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Q:
_____ is the direct exchange of goods and/or services between two parties without a cash transaction and is the simplest arrangement.
A) Counterpurchase
B) Barter
C) Offset
D) Switch trading
Q:
_____ denotes a range of barter-like agreements and its principle is to trade goods and services for other goods and services when they cannot be traded for money.
A) Countertrade
B) Cross-selling
C) Matchmaking
D) Letter of credit
Q:
_____ is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.
A) Floating exchange system
B) Countertrade
C) Letter of credit trade
D) Fixed exchange system
Q:
_____ occurs when a firm supplies technology, equipment, training, or other services in a country and agrees to take a certain percentage of the resultant output as partial payment for the contract.
A) A counterpurchase
B) An offset
C) A barter
D) A buyback
Q:
_____ occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.
A) Barter
B) Offset
C) Counterpurchase
D) Buyback
Q:
_____ is primarily used for one time only deals in transactions with trading partners who are not creditworthy or trustworthy.
A) Counterpurchase
B) Barter
C) Offset
D) Buyback
Q:
_____ is viewed as the most restrictive countertrade arrangement.
A) Barter
B) Offset
C) Buyback
D) Switch trading
Q:
Countertrade emerged in the 1960s as a way for the _____ to purchase imports.
A) United States
B) European Union
C) ASEAN countries
D) Soviet Union and the then-communist states of Eastern Europe
Q:
Which of the following statements is true of export credit insurance?
A) Exporters will require more insurance if a letter of credit is used in transactions.
B) The Foreign Credit Insurance Association provides coverage against commercial risks and political risks.
C) Private associations cannot offer export insurance in the United States.
D) Organizations do not receive coverage against political risks of global trade.
Q:
The Export-Import Bank
A) is an international financial institution that provides loans for capital programs.
B) provides finance to facilitate cross-border trade between the United States and other countries.
C) is an independent agency of the United Nations.
D) focuses on policies that have an impact on the exchange rate and the balance of payments.
Q:
As a document of title, a _____ can be used to obtain payment or a written promise of payment before the merchandise is released to the importer.
A) bill of lading
B) letter of credit
C) bill of exchange
D) draft
Q:
An importer obtains a _____ from a local bank in a typical international transaction.
A) draft
B) bill of lading
C) letter of credit
D) bill of exchange
Q:
A _____ serves as a receipt, a contract, and a document of title.
A) letter of credit
B) bill of lading
C) draft
D) bill of exchange
Q:
The _____ is issued to the exporter by the common carrier transporting the merchandise.
A) bill of lading
B) sight draft
C) letter of credit
D) time draft
Q:
A _____ allows for a delay in payment normally 30, 60, 90, or 120 days.
A) bill of lading
B) sight draft
C) bill of exchange
D) time draft
Q:
A ____ is the instrument normally used in international commerce to effect payment.
A) bill of lading
B) letter of credit
C) draft
D) countertrade
Q:
Firms commonly employ _____ as a third party in international transactions.
A) a reputable bank
B) a stock exchange
C) an export management company
D) a customs broker
Q:
In a typical international trade transaction, the
A) exporter should obtain a letter of credit to initiate transactions.
B) importer and exporter maintain an account with the same bank.
C) importer s bank sends a letter of credit to the exporter s bank.
D) importer s bank sends the draft and bill of lading to the exporter s bank.
Q:
As a receipt, the bill of lading indicates that the carrier
A) provides a written promise of payment before releasing the merchandise.
B) has obtained the merchandise described on the face of the document.
C) receives payment from a third-party such as a bank or trading house.
D) is obligated to provide a transportation service in return for a certain charge.
Q:
A banker s acceptance
A) is payable to the drawee immediately on presentation in a bank.
B) is a time draft that has been drawn on and accepted by a bank.
C) is a sight draft that can be used as a negotiable instrument in banks.
D) allows a buyer possession of the merchandise without signing any formal documents.
Q:
In an international transaction involving a bank as a third party, the exporter ships the product after
A) the bank receives materials from the importer.
B) receiving a cleared payment through the bank.
C) the importer has paid the bank.
D) the bank promises to pay on the importer s behalf.
Q:
A draft used in international transactions
A) is a document requesting payment.
B) explains the conditions of a contract.
C) is the same as a letter of credit.
D) gives a bank guarantee to an exporter.
Q:
Bank charges on letters of credit will depend on the
A) exporter s creditworthiness.
B) size of the transaction.
C) exporter s means of finance.
D) time taken to approve the sale.
Q:
The exporter endorses the ________ so title to the goods is transferred to the bank.
A) bill of lading
B) letter of credit
C) draft
D) promissory note
Q:
Which of the following is a successful exporting strategy used by 3M?
A) Add additional products once exporting becomes successful.
B) Enter many markets at one time to gain maximum exposure.
C) Bring in expert marketing specialists to promote the firm s products.
D) Enter on a large scale to flood the market.
Q:
In theory, the advantage of export management companies is that they are
A) managed by governments that provide export subsidies.
B) not-for-profit organizations that provide free service.
C) subsidized by the Department of Commerce.
D) experienced specialists who can help the neophyte exporter.
Q:
Japan s great trading houses are called
A) Nikei.
B) sogo shosha.
C) Yen houses.
D) Samurai houses.
Q:
Which of the following statements is true about the Small Business Administration (SBA)?
A) It is the most comprehensive source of export opportunities information.
B) The SBA is a private organization managed by leaders of large corporations.
C) The SBA employs trade officers throughout the United States.
D) The SBA offers help exclusively to small businesses that sell products within the United States.
Q:
Japan s _____ have offices all over the world, and they proactively, continuously seek export opportunities for their affiliated companies large and small.
A) sogo shosha
B) kaizen
C) MITI
D) Samurai
Q:
Which of the following statements is true of export management companies (EMCs)?
A) An EMC is a transportation company that engages in international business.
B) EMCs are export-import banks that manage foreign exchanges.
C) EMCs are export specialists that act on behalf of their client firms.
D) An EMC is an intermediary that facilitates talks between two nations.
Q:
_____ are export specialists that offer a full menu of services to handle all aspects of exporting, similar to having an internal exporting department within your own firm.
A) Small business development centers (SBDCs)
B) Centers for international business education and research (CIBERs)
C) Export legal assistance networks (ELANs)
D) Export management companies (EMCs)
Q:
_____ can help new exporters identify opportunities and avoid common pitfalls.
A) An MITI
B) An export-import bank
C) An in-house trading department
D) An export management company
Q:
What is a common difficulty that traders face when exporting goods or services to other countries?
A) Small firms tend to be more aggressive than larger firms in global trade.
B) Governments do not provide much assistance to exporters.
C) Growth opportunities are often limited in global markets.
D) Exporters often face voluminous paperwork and complex formalities.
Q:
What is a reason that firms take a reactive approach to exporting rather than a proactive approach?
A) Most firms are familiar with the foreign market opportunities and therefore do not need to utilize proactive approaches.
B) They are intimidated by the complexities and mechanics of exporting to countries where business practices, language, culture, legal systems, and currency are very different from the home market.
C) Most firms already know where the market potential and opportunities are and they do not need to be proactive.
D) They are not intimidated by the complexities and mechanics of exporting to foreign countries and can, therefore, use the same reactive approaches that work in their home market.
Q:
What is true of reactive firms?
A) Reactive firms consider a variety of markets for selling their products and services.
B) They consider exporting only after their domestic market is saturated.
C) They systematically scan foreign markets for profitable export opportunities.
D) They create excess productive capacity and actively hunt for opportunities in foreign markets.
Q:
The great promise of exporting is that
A) large revenue opportunities are often found in foreign markets.
B) it provides more opportunities to smaller firms than larger firms.
C) international trade is protected against exchange risks.
D) it reduces the need for insuring businesses against political risks.
Q:
What is true of exporting?
A) A common pitfall of exporting is a poor understanding of competitive conditions in the foreign market.
B) Securing financing is rarely a problem for exporters.
C) A common pitfall of exporting is trying too hard to customize a product offering rather than sticking with what you know.
D) Most exporters have a very good understanding of the competitive conditions in the foreign market.
Q:
Explain why barter is viewed as the most restrictive countertrade arrangement.
Q:
Describe the 14 steps in a typical international trade transaction.
Q:
Why is there a problem of trust that persists in international business?
Q:
Explain 3M s main export principles that have made the company s exporting business so successful.
Q:
What problems do novice exporters typically face when trying to export?
Q:
A good ally will expropriate the firm s technological know-how while giving away little in return.
⊚ true
⊚ false
Q:
Johan s firm is considering entering a country where there are no incumbent competitors to be acquired. Its best option is likely to be a greenfield venture.
⊚ true
⊚ false
Q:
Acquisitions rarely produce disappointing results.
⊚ true
⊚ false
Q:
The greater the pressures for cost reductions, the more likely a firm will want to pursue some combination of exporting and wholly owned subsidiaries.
⊚ true
⊚ false
Q:
Brand names such as Starbucks and Subway are well protected by international laws pertaining to trademarks.
⊚ true
⊚ false
Q:
If a firm s core competence is proprietary technological knowledge, a joint venture is preferable.
⊚ true
⊚ false
Q:
A wholly owned subsidiary limits a firm s control over marketing and sales in different countries.
⊚ true
⊚ false
Q:
The most typical joint venture is a 60 40 venture, in which one party holds most of the ownership stake.
⊚ true
⊚ false
Q:
Franchising enables a firm to quickly build a global presence.
⊚ true
⊚ false
Q:
Licensing limits a firm s ability to realize experience curve and location economies.
⊚ true
⊚ false
Q:
Tangible property includes patents, designs, copyrights, and trademarks.
⊚ true
⊚ false
Q:
Exporting from a firm s home base is most appropriate when lower-cost locations for manufacturing the product can be found abroad.
⊚ true
⊚ false
Q:
Gadgets, Inc., wants to enter a foreign market on a small scale. This will allow it to learn about the market while limiting the firm s exposure to that market.
⊚ true
⊚ false
Q:
A strategic commitment can usually be successfully reversed by the top management at will.
⊚ true
⊚ false
Q:
Educating customers is an element of pioneering costs.
⊚ true
⊚ false
Q:
When determining the value of a foreign market, an international firm must consider both its products and the competition.
⊚ true
⊚ false
Q:
The choice of which international markets to enter should be driven by an assessment of absolute short-run growth and profit potential.
⊚ true
⊚ false
Q:
_____ refers to the building of interpersonal relationships between the firms managers in a strategic alliance.
A) Alliance partnerships
B) Joint management
C) Relational capital
D) Team building
Q:
_____ can be used to formalize arrangements to swap skills and technology in a strategic alliance.
A) Modularization
B) Cross-licensing agreements
C) Structured transfer agreements
D) Contractual safeguards
Q:
_____ is a way to bring together complementary skills and assets that neither company could easily develop on its own.
A) An alliance
B) A turnkey contract
C) A wholly owned subsidiary
D) A licensing agreement
Q:
Which of the following is true of strategic alliances?
A) Strategic alliances can make entry into a foreign market difficult.
B) Strategic alliances, while they have many benefits, do not allow firms to share the fixed costs of developing new products or processes.
C) Strategic alliances allow firms to bring together complementary skills and assets that neither company could easily develop on its own.
D) Strategic alliances, while beneficial to firms, make the establishment of technological standards for an industry difficult.
Q:
An advantage of forming a strategic alliance is that it helps firms
A) protect their procedures and technologies.
B) reduce the level of conflicts that occur within an organization.
C) share the risks of developing new products or processes.
D) increase the cultural similarities between employees.
Q:
_____ refer to cooperative agreements between potential or actual competitors.
A) Greenfield investments
B) Strategic alliances
C) Takeovers
D) Licensing agreements
Q:
Which of the following is true of establishing a greenfield venture in a foreign country?
A) Greenfield investments are less risky than acquiring an existing company in a foreign market.
B) A degree of uncertainty is associated with a greenfield venture because of future revenue and profit prospects.
C) Greenfield investments virtually eliminate the possibility of a more aggressive global competitor entering the market via acquisitions.
D) Greenfield investments are quick to establish.
Q:
The main advantage of _____ is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants.
A) an acquisition
B) strategic alliances
C) greenfield investment
D) franchising
Q:
_____ allow a firm to rapidly build its presence in the target foreign market.
A) Joint ventures
B) Acquisitions
C) Subsidiaries
D) Turnkey contracts
Q:
What is true of acquisitions?
A) It is a time-consuming process.
B) Managers view them as more risky than greenfield ventures.
C) They give the firm a much greater ability to build the kind of subsidiary company that it wants.
D) In many cases, firms make acquisitions to preempt their competitors.
Q:
If a firm s core competency is based on control over proprietary technological know-how, _____ and _____ arrangements should be avoided if possible to minimize the risk of losing control over that technology.
A) licensing; joint venture
B) wholly owned subsidiary; exporting
C) turnkey contracts; exporting
D) exporting; joint venture
Q:
Firms pursuing global standardization or transnational strategies tend to prefer _____ arrangements.
A) wholly owned subsidiary
B) franchising
C) joint-venture
D) licensing
Q:
When technological know-how constitutes a firm s core competence, which entry mode is the optimal choice?
A) foreign franchises controlled by joint ventures
B) licensing agreements
C) wholly owned subsidiaries
D) turnkey contracts
Q:
Apple exports its products to many countries. An advantage of exporting products to another country is that it
A) minimizes exchange rate risks.
B) provides the ability to achieve experience curve and location economies.
C) faces less trade barriers.
D) gives firms access to local knowledge.
Q:
A _____ entails establishing a firm that is owned together by two or more otherwise independent firms.
A) joint venture
B) licensing agreement
C) franchisee
D) turnkey contract
Q:
A wholly owned subsidiary is appropriate when the firm wants
A) to share the cost and risk of developing a foreign market.
B) 100 percent of the profits generated in a foreign market.
C) a plant that is ready to operate.
D) to test a market.
Q:
The most typical joint venture is a _____ venture.
A) 50 50
B) 60 40
C) 75 25
D) 10 90
Q:
_____ is pursued primarily by manufacturing firms and _____ is employed primarily by service firms.
A) Licensing; franchising
B) Franchising; licensing
C) Franchising; exporting
D) Exporting; licensing
Q:
Under _____ agreement, a firm might license some valuable intangible property to a foreign partner, but in addition to a royalty payment, the firm might also request that the foreign partner license some of its valuable know-how to the firm.
A) an integrated licensing
B) a chartering
C) a franchising
D) a cross-licensing
Q:
Patents, inventions, formulas, processes, designs, copyrights, and trademarks are all forms of
A) licensing agreements.
B) franchising agreements.
C) intellectual property.
D) tangible property.
Q:
Firms entering a market via a _____ must bear all the costs and risks associated with the venture.
A) licensing contract
B) joint venture
C) turnkey contract
D) wholly owned subsidiary