question

Companies decide to export to increase their sales and profits or to protect them from being eroded.

answer

False

question

The first step in finding a foreign market for a product is to determine whether a market exists for a firm's products.

answer

True

question

The International Trade Administration (ITA) is a good place for U.S. beginning exporters to start out.

answer

False

question

The FTA's Market Access and Compliance Department monitors foreign country compliance with trade agreements.

answer

True

question

CIBERs are international business research and education efforts located at U.S. universities.

answer

True

question

Once a firm determines that a market exists for its products, it needs to decide to export directly or indirectly.

answer

True

question

The only export support available in the United States at the federal level is through trade. gov.

answer

False

question

Reverse trade missions try to find import sources in foreign countries for U.S. producers.

answer

False

question

One of the most common mistakes made by new exporters is not getting advice.

answer

True

question

U.S. pavilions are located in every country around the world and provide background information and displays on foreign companies.

answer

False

question

If a firm decides to set up its own export operation rather than do indirect exporting, the firm must obtain overseas distribution.

answer

True

question

Generally, trade missions consist of 5 to 12 business professors.

answer

False

question

New exporters always come to the process with a carefully developed marketing strategy.

answer

False

question

Lack of top management commitment to export is often a problem with new exporters

answer

False

question

Mistakes in selecting foreign distributors and sales representatives are not an issue new exporters face.

answer

False

question

Responding to any demand rather than executing a planned growth strategy is not a mistake new exporters tend to make.

answer

False

question

Once in export markets, new exporters tend to maintain their focus on them, despite what is happening in the home market.

answer

False

question

Often new exporters think that they won't have to localize their approach, that a marketing technique or distribution system that works in one country will work in another.

answer

True

question

New exporters often fail to provide local language translation of service, sales, and warrant information.

answer

True

question

Often small exporters don't consider the use of an export management company when they should.

answer

True

question

Licensing and joint venture agreements cannot be useful business forms for new exporters.

answer

False

question

The export marketing plan is essentially the same as the domestic marketing plan.

answer

True

question

The export marketing plan does not include product characteristics, promotional plans, and details on arrangements with foreign representatives.

answer

False

question

Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules, and cash flow projections are all part of the export marketing plan.

answer

False

question

Export pricing and sales agreements for foreign representatives are part of the marketing mix.

answer

True

question

Incoterms are 11 trade terms that describe the responsibilities of the buyer and seller in international trade.

answer

True

question

Incoterms were created by the New York Chamber of Commerce and revised every year.

answer

False

question

In FAS (free alongside ship, loading port) the buyer pays all the transportation and delivery expenses up to the ship's side and clears the goods for export. Risk passes at the ship's rail.

answer

True

question

In CIF (cost, insurance, freight, foreign port) the buyer quotes a price that includes the cost of the goods, insurance, and all transportation and miscellaneous charges to the named foreign port in the country of final destianation.

answer

False

question

CFR (cost and freight, foreign port) is similar to CIF except that the buyer purchases the insurance because it can obtain it at lower cost or because its government, to save foreign exchange, insists that it use a local insurance company.

answer

False

question

In a DAP (delivered at names place), the buyer is resposible for paying for all transportation costs from the seller's location, including customs clearing, to the buyer's location.

answer

False

question

In a DAP (delivered at named place), the seller assumes risk when the goods leave the seller's factory or warehouse.

answer

False

question

CIF and CFR terms are more convenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.

answer

True

question

Out of all the pricing methods mentioned, the preferred on for sellers is ex-works/factory door

answer

True

question

The sales agreement should specify as simply as possible the duties of the representative and the firm.

answer

True

question

The sales agreement should not address where disputes will be resolved and by what legal system. That belongs in a side document.

answer

False

question

Some nations, especially in Asia, follow that Carlos Calvo doctrine, which protects them agianst fraud.

answer

False

question

On an open account, the buyer assumes all of the payment risk.

answer

False

question

On an open account, payment can be made once the exports have been sold.

answer

False

question

A disadvantage for companies that insist on less risky transactions, such as a letter of credit, is that they may be losing business to competitors that sell on open accounts.

answer

True

question

When engaging in international business, banks are concerned with the merchandise, not the documents.

answer

False

question

Export drafts must be paid before the buyer receives shipping documents.

answer

False

question

A confirmed letter of credit guarantees payment to the seller.

answer

True

question

Exporters should consider both private and public export financing.

answer

True

question

By accepting a time draft, the buyer assumes the responsibility for making payment at maturity of the draft.

answer

True

question

Factoring allows the exporter to be more competitive by selling on open account rather than by means of the more costly letter-of-credit method.

answer

False

question

The L/C sets up the bank as an intermediary between the seller and the buyer and reduces risk of nonpayment.

answer

True

question

Free trade zones are areas designated by the government of a country for duty-free entry of any nonprohibited good.

answer

True

question

Firms that include imported parts in their finished products must pay duty on the imports, but this duty is returned when the product is exported (customs drawback).

answer

True

question

If assembly or manufacturing is done in an FTZ using imported components, no duties need to be paid when the finished product is imported.

answer

False

question

Payment terms are incidental once the customer need has been identified and a sales price agreed to.

answer

False

question

A shipper's export declaration (SED) is a document required by the U.S. Department of Agriculture to control exports and supply export statistics.

answer

False

question

Straight bills of lading are negotiable documents.

answer

False

question

The EU uses the CE mark to certify health and safety.

answer

True

question

Products placed in a bonded warehouse do not pay import duties until they are removed.

answer

True

question

Every importer should know how the U.S. Customs calculates import duties and know the importance of the product classification.

answer

True

question

Of the 12 most common mistakes and pitfalls awaiting new exporters, which of the following is not on the list in the textbook? A. Failure to develop an international marketing plan B. Treating international distributors on an equal basis with domestic counterparts C. Insufficient care in selecting overseas distributors D. Failure to get good advice E. None of the above (They are all on the list.)

answer

E.

question

Of the 12 most common mistakes and pitfalls awaiting new exporters, which of the following is not on the list in the textbook? A. Failure to develop an international marketing plan B. Treating international distributors on an equal basis with domestic counterparts C. Insufficient care in selecting overseas distributors D. Failure to get good advice E. None of the above (They are all on the list.)

answer

E.

question

Market Access and Compliance (MAC) specialists seek to open foreign markets to American products. MAC specialists do not do the following: A. develop strategies to overcome obstacles faced by U.S. business in foreign countries and regions. B. monitor foreign country compliance with trade agreements. C. monitor exchange rate movement. D. all of the above. E. A and B.

answer

E.

question

Credit information is available for new exporters through all of the following except: A. Dun & Bradstreet. B. the FCIB (Finance, Credit, and International Business Association). C. the exporter's bank. D. the SBA (Small Business Administration). E. all of the above.

answer

D.

question

The Gold Key Service provided through many American embassies offers companies the following: A. orientation briefings. B. market research. C. introductions to potential partners. D. assistance in developing a marketing strategy for the particular country. E. all of the above.

answer

E.

question

The Department of Commerce organizes events called "Show and Sells" that are helpful in both locating foreign representatives and making sales. Which of the following is not an event offered by the Department of Commerce? A. U.S. pavilions B. Reverse trade missions C. Product literature center D. Education seminars E. None of the above

answer

D.

question

Export marketing plans should be specific about: A. the markets to be developed. B. the marketing strategy for servicing them. C. the tactics required to make the strategy operational. D. cash flow projections. E. A, B, and C.

answer

E.

question

Ex-Works is a short way to say: A. cash in advance. B. an open account. C. consignment. D. letters of credit. E. shipment transferred to seller at factory.

answer

E.

question

Incoterms are divided into two basic categories: A. open account and L/C. B. general and water transport terms. C. ship and ground transport. D. export and domestic shipments. E. risk and nonrisk terms of sale (buyer's perspective).

answer

B.

question

Incoterms are developed and maintained by: A. the U.S. Chamber of Commerce. B. the International Chamber of Commerce. C. the WTO. D. the UN. E. a committee of major global companies.

answer

B.

question

The total number of Incoterms as of 2011 is: A. 11. B. 25. C. 15. D. variable. (They vary as need dictates.) E. 45.

answer

A.

question

On a consignment sale, the payment risk is: A. assumed by the buyer. B. assumed to be equally shared. C. carried by the seller. D. covered by insurance. E. covered by the bank issuing the L/C.

answer

C.

question

Which of the following is the most risky for an exporter? A. Open account B. Irrevocable letter of credit C. Bank collection time draft D. Cash in advance E. Revocable letter of credit

answer

A.

question

Freight forwarders' responsibilities may include all of the following except: A. booking space on a ship. B. preparing the export documents. C. verifying that the seller has money in the bank. D. arranging to have the merchandise delivered to the port. E. D and C.

answer

C.

question

Which of the following is the most risky for an importer? A. Open account B. Irrevocable letter of credit C. Bank collection time draft D. Cash in Advance E. None of the above

answer

D.

question

The U.S. Export-Import Bank (Ex-Im Bank) offers the following: A. export credit insurance. B. guarantees. C. direct and intermediary loans. D. Working Capital Guarantee. E. all of the above.

answer

E.

question

Foreign trade zones are also called: A. free trade zones. B. transit zones. C. free perimeters. D. export processing zones. E. all of the above.

answer

E.

question

A shipper's export declaration (SED) includes: A. names and addresses of the shipper and consignee. B. U.S. port of exit and foreign port of unloading. C. export license number and bill-of-lading number. D. description and value of the goods. E. all of the above.

answer

E.

question

An export bill of lading serves as: A. a contract for carriage between the shipper and the carrier. B. a receipt from the carrier for the goods shipped. C. a certificate of ownership. D. a receipt for the IRS. E. A, B, and C.

answer

E.

question

The kinds of marine insurance policies include: A. basic named perils. B. broad named perils. C. partial risk. D. all risk. E. A, B, and D.

answer

E.

question

The premiums charged by marine insurance companies on an international transaction depend on: A. the age of the ship. B. whether the goods are stowed on deck or under deck. C. the volume of business D. how the good are packed. E. all of the above.

answer

E.

question

Collection documents vary from country to country. The most common types of collection documents that the seller provides to the buyer include all of the following except: A. commercial invoices. B. consular invoices. C. income statements. D. certificates of origin.

answer

C.

question

"Comparing the total cost of ocean freight versus air freight, air freight may be cheaper." What components are considered when making the previous statement? A. Insurance rates B. Packing C. Replacement cost of damaged goods D. Inventory cost E. All of the above

answer

E.

question

What is an export license? A. Permission from the U.S. government to export B. An international quality performance rating C. A shipping qualification D. Permission from the top management team to export E. Permission to transfer domestic currency abroad

answer

A.

question

Bills of lading are of two types: A. invalidated and validated B. endorsed and unendorsed C. to order and straight D. confirmed and unconfirmed E. documented and undocumented

answer

C.

question

In the area of shipment risk, ocean vessels assume: A. all the risk for the safety of their cargo. B. none of the risk for the safety of their cargo, except for negligence. C. exporters or importers will have bought adequate insurance. D. marine environments are usually safe. E. half of the risk for the safety of their shipment.

answer

B.

question

Basic named perils marine insurance covers: A. perils of the sea, fires, jettisons, hurricanes. B. theft and larceny. C. piracy on the seas. D. accidents and storms other than hurricanes. E. flooding, tsunamis, earthquakes.

answer

A.

question

Collection documents are: A. for debt carried in cash receivables. B. needed to load and unload transported goods. C. presented to the buyer for payment. D. certificates of origin, invoices, and inspection certificates. E. C and D.

answer

E.

question

The CE mark in the EU: A. shows that an export license has been issued. B. indicates the electric current, DC or AC. C. shows that the product conforms to health and safety standards. D. A and C.

answer

C.

question

LASH and RO-RO are: A. innovative material-handling methods. B. kinds of containerization. C. Panamax ships. D. barges used in materials handling. E. Japanese import requirements.

answer

A.

question

The Panama Canal: A. has to be enlarged for larger ship sizes. B. increases shipping costs from New York to Los Angeles. C. can handle Panamax-size ships. D. makes shipping competitive with air freight. E. reduces travel time between the U.S. West Coast and Europe by 21 days.

answer

A.

question

The CE mark in the EU: A. shows that an export license has been issued. B. indicates the electric current, DC or AC. C. shows that the product conforms to health and safety standards. D. A and C.

answer

C.

International Business – Chapter 14 – Flashcards

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