Question 1

Which of the following is a strategic step taken to increase a firm's probability of exporting successfully?
A)Avoiding the use of export management companies to contain costs
B)Entering several markets simultaneously to hedge risk
C)Entering a foreign market on a small scale
D)Waiting for export opportunities
E)Avoiding recruitment of local personnel

Accepted Answer

It often makes sense for an exporter to enter a foreign market on a small scale to reduce the costs of any subsequent failure. Most importantly, entering on a small scale provides the time and opportunity to learn about the foreign country before making significant capital commitments to that market.

Question 2

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:
A)easy tracking of the parties involved.
B)a lack of trust between the parties.
C)strict enforcement of contractual obligations.
D)rapid acculturation.
E)better understanding of how transactions should be configured.

Accepted Answer

Firms engaged in international trade have to trust someone they may have never seen, who lives in a different country, who speaks a different language, who abides by (or does not abide by) a different legal system, and who could be very difficult to track down if he/she defaults on an obligation. Consequently, neither party to the trade completely trusts the other.

Question 3

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:
A)ELAN list.
B)"best prospects" list.
C)"comparison shopping service."
D)SCORE list.
E)export management list.

Accepted Answer

The International Trade Administration and the U.S. Commercial Service provide the potential exporter with a "best prospects" list, which gives the names and addresses of potential distributors in foreign markets along with businesses they are in, the products they handle, and their contact person.

Question 4

The most comprehensive source of information on export opportunities for U.S. firms is the:
A)Small Business Administration.
B)Department of Commerce.
C)Federal Trade Commission.
D)Bureau of Competition.
E)Bank of New York.

Accepted Answer

Despite institutional disadvantages, U.S. firms can increase their awareness of export opportunities. The most comprehensive source of information is the U.S. Department of Commerce and its district offices all over the country. Within that department are two organizations dedicated to providing businesses with intelligence and assistance for attacking foreign markets: the International Trade Administration and the U.S. Commercial Service.

Question 5

Which of the following organizations runs the Service Corps of Retired Executives (SCORE) program?
A)Foreign Credit Insurance Association
B)International Trade Administration
C)Small Business Administration
D)U.S. Department of Commerce
E)U.S. Commercial Service

Accepted Answer

A government organization, the Small Business Administration (SBA), can help potential exporters. 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.

Question 6

Which of the following is a function of an export management company?
A)It starts exporting operations for a firm with the understanding that the firm will take over operations after they are well established.
B)It coordinates the Export Legal Assistance Network, a nationwide group of international trade attorneys.
C)It oversees volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses.
D)It collects duties on exported products and sets interest rates for charging foreign investors.
E)It gives novice exporters the names and addresses of potential distributors in foreign markets along with businesses they are in.

Accepted Answer

Export Management Companies (EMCs) normally accept two types of export assignments. They start exporting operations for a firm with the understanding that the firm will take over operations after they are well established. In another type, start-up services are performed with the understanding that the EMC will have continuing responsibility for selling the firm's products.

Question 7

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:
A)merchandise bill.
B)bill of lading.
C)bill of exchange.
D)draft.
E)letter of credit.

Accepted Answer

The problem of lack of trust in international trade is solved by using a third party trusted by both parties-normally a reputable bank-to act as an intermediary. Title to the products is given by the exporter to the bank that issued a letter of credit in the form of a document called a bill of lading.

Question 8

Which of the following is a way in which the U.S. Department of Commerce helps potential exporters?
A)It oversees volunteers with international trade experience and directs them to provide one-on-one counseling to active and new-to-export businesses.
B)It assembles a "comparison shopping service" for 14 countries that are major markets for U.S. exports.
C)It coordinates a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.
D)It provides export specialists who act as the export marketing departments or international departments for their client firms.
E)It starts exporting operations for firms until they are well established.

Accepted Answer

Within the U.S. Department of Commerce are two organizations dedicated to providing businesses with intelligence and assistance for attacking foreign markets: the International Trade Administration and the U.S. Commercial Service. The Department of Commerce has assembled a "comparison shopping service" for 14 countries that are major markets for U.S. exports. For a small fee, a firm can receive a customized market research survey on a product of its choice.

Question 9

Which of the following is true of a letter of credit in international trade?
A)No cash deposit or collateral is required from the importer.
B)The exporter pays the trusted third party (usually a bank) a fee for the service.
C)It becomes a financial contract between the trusted third party (usually a bank) and the exporter.
D)It is issued by the exporter at the request of the importer.
E)The creditworthiness of the importer is irrelevant when issuing a letter of credit.

Accepted Answer

The letter of credit states that the bank will pay the exporter for the merchandise as long as it is shipped in accordance with specified instructions and conditions. At this point, the letter of credit becomes a financial contract between the bank and the exporter.

Question 10

A lack of trust between two parties engaged in international trade is exacerbated by the:
A)saturation of the domestic market.
B)similar preferences of the parties regarding how a transaction should be configured.
C)narrowing distance between the two parties due to technological advances.
D)problems of using an underdeveloped international legal system to enforce contractual obligations.
E)possibility of doing business with someone with whom they have been associated for a long time.

Accepted Answer

The lack of trust between two parties is exacerbated by the distance between the two parties-in space, language, and culture-and by the problems of using an underdeveloped international legal system to enforce contractual obligations.

Question 11

Which of the following institutions within the U.S. Department of Commerce is dedicated to providing businesses with intelligence and assistance for attacking foreign markets?
A)The International Trade Administration
B)The Small Business Administration
C)The Federal Trade Commission
D)The Bureau of Competition
E)The Bank of New York

Accepted Answer

The most comprehensive source of information on export opportunities for U.S. firms is the U.S. Department of Commerce and its district offices all over the country. Within the U.S. Department of Commerce are two organizations dedicated to providing businesses with intelligence and assistance for attacking foreign markets: the International Trade Administration and the U.S. Commercial Service.

Question 12

Which of the following is a drawback of relying on an export management company (EMC)?
A)It does not provide references and has no antecedents.
B)The exporting company can fail to develop its own exporting capabilities.
C)It does not have expert specialists to help a neophyte exporter identify opportunities.
D)It typically lacks information about local business regulations.
E)The exporting company cannot avoid the common pitfalls of exporting.

Accepted Answer

The quality of export management companies (EMCs) varies. While some perform their functions very well, others appear to add little value to the exporting company. One drawback of relying on EMCs is that the company can fail to develop its own exporting capabilities.

Question 13

In international trade, an exporter wants to be paid before a consignment is shipped. Correspondingly, the importer wants to pay only upon receipt of the consignment. These conflicting preferences of the parties are a manifestation of:
A)corporate greed.
B)acculturation.
C)lack of trust.
D)cultural insensitivity.
E)countertrading opportunities.

Accepted Answer

Firms engaged in international trade have to trust someone they may have never seen, who lives in a different country, who speaks a different language, who abides by (or does not abide by) a different legal system, and who could be very difficult to track down if he or she defaults on an obligation. Due to the lack of trust between the two parties to an international transaction, each has his/her own preferences as to how the transaction should be configured.

Question 14

Which of the following is true of a letter of credit?
A)It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents.
B)It is a document written by an exporter instructing an importer to pay a specified amount of money at a specified time.
C)It serves as a receipt, a contract, and a document of title.
D)It indicates that the carrier has received the merchandise described on the face of the document.
E)It allows buyers to obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Accepted Answer

A letter of credit, abbreviated as L/C, stands at the center of international commercial transactions. Issued by a bank at the request of an importer, the letter of credit states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.

Question 15

Which of the following refers to an export specialist that acts as an export marketing department for client firms?
A)Export management company
B)Export-import firm
C)Foreign direct investment management firm
D)Strategy management company
E)Association of export companies

Accepted Answer

One way for first-time exporters to identify the opportunities associated with exporting and to avoid many of the associated pitfalls is to hire an export management company (EMC). EMCs are export specialists that act as the export marketing department or international department for their client firms.

Question 16

Representatives of the U.S. Department of Commerce accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers, as part of the:
A)matchmaker program.
B)"best prospects" listing.
C)SCORE program.
D)"comparison shopping service."
E)export-import program.

Accepted Answer

The Department of Commerce has a matchmaker program, in which department representatives accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers.

Question 17

A nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters is the:
A)TradeNet Export Advisor.
B)Export Trade Assistance Partnership.
C)United States Trade Service.
D)Export Legal Assistance Network.
E)Ex-Im Network.

Accepted Answer

The Small Business Administration 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.

Question 18

Which of the following stands at the center of international commercial transactions and is issued by a bank at the request of an importer?
A)Bill of lading
B)Time draft
C)Letter of credit
D)Sight draft
E)Bill of exchange

Accepted Answer

A letter of credit stands at the center of international commercial transactions. Issued by a bank at the request of an importer, the letter of credit states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.

Question 19

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:
A)Export Legal Assistance Network.
B)Service Corps of Retired Executives.
C)International Trade Veteran's Group.
D)Network of Foreign Trade Executives.
E)Export Management Company.

Accepted Answer

Through its Service Corps of Retired Executives (SCORE) program, the Small Business Administration oversees some 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses.

Question 20

A firm that enters many markets at once:
A)runs the risk of spreading its limited management resources too thin.
B)becomes established in all the markets.
C)gets the time to learn about each market.
D)has fewer export opportunities.
E)reduces the costs of any subsequent failure.

Accepted Answer

The firm that enters many markets at once runs the risk of spreading its limited management resources too thin. The result of such a shotgun approach to exporting may be a failure to become established in any one market.

Quiz 14: Exporting, Importing, and Countertrade

Which of the following is a strategic step taken to increase a firm's probability of exporting successfully?

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:

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:

The most comprehensive source of information on export opportunities for U.S. firms is the:

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

Which of the following is a function of an export management company?

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:

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

Which of the following is true of a letter of credit in international trade?

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

Which of the following institutions within the U.S. Department of Commerce is dedicated to providing businesses with intelligence and assistance for attacking foreign markets?

Which of the following is a drawback of relying on an export management company (EMC) ?

In international trade, an exporter wants to be paid before a consignment is shipped. Correspondingly, the importer wants to pay only upon receipt of the consignment. These conflicting preferences of the parties are a manifestation of:

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

Which of the following refers to an export specialist that acts as an export marketing department for client firms?

Representatives of the U.S. Department of Commerce accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers, as part of the:

A nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters is the:

Which of the following stands at the center of international commercial transactions and is issued by a bank at the request of an importer?

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:

A firm that enters many markets at once: