down of special contract agreements by governments to attract manufacturing companies.
E) It refers to the social contract between the community and a manufacturing organization on environmental issues.

Question 36

Which of the following statements holds true for "countertrade"?

A) It refers to a situation where companies are barred from engaging in sales in particular goods and services.
B) It refers to a situation where companies trade goods and services for other goods and services.
C) It refers to a situation where companies jointly sell goods and services with their competitors.
D) It refers to a situation where companies establish their monopoly in the sale of goods and services in a particular sector.
E) It refers to a situation where companies indulge in business espionage to counter the trade of their competitors.

Question 37

_____ refers to buying the raw materials, components, or services from companies outside the home country.

A) Insourcing
B) Global sourcing
C) Open sourcing
D) Farmshoring
E) Offshoring

Question 38

Which of the following statements holds true for the barter system?

A) It refers to the exchange of goods and services with payments made in gold.
B) It refers to the direct exchange of goods with countries accorded the most favored nation status.
C) It refers to the direct exchange of goods and services with nations that have been accorded AAA in the credit rating system.
D) It refers to the direct exchange of goods without traders having to pay customs duties.
E) It refers to the direct exchange of one good for another, with no money involved.

Question 39

One of the disadvantages of licensing is the lower potential returns, compared to other forms of entry into the foreign market, because the revenues are shared between the parties.

Question 40

_____ refers to a contractual, strategic partnership between two or more separate business entities to pursue a business opportunity together.

A) Joint venture
B) Licensing
C) Leasing
D) Acquisition
E) Franchising

Question 41

The term _____ refers to a situation in which an exporter sells a time draft at a discount to an intermediary (often a bank) that will pay the exporter immediately and then collect the full amount from the importer at the later date.

A) free on board
B) goodwill
C) factoring
D) flight capital
E) cash in advance

Question 42

Due to national security or product scarcity, some governments require that organizations need to acquire a(n) _____, which refers to the permission to export goods.

A) export declaration
B) license
C) letter of credit
D) bill of lading
E) customs invoice

Question 43

Which of the following statements holds true for an open account?

A) It is an arrangement in which the exporter ships the goods and then bills the importer.
B) It is an arrangement in which an exporter is paid immediately on receipt of the bill of exchange.
C) It is an arrangement in which an exporter sells a time draft at a discount to an intermediary that will pay the exporter immediately and then collect the full amount from the importer at the later date.
D) It is an arrangement in which the exporter is paid exactly one year after the delivery has been made to the importer.
E) It is an arrangement in which the exporter requires payment from the importer before shipping the goods.

Question 44

A _____ typically prepares the documentation, suggests shipping methods, navigates trade regulations, and assists with details like packing and labeling.

A) freight forwarder
B) crew manager
C) fleet superintendent
D) marine superintendent
E) reefer product manager

Question 45

Which of the following statements holds true for insurance certificates?

A) It is a document that authorizes the carrier to transport the goods to the buyer's destination.
B) It is a document that contains the description of the items being shipped.
C) It is a document that declares the country from which the product originates.
D) It is a document that represents the bill for the goods shipped from the exporter to the importer or buyer.
E) It is a document that shows the amount of coverage on the goods being transported.

Question 46

Which of the following statements is true about distributors?

A) Distributors are export intermediaries who represent the company in the foreign market.
B) Distributors are export intermediaries who ensure the physical transportation of goods from one country to another.
C) Distributors are export intermediaries who are responsible for branding of the goods sold by them.
D) Distributors are export intermediaries who are the sole recipient of the profits generated after the sale of goods.
E) Distributors are export intermediaries who design and develop the goods that are sold by them.

Question 47

_____ refers to the financing granted against collateral, which can be the imported/exported goods.

A) Angel funding
B) Purchase Order Financing
C) Secured financing
D) Overdraft
E) Cash advance

Question 48

_____ refers to an organization that helps U.S. businesses invest overseas, particularly in developing countries, by providing direct loans and loan guarantees to projects that meet its guidelines.

A) Bank of America Merrill Lynch
B) Export-Import Bank of the United States
C) Wells Fargo Securities
D) US Small Business Administration
E) Overseas Private Investment Corporation

Question 49

The _____ is the contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.

A) letter of credit
B) bill of lading
C) customs invoice
D) export declaration
E) license

Question 50

Which of the following statements holds true for the time draft?

A) The time draft is paid on the receipt of the goods by the importer.
B) The time draft is payable typically 30, 60, 90, or 120 days in the future as specified by the draft.
C) The time draft is paid on receipt of the draft (when it is "seen").
D) The time draft is paid in advance immediately after the order is made to the exporter and before the export of the ordered goods.
E) The time draft is paid after a period of exactly one year after the delivery has been made to the importer.

Question 51

Which of the following statements holds true for cash in advance?

A) It is an arrangement in which the exporter ships the goods and then bills the importer.
B) It is an arrangement in which an exporter is paid immediately on receipt of the bill of exchange.
C) It is an arrangement in which an exporter sells a time draft at a discount to an intermediary that will pay the exporter immediately and then collect the full amount from the importer at the later date.
D) It is an arrangement in which the exporter is paid exactly one year after the delivery has been made to the importer.
E) It is an arrangement in which the exporter requires payment from the importer before shipping the goods.

Question 52

A carrier refers to the entity which:

A) handles the physical transportation of goods across geographical distances.
B) buys goods from another country and transfers into one's home country.
C) sends goods out of one's own country to another country.
D) finances the production of goods in a foreign country.
E) designs and develops goods in one's own country.

Question 53

A commercial or customs invoice refers to the:

A) contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.
B) document containing the description of the items being shipped.
C) invoice that declares the country from which the product originates.
D) bill for the goods shipped from the exporter to the importer or buyer.
E) certificate showing the amount of coverage on the goods.

Question 54

Which of the following statements holds true for the sight draft?

A) The sight draft is paid on the receipt of the goods by the importer.
B) The sight draft is payable typically 30, 60, 90, or 120 days in the future as specified by the draft.
C) The sight draft is paid on receipt of the draft (when it is "seen").
D) The sight draft is paid in advance immediately after the order is made to the exporter and before the export of the ordered goods.
E) The sight draft is paid after a period of exactly one year after the delivery has been made to the importer.

Question 55

_____ refers to an organization that helps U.S. exporters who have found a buyer, yet the buyer is unable to get financing for the purchase in his own country.

A) Bank of America Merrill Lynch
B) Export-Import Bank of the United States
C) Wells Fargo Securities
D) Handelsbanken Capital Markets
E) Overseas Private Investment Corporation

Question 56

The _____ is a legal document issued by a bank at the importer's (or buyer's) request wherein the importer promises to pay a specified amount of money when the bank receives documents about the shipment.

A) export declaration
B) license
C) letter of credit
D) bill of lading
E) customs invoice

Question 57

_____ is the document by which the exporter tells the importer to pay a specified amount at a specified time.

A) Letter of credit
B) Bill of lading
C) Customs invoice
D) Insurance certificate
E) Bill of exchange

Question 58

_____ refers to an organization that assists foreign companies in exporting their products to Japan by providing free-market entry information and business-partner matching as well as some subsidies.

A) Japan Bank for International Cooperation
B) Japan External Trade Organization
C) Development Bank of Japan
D) Master Trust Bank of Japan
E) Japan Post Bank Company

Question 59

Which of the following statements holds true for export declaration?

A) It is a document that authorizes the carrier to transport the goods to the buyer's destination.
B) It is a document that contains the description of the items being shipped.
C) It is a document that acts as proof that the shipment was made and that the goods have been received.
D) It is a document that represents the bill for the goods shipped from the exporter to the importer or buyer.
E) It is a document that shows the amount of coverage on the goods.

Question 60

_____ refers to a contract that specifies the performance standards that an outsourcer must meet to ensure quality and performance when outsourcing services.

A) Operational level agreement
B) Service-level agreement
C) Smithsonian Agreement
D) Termination agreement
E) Repurchase agreement

Question 61

What are the hidden costs of outsourcing?

Question 62

Which of the following statements holds true for the ISO 9001:2008 certification?

A) Organizations which supply raw materials are barred from applying for the ISO 9001:2008 certification.
B) Companies which meet the criteria of a minimum financial turnover can apply for the ISO 9001:2008 certification.
C) The ISO 9001:2008 certification is a mark that a company's products and services have met quality standards.
D) Companies that had achieved ISO 9001:2000 certification were exempt from being recertified to meet ISO 9001:2008 standards.
E) ISO 9001:2008 certification specifically focuses on the environment.

Question 63

Guanxi refers to the:

A) connections which are essential for doing business in China.
B) subcultural groups that exist in China.
C) dominant cultural group that decides Chinese cultural norms.
D) cultural differences between Taiwan and China.
E) department responsible for implementing cultural practices in China.

Question 64

What steps can companies take to manage the quality and consistency in the performance of the suppliers?

Question 65

What are the constituents of service-level agreements?

Question 66

Which of the following statements holds true for the customs department?

A) It refers to the governmental agency responsible for the transportation of goods from one country to another.
B) It refers to the governmental agency that establishes special economic zones for organizations willing to invest in the country.
C) It refers to the governmental agency that provides legal support to foreign institutional investors willing to invest in the country.
D) It refers to the governmental agency that monitors imports and collects import duties on goods coming into the country.
E) It refers to the governmental agency that provides financial assistance to multinational companies to set up business establishments in the country.

Question 67

Which of the following can also function as collateral against loans?

A) Certificate of origin
B) Export declaration
C) License
D) Customs invoice
E) Bill of lading

Question 68

What options does a firm have if it wants to have a direct operating presence in the foreign country, which is completely under its control?

Question 69

Which of the following is a contractual mode of entry into a foreign market?

A) Greenfield ventures
B) Licensing
C) Joint ventures
D) Acquisition
E) Merger

Question 70

What are the two contractual modes of entry into a foreign country?

Question 71

What are the advantages of licensing for a multinational firm?

Question 72

What are the factors that encourage companies to engage in countertrade?

Question 73

What are the challenges posed by joint ventures for the companies involved?

Question 74

What are the risks of relying only on the export option for entering into a foreign market?

Question 75

Which of the following statements holds true for a nonentity joint venture?

A) In a nonentity joint venture, the partner with the smaller capital investment loses control over the joint venture after a period of two months.
B) In a nonentity joint venture, each of the partners contributes capital and resources in exchange for an equity stake and share in any resulting profits.
C) In a nonentity joint venture, the control of the joint venture is in the hands of the party which makes the larger capital investment.
D) In a nonentity joint venture, there is no contribution of capital to form a new entity.
E) In a nonentity joint venture the benefit gained is in the form of collective profits rather than individual profits.

Question 76

Which of the following statements holds true for the World Customs Organization (WCO)?

A) It created a framework that calls for the handing over of the control of the customs department of politically unstable countries to the WCO.
B) It created a framework that calls for the establishment of a super customs department that would control the customs departments of individual countries.
C) It created a framework that calls for cooperation between the customs administrations of different countries.
D) It created a framework that calls for the economic isolation of those countries that refuse to cooperate on customs related matters.
E) It created a framework that calls for the creation of a fund to help strengthen the customs departments of the member countries.

Question 77

What is a letter of credit?

Question 78

What is the draft or bill of exchange?

Question 79

Which of the following statements holds true for a tax haven?

A) It refers to a country which requires a substantive local presence of the organization that has parked its revenue in this country.
B) It refers to a country which has highly effective exchange of tax information with foreign tax authorities.
C) It refers to a country which has very advantageous (low) corporate income taxes.
D) It refers to a country which is highly transparent in the operation of legislative, legal, and administrative provisions.
E) It refers to a country which promotes itself as a financial centre for resident companies.

Question 80

Which of the following methods of energy generation would leave the lowest carbon footprint?

A) Thermal
B) Geothermal
C) Crude oil
D) Nuclear
E) Natural gas