Deck 14: Global Supply Management

Question 1

In international buying, the entity that makes a contract with the buyer and then buys the product in its name from the foreign supplier, takes title, delivers to the place agreed on with the buyer, and then bills the buyer for the agreed-on price, is an):

A) import broker.
B) sales agent.
C) import merchant.
D) trading company.
E) foreign import agent.

Answer 1

C

Question 2

The United Nations Convention for the International Sale of Goods CISG):

A) is automatically applied if both nations have adopted the CISG, unless another body of law is agreed upon in the contract.
B) is automatically applied if both nations have adopted the CISG, and there can be no exceptions.
C) replaces the UCC as the worldwide body of law governing international trade.
D) should always be the preference for a buyer from the United States.
E) always puts the United States buyer at an advantage.

Answer 2

A

Question 3

When dealing with an international supplier, a knowledgeable buyer:

A) normally will attempt to negotiate a cost-plus-incentive-fee contract.
B) will attempt to price in Euro Dollars.
C) will normally price in the currency of the seller's country.
D) will always state the price in U.S. dollars.
E) may decide to deal in international currency options.

Answer 3

E

Question 4

It is rare for international trade disputes to be settled through international arbitration partly because the costs of arbitration exceed the costs of litigation.

Question 5

When comparing the total cost of ownership from an international supplier to that of a domestic supplier, the international supplier's:

A) lower labor costs are easily eroded by additional shipping and insurance costs.
B) price will be higher if the U.S. dollar is strengthening on the exchange rate.
C) lower labor costs offset the high cost of inefficient equipment and processes.
D) lower labor rates must be considered in the context of productivity and quality.
E) prices are carefully controlled by the U.S. government to prevent dumping.

Question 6

Which of the following would encourage countertrade?

A) excess foreign exchange.
B) readily available credit.
C) a strong base of suppliers.
D) the need to develop export markets for new products.
E) a well-developed domestic economy.

Question 7

When there is a large number of common requirements across facilities or business units, and the supply base is dispersed geographically, an appropriate global sourcing structure is:

A) a global commodity management organization.
B) regional purchasing offices that manage the region's spend for every commodity.
C) a centralized international purchasing office equidistant from key suppliers.
D) a centrally managed global sourcing office located in the corporate headquarters.
E) a decentralized structure where purchasing managers are at each facility.

Question 8

Three approaches to global sourcing are to establish 1) global purchasing offices, 2) International Commodity Organizations ICOs), or 3) Regional Purchasing Offices RPOs).

Question 9

When sourcing internationally:
A) the buyer should immediately establish an informal first-name basis with the supplier's representatives.

A) the buyer should learn about the culture, customs, norms, taboos, and history of the supplier's country.
B) the need for personal space is generally the same in most regions of the world.
C) the global availability and use of email, fax, and phone has largely eliminated communication barriers.
D) differing cultural and social norms will have little impact since most businesspeople are accustomed to working with North Americans.

Question 10

The most-cited reason for international trade is:

A) better quality.
B) better overall value.
C) more advanced technology.
D) lower total costs.
E) lower price.

Question 11

The primary reasons for using a foreign trade zone FTZ) are 1) to avoid, postpone, or reduce duties on imported goods, and 2) to create economic benefits for the local community through job creation.

Question 12

The Foreign Corrupt Practices Act FCPA):

A) allows payment to facilitate the performance of normal duties.
B) attempts to persuade other nations to adopt U.S. rules regarding payments to officials.
C) allows U.S. firms to prosecute foreign nationals on bribery charges.
D) allows U.S. firms to make payments to facilitate normal duties and to make payments to obtain special advantages.
E) allows foreign nationals to offer payments to U.S. government officials to expedite trade agreements.

Question 13

Even though the economy of Mexico relies heavily on the jobs generated by maquiladoras, the government of Mexico has not set wage rates equal to those of India and China.

Question 14

The growth in international trade has come from an increase in the international sale of services as well as goods.

Question 15

The governing convention on shipping terms and responsibilities involved in international transportation is called ITAPS International Transport and Payment Specifications.)

Question 16

Countertrade historically has been very uncommon in the sale by U.S. firms of armaments to other nations, but very common in civilian procurement projects.

Question 17

The NAFTA, the EU, ASEAN and the WTO are all examples of Free Trade Agreements which were designed to facilitate trade between and among member countries.

Question 18

A temporary importation bond TIB) allows certain classes of merchandise, to be imported into the U. S. with the net effect that no duty is paid on the merchandise, provided it is reexported.

Question 19

When one condition of the countertrade agreement is that government and/or military-related exports be purchased, this is a swap trade arrangement.

Question 20

A foreign trade zone FTZ) in the U. S.:
A) facilitates rapid calculation of import duties.

A) must use only goods made in the U. S. according to the Buy America Act.
B) facilitates rapid calculation and payment of import duties.
C) creates and maintains jobs in the United States that might have gone offshore.
D) is completely different in purpose from a maquiladora in Mexico.