Exam 14: Exporting, Importing, and Countertrade

Jamal Steel,a rapidly growing small steel company with annual revenues of $8 million is looking to buy a large industrial furnace from Japan that is expected to cost $2 million.The exporter wants Jamal Steel to produce a letter of credit.Jamal Steel's CFO is reluctant to do so.Which of the following disadvantages of using a letter of credit for international transactions is likely the reason for the CFO's reluctance?

Compared to a decade ago,commercial banks and major accounting firms are rarely willing to assist small firms in starting export operations due to high default risks.

When a time draft is drawn on and accepted by a bank,it is known as a

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

Describe the pros and cons of countertrade.

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

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

Which of the following is true of exporting?

Briefly describe the different types of countertrade arrangements.

Countertrade occurs when the

Darren Bloom,the sales manager for John Fountain Products,a small family business,is eager to get the company on an export path.The CEO of the company is not convinced,however.To convince the CEO,Bloom should point out that firms that do not export often

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

When a bill of lading is used to obtain payment or a written promise of payment before the merchandise is released to the importer,it serves as a

Lack of trust in international trade is exacerbated by the distance between the two parties in space,language,and culture.

The principle of countertrade is to trade goods and services for money.

Unhappy with the speed with which the company's export initiative was going,the CEO called Mary Adams,the person in charge of exports at Ambient Products,to understand the reasons for the company's delay.Which of the following is a valid defense that Mary Adams can use?

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

While small firms tend to be proactive about seeking opportunities for profitable exporting,large firms are very reactive.

In international commerce,time drafts are negotiable instruments.

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)