Deck 13: Export and Import

Question 1

Companies are likely to export products abroad in all of the following situations EXCEPT which one?

A) when their average cost per unit of home country production declines substantially by increasing output
B) when they want to use the riskiest but most profitable method to engage international trade
C) when they aim to increase degree of market diversification
D) when they are new to international business

Answer 1

B

Question 2

Boyce Dynamics,a U.S. maker of LED flashlights,fills unsolicited orders from foreign buyers. It has not proactively investigated international trade options. Boyce Dynamics is best categorized as a(n)________.

A) regular exporter
B) non-exporter
C) occasional exporter
D) domestic exporter

Answer 2

C

Question 3

Which of the following transactions refers to the purchase of goods or services produced by a company based in one country from sellers that reside in a different country?

A) importing
B) countertrading
C) exporting
D) freight forwarding

Answer 3

A

Question 4

An Australian company makes athletic wear for women,men,and adults. After several years of successfully exporting its products to the U.K. and the U.S.,the company began exporting to Japan. This is an example of ________.

A) a born-global company
B) a location advantage
C) third-party exporting
D) incremental internationalization

Question 5

The CEO of Coffman Enterprises wants to export products to foreign markets. However,top executives at Coffman are concerned that the firm will face fierce competition from foreign rivals because Coffman lacks significant core competencies. The executives are most likely worried that Coffman lacks ________.

A) capital advantages
B) internalization advantages
C) location advantages
D) ownership advantages

Question 6

This spring break you are planning to leave the U.S. and visit London,where you will stay in a hotel for 10 days. The London hotel will be performing a ________.

A) indirect merchandise export
B) merchandise export
C) service export
D) service import

Question 7

The benefits of retaining a core competency within a company and purposefully threading that core competency through the value chain are referred to as ________ advantages.

A) internalization
B) domestic
C) location
D) ownership

Question 8

Iverson Products is a U.S. firm that is considering expanding internationally by exporting. Which of the following is the LEAST likely benefit for Iverson?

A) boosting marketplace flexibility
B) improving economies of scale
C) facing lower business risk compared to other foreign market entry options
D) requiring fairly few resources

Question 9

The probability that a business is engaged in exporting tends to ________.

A) decrease with the size of the firm
B) increase with the product life cycle
C) decrease with the product life cycle
D) increase with the size of the firm

Question 10

Which of the following statements about small and medium-sized enterprises (SMEs)is true?

A) SMEs are steadily reducing their export intensity ratios.
B) SMEs make up the majority of all U.S. exporters.
C) SMEs are the source of more than half of the monetary value of U.S. exports.
D) SMEs that export goods have fewer than 20 employees.

Question 11

Small and medium-size enterprises,such as SpinCent as seen in the opening case for chapter 13,account for ________ of all U.S. exporters.

A) 38%
B) 54%
C) 79%
D) 97%

Question 12

The ________ of a firm is the share of its total output that is exported.

A) freight forward
B) incremental export
C) export intensity
D) intermodal export

Question 13

According to the research described in your text,which of the following is among the factors that would increase a firm's probability of exporting?

A) low domestic productivity
B) high domestic labor costs
C) high level of operational efficiency
D) high R & D demands

Question 14

Which of the following is NOT an example of a service export?

A) a management firm providing advice to a foreign client
B) an investment bank arranging financing for a foreign firm
C) a coffee chain opening a new store in a foreign country
D) an engineering firm building roads in a foreign country

Question 15

Which of the following best explains why SpinCent decided to export?

A) growth opportunities in Asia
B) labor demands in the U.S.
C) declining tariffs in the EU
D) promising market locations in South America

Question 16

Which of the following is usually NOT a factor that triggers companies to look to exports to boost total sales?

A) maturity of the domestic market
B) potential to leverage core competencies in foreign markets
C) social needs in developing countries
D) response to the market entry of a foreign rival

Question 17

Vantex Fabrics is a U.S. firm that designs,manufactures,and sells high-quality fabrics used for home decor. Executives at the firm believe that Vantex could significantly increase its profitability by exporting fabrics to foreign markets. The vice president of marketing is in favor of exporting to England,while the vice president of finance asserts that the firm would benefit most from exporting to China. Which of the following,if true,best supports the vice president of marketing's suggestion?

A) Incremental internalization reduces the exporting risks facing Vantex.
B) Rapid internationalization decreases the likelihood of failure for Vantex.
C) Vantex plans to diversify its product offerings within the next ten years.
D) Vantex employs 450 people and will likely develop worldwide operations within 12 months.

Question 18

Vandelay Designs is a small firm based in Boston that makes and sells scrapbooking products through its retail store and Web site. Many of Vandelay's first sales were made to customers located in Canada,England,and Japan. Vandelay Designs would best be identified as a(n)________.

A) incremental exporter
B) occasional exporter
C) born global
D) geo-expo

Question 19

Which of the following transactions refers to the sale of goods or services produced by a company based in one country to customers that reside in a different country?

A) importing
B) countertrading
C) exporting
D) freight forwarding

Question 20

Barton Accessories has two retail stores and one production facility where the firm's line of leather belts and purses are assembled. Barton employs 430 people and generates nearly $1 million in revenue each year through domestic and international sales. Which term best describes the status of Barton?

A) SME
B) MNE
C) MNC
D) FDI

Question 21

The incremental internationalization view of exporting holds that companies first target countries that are ________ their home market.

A) different from
B) similar to
C) smaller than
D) larger than

Question 22

A(n)________ operates on a contractual basis and provides exclusive representation for an exporter's goods and services in a foreign market.

A) export management company
B) import broker
C) invoice agent
D) countertrader

Question 23

Meade Clocks has hired an intermediary to manage its export activity. Meade should most likely expect ________.

A) lower profit margins
B) greater control over global sales
C) more responsibility for customer satisfaction
D) frequent misunderstandings about trade regulations

Question 24

The perspective of ________ holds that as a company gains experience,resources,and confidence,it progressively increases its scope of countries to which it exports.

A) serendipity
B) export management
C) the born-global theory
D) incremental internalization

Question 25

Corbin Coffee plans to initiate activities in foreign markets through indirect exporting. The firm is most likely to use ________.

A) local managers to pay tariffs and duties
B) external specialists to assist in the export process
C) the International Trade Administration to monitor exports
D) freight forwarders to act as distributors in foreign markets

Question 26

What is the most likely reason that firms avoid aggressively seeking export opportunities?

A) Exporting is an activity best left to large, resource rich firms.
B) Firms are unaware of opportunities in foreign markets.
C) Foreign customers cannot easily communicate their needs.
D) Firms are reluctant to adjust their established business practices.

Question 27

Which of the following is NOT one of the three main types of importers?

A) importers looking for suppliers abroad to concentrate their operating risks
B) importers looking for any product around the world they can deliver to local citizens for a profit
C) importers looking to foreign-sourcing to get the highest quality products at the lowest possible price
D) importers using foreign sourcing to optimize their supply chains

Question 28

Which of the following best describes the concept of serendipity in exporting?

A) modifying products to meet cultural preferences
B) initiating global sales through e-commerce methods
C) relying too much on exports when domestic sales suddenly increase
D) opportunistically responding to unsolicited orders from foreign customers

Question 29

The primary responsibilities of the ________ are the assessment and collection of all duties,taxes,and fees on imported merchandise,the enforcement of customs and related laws,and the administration of certain navigation laws and treaties.

A) Bureau of Customs and Border Protection
B) U.S. Secret Service
C) Internal Revenue Service
D) Food and Drug Administration

Question 30

Which of the following has been the LEAST likely outcome of e-commerce on exporting?

A) enhancing supply chains
B) triggering a rise in born globals
C) overcoming capital limitations for SMEs
D) expanding market opportunities for traders

Question 31

The basis for designing an effective export strategy most likely begins with ________.

A) identifying how a firm can leverage its core competencies into foreign markets
B) hiring local personnel in target markets to build the business
C) enlisting the support of an export management company
D) simultaneously targeting a large number of foreign markets

Question 32

Which of the following is typically true of an export management company?

A) It is usually a division of a manufacturing company.
B) Most EMCs in the United States are large, representing a wide range of products and large number of companies.
C) It operates on a contractual basis for a manufacturer by helping obtain orders for its clients' products.
D) It usually takes title to products rather than act as an agent.

Question 33

All of the following are primary duties of the Bureau of Customs and Border Protection EXCEPT which one?

A) assessing all duties, taxes, and fees on imported merchandise
B) collecting import and export tariffs
C) protecting the U.S. from threatening imports
D) policing smuggling operations

Question 34

A driving factor for the growth in imports is the impact of ________.

A) government programs
B) labor specialization
C) consumer preferences
D) social trends

Question 35

In conducting ________,a business sells goods directly to or through an independent domestic intermediary in the exporter's home country that exports the products to foreign markets.

A) direct exporting
B) global marketing
C) strategic planning
D) indirect exporting

Question 36

A broker or other import consultant can help an importer minimize import duties by ________.

A) bypassing duty rebates available through drawback provisions
B) incurring duties by using non-bonded warehouses and foreign trade zones
C) maximizing liability by improperly marking an import's country of origin
D) valuing products in such a way that they qualify for more favorable duty treatment

Question 37

You are the manager of an SME in the United States,and your firm wants to begin exporting. Since you have never been involved with exporting,there are many compelling reasons that encourage contacting the ________ to obtain expert counseling on exporting.

A) U.S. Treasury Department
B) Small Business Administration
C) Federal Credit Insurance Association
D) U.S. Commerce Department

Question 38

Which of the following is NOT one of the common ways that trade intermediaries are paid by exporters?

A) commission rate
B) buy-sell basis
C) fixed salary
D) special event contribution

Question 39

In designing an export plan,managers initially do all of the following EXCEPT ________.

A) sequence tactics
B) specify objectives
C) identify useful resources
D) organize financial support

Question 40

All of the following are common problems associated with exporting and importing EXCEPT ________.

A) managing financial risks
B) finding reliable intermediaries
C) matching foreign rivals' prices
D) establishing distribution networks

Question 41

Exporters who opt for direct exporting are most likely to _______.

A) sustain long-term profitability
B) sell products to domestic retailers
C) depend on international marketers
D) sell products to a foreign distributor

Question 42

The Internet supports more companies' efforts to launch a direct exporting strategy by ________.

A) providing information quickly and inexpensively
B) eliminating the need for highly detailed export plans
C) letting software take over customer service responsibilities
D) countering the power of electronic data interchange systems

Question 43

Which of the following is a difference between export management companies (EMCs)and export trading companies (ETCs)?

A) ETCs deal with both exports and imports, while EMCs deal only with exports.
B) ETCs are subject to antitrust laws, while EMCs are not.
C) ETCs typically carry inventory, while EMCs typically do not.
D) ETCs operate more on the basis of demand, while EMCs operate more on the basis of supply.

Question 44

Proctor & Gamble exchanges cleaning products for machinery with Russia and Hungary. The nature of this transaction indicates that Proctor & Gamble is engaging in ________.

A) third-party logistics
B) freight forwarding
C) countertrade
D) e-commerce

Question 45

Which of the following types of agents moves international cargo,facilitates shipment tracking,and handles product returns for exporters and importers?

A) trade intermediaries
B) third party logistics
C) customs brokers
D) freight forwarders

Question 46

Countertrade is an alternative means of structuring an international sale when ________.

A) natural resources are highly desirable
B) an importer is able to obtain a bank loan
C) an importer does not belong to the World Bank
D) conventional forms of payment are difficult, costly, or nonexistent

Question 47

An exporter that implements a(n)________ strategy does so with the intent to develop its own international marketing capability.

A) indirect selling
B) freight forwarding
C) direct exporting
D) export intermediation

Question 48

Federal,state,and local governments that recognize the benefits of international trade,actively aid the efforts of potential and active exporters and ________.

A) ensure the quality of exported products
B) establish barriers to punish foreign rivals
C) collect a fee for each successful export sale
D) protect the interests of struggling importers

Question 49

Ultimately,countertrade is an inefficient way of doing business because it ________.

A) encourages buyers and sellers to use customs brokers to handle exchanges
B) requires buyers and sellers to negotiate a fair value on the exchange
C) reduces the risk that the goods sent as payment are of poor quality
D) eliminates the potential for price and financial distortion

Question 50

Which of the following is true of export trading companies in the United States?

A) They are like independent distributors that match buyers with buyers.
B) They are prohibited from working with a firm's competitors due to antitrust laws.
C) They must be established independently of the company in order to avoid a conflict of interest.
D) They have been a successful form of export intermediary in recent years.

Question 51

As described in the opening case,SpinCent's CEO analyzed foreign markets,assessed industries,prepped his company,traveled overseas,and hired trustworthy distributors. SpinCent manages the export process including making and marketing its products for foreign buyers. The nature of these activities shows that the leadership of SpinCent is committing the company to ________.

A) countertrade
B) direct exporting
C) indirect exporting
D) third party logistics

Question 52

Morris Lighting is a U.S. firm that wants to start exporting its high-end lighting fixtures to foreign markets. Morris Lighting should seek assistance from U.S. government agencies for all of the following EXCEPT ________.

A) organizing trade events that help potential exporters make foreign contacts and explore export opportunities
B) understanding how to comply with domestic and foreign trade regulations
C) acting as an export marketing department or international department for the company
D) providing information about market demographics and product demand

Question 53

Companies can anticipate conducting countertrade with businesses in countries that ________.

A) experience widespread economic problems
B) command strong negotiation positions
C) have sufficient access to cash
D) weakly regulate international trade

Question 54

Jordan Jewelry is a U.S. firm that designs,manufactures,and sells inexpensive jewelry and accessories. Executives at the firm believe that Jordan Jewelry could significantly increase its profitability by exporting products to foreign markets. Before engaging in international trade,Jordan executives need to develop an export plan. Which of the following questions is LEAST relevant to this activity?

A) Would Jordan's resources be better utilized developing business in the United States?
B) How much will it cost to get Jordan's products to the targeted markets?
C) What marketing campaign would be best for Jordan's foreign markets?
D) Is exporting consistent with Jordan's long-term goals?

Question 55

Fundamentally,countertrade is best described as a(n)________ transaction.

A) simple
B) common
C) desirable
D) inefficient

Question 56

All of the following are benefits of countertrade EXCEPT ________.

A) decreasing trade protectionism
B) increasing access to innovative technology
C) developing new trade relationships with foreign companies
D) preserving foreign exchange reserves

Question 57

A freight forwarder performs which of the following functions?

A) arranging the fastest and cheapest transportation of products to and from foreign suppliers
B) taking title to the goods it exports and imports from country to country
C) acting as a sales representative in a foreign market
D) valuing products that qualify for favorable tariffs

Question 58

Fair Day Paper Products is a family-owned start up that imports bamboo paper from China to make custom greeting cards. The firm has experienced many problems in receiving the supplies from China; recurring problems include lost shipments,delays,and damaged products. Fair Day would most likely benefit by enlisting the help provided by which of the following?

A) countertraders
B) customs brokers
C) import agents
D) third party logistics

Question 59

________ refers to any one of several different arrangements that business parties negotiate so that they can trade goods and services with limited or no use of currency.

A) Factoring
B) Offset
C) Countertrade
D) Barter

Question 60

What is typically the most difficult aspect of an export plan for SMEs?

A) finding a freight forwarder
B) identifying core competencies
C) creating countertrade activities
D) targeting the right foreign market

Question 61

Ownership advantages refer to a firm's specific assets,international experience,and the ability to develop either low-cost or highly differentiated products within the context of its particular value chain.

Question 62

The opportunity to increase profitability is the primary reason that firms decide to export.

Question 63

Major types of indirect intermediaries include export trading companies,distributors,and freight forwarding companies.

Question 64

A company classified as a small and medium-sized enterprise (SME)has fewer than 500 employees.

Question 65

"Born global" firms are those that step straight onto the world stage,making exporting the primary goal of the firm from day one of operations.

Question 66

In what is known as direct exporting,the exporter sells goods directly to or through an independent domestic intermediary in the exporter's home country that then exports the products to foreign markets.

Question 67

One advantage of importing is that an importer can diversify its operating risks by developing alternative suppliers.

Question 68

An arbitrageur is an exporter that seeks to conduct countertrade in emerging markets.

Question 69

Export intensity,the percentage of total revenues coming from exports,is not always correlated with company size.

Question 70

The probability of a company being an exporter is independent of the size of the company.

Question 71

Indirect exporters sells goods to a foreign intermediary,who then sells the product in the domestic market to the final consumer.

Question 72

A major pitfall of exporting is misclassifying products in terms of the destination country's tariff schedule,thereby incurring a higher tax or slower delivery.

Question 73

Exporters employ an export management company as part of an indirect exporting strategy.

Question 74

The U.S. government has more than 10,000 tariff classifications and more than half of them are subject to interpretation.

Question 75

Companies new to exporting most frequently suffer over-commitment by top management in taking on the initial difficulties and financial requirements of exporting.

Question 76

Serendipity is often an export trigger for companies that purposefully look to internationalize their operations.

Question 77

The primary duty of the customs agency of a government is the assessment and collection of all duties,taxes,and fees on imported merchandise.

Question 78

Advocates of exporting e-waste assert that the activity helps entrepreneurs in developing countries create value by recovering and recycling scarce resources such as copper.

Question 79

An export trading company (ETC)works with many manufacturers rather than representing a single manufacturer.

Question 80

The stages of development in a company's export expansion are tied to company size.