Deck 13: Exporting,Importing,and Countertrade

Question 1

Exporters are typically faced with what problems?

A) lots of paperwork
B) complex formalities
C) many potential delays
D) potential errors
E) all of these answers are correct

Answer 1

E

Question 2

Large firms generally tend to be ______________ about seeking opportunities for profitable exporting,whereas medium-sized and small firms are ____________.

A) passive; aggressive
B) reactive; proactive
C) discouraged; encouraged
D) proactive; reactive
E) aggressive; discouraged

Answer 2

D

Question 3

Which of these countries is considered as one of the World's most successful exporting nation?

A) Australia
B) The Philippines
C) Germany
D) The U.K.
E) Canada

Answer 3

C

Question 4

According to the opening case,one of the things SteelMaster did to grow its export business was what?

A) gain the redibility of foreign governments
B) obtain below market rate financing
C) open manufacturing facilities around the globe
D) learn other languages
E) have a dedicated person to develop international business

Question 5

Common pitfalls of exporting include all of these except:

A) poor understanding of competitive conditions
B) problems securing financing
C) poor market analysis
D) intimidating the foreign customers
E) failure to customize the product

Question 6

The way to overcome ignorance about export opportunities is _________.

A) to start importing
B) to DFAIT
C) to collect information
D) to use barter transactions
E) to use countertrade

Question 7

In the United States,what percent of firms export,according to the U.S.Small Business Administration?

A) nearly 98 percent
B) about 23 percent
C) less than 2 percent
D) a little under 50 percent
E) over 50 percent

Question 8

What federal agency supports the development of trade by providing services to exporters,developing policy,and attracting investment to Canada?

A) The UN
B) DFAIT
C) CITP
D) FITT
E) EMC

Question 9

Toddler Toys,which recently opened for business,has 45 employees and about $10 million in sales and would be considered to be a small or medium sized firm.Given the small size of the firm,according to studies,Toddler Toys would be ___________ seeking opportunities for profitable exporting.

A) proactive about
B) prohibited from
C) reactive about
D) government-driven for
E) discouraged from

Question 10

The combination of ______________ and _____________ explains why exporters still account for only a tiny percentage of U.S.firms.

A) unfamiliarity; intimidation
B) unpredictability; regulations
C) culture; language
D) financing; marketing
E) size; language

Question 11

According to the UN report on trade and development,a typical international trade transaction may involve __________ parties,___________ original documents,and ___________ document copies.

A) 25; 35; 225
B) 2; 9; 18
C) 10; 3; 30
D) 15; 180; 60
E) 30; 60; 360

Question 12

ABC International's market research identified that Canadian consumers prefer relatively less sugar in their soft drinks whereas Asian consumers prefer more.ABC exported their best selling soft drink in Canada,Tasty,without modification to the Asian market.ABC committed which of the common mistakes of exporting?

A) Poor market analysis
B) A failure to customize the product
C) A poorly executed promotional campaign
D) A poor understanding of competitive conditions
E) A poor choice of retailers

Question 13

Exporting remains a challenge for firms,especially for _______ firms that can find the process intimidating.

A) Canadian
B) U.S.
C) small
D) large
E) multinational

Question 14

According to the United Nations report on trade and development,document and paperwork preparation often amounts to what percentage of the final value of the goods exported?

A) Approximately 10 percent
B) Over 33 percent
C) Less than 2 percent
D) Between 40 and 50 percent
E) Between 22 and 23 percent

Question 15

Great trading houses in Japan are called:

A) kaizen
B) sogo shosha
C) MITI
D) guanxi
E) keiratsu

Question 16

Until recently,Canada was mostly a(n)____________ when it came to international trade.

A) market leader
B) economy where exports played a major role
C) economy built on countertrade
D) self-contained economy
E) example of the world's most successful exporting nations

Question 17

One reason more firms are not proactive about seeking export opportunities is that:

A) they are very familiar with foreign market opportunities
B) they are intimidated by complexities and mechanics of exporting
C) there are too many opportunities available domestically
D) they have concluded foreign markets are not profitable
E) they do not have enough time to serve both the domestic and export markets

Question 18

What is the attraction to firms of exporting?

A) larger revenue
B) larger profits
C) the ability to gain cultural awareness
D) all of these answers are correct
E) both larger revenue and larger profits

Question 19

Heublein,a manufacturer of liqueurs,decided to use the U.S.name for their cranberry liqueur when they started exporting to the U.K.Sales were very slow and only later did they understand that the name they were using was slang for privy in Britain.This is an example of what common exporting pitfall?

A) poor distribution and retailing
B) unfamiliarity with British markets
C) cultural similarities
D) different business practices
E) lack of product adaptation

Question 20

According to the text,why is exporting becoming easier?

A) declining trade barriers under GATT
B) declining trade barriers under the WTO
C) regional economic agreements such as the EU
D) regional economic agreements such as NAFTA
E) all of these answers are correct

Question 21

A good EMC will have all of these except:

A) a network of contacts in potential markets.
B) a good knowledge of different business mores.
C) multilingual employees.
D) the financing available for client firms.
E) an understanding of the ins and outs of the exporting process.

Question 22

Access International,a British based greeting card company,is interested in importing paper from Canada.Which of these should Access arrange first for the Canadian company to ship the merchandise?

A) letter of credit
B) bill of Lading
C) time draft
D) sight draft
E) way bill

Question 23

Exporting is:

A) profitable if little investment is needed
B) an end in itself
C) a resource drainer for small businesses and therefore should be avoided
D) successful when used on a "shot gun" approach
E) merely a step on the road toward establishment of foreign production

Question 24

Completion of FITT's eight training modules leads to the _____ designation.

A) DFAIT
B) ITC
C) CFIT
D) FITT
E) CITP

Question 25

At the municipal and provincial level there can be the following services,except:

A) local chambers of commerce
B) boards of trade
C) trade representation offices in other provinces
D) trade representation offices in other countries
E) trade financing

Question 26

What is the document,issued by a bank,that indicates that the bank will make payments under specific circumstances known as?

A) bill of lading
B) time draft
C) way bill
D) sight draft
E) letter of credit

Question 27

____________ are export specialist who act as the export marketing department or international department for their client firms.

A) Trade Commissioners
B) The foreign country embassies
C) The WTO and the World Bank
D) EMCs
E) Team Canada members

Question 28

ITCs refer to what?

A) International Trade Committees
B) International Transit Committees
C) International Trade Centres
D) Inter-provincial Trade Centres
E) Inter-governmental Trade Committees

Question 29

International Trade Centres also promote international trade through what?

A) the United Nations
B) EMC
C) Trade Commissioners
D) Team Canada
E) FITT

Question 30

The typical export-import transaction has how many steps?

A) 4
B) 6
C) 12
D) 14
E) 16

Question 31

A firm can increase the probability of exporting successfully by taking which of these steps?

A) avoid hiring EMCs to contain costs
B) hire home country personnel to build commitment
C) enter on a small scale
D) wait for the export opportunities to come to you
E) make extensive investments in building regional contacts

Question 32

For Canadian firms,the most comprehensive sources of export opportunities information is/are the:

A) trade commissioners
B) United Nations
C) Team Canada
D) foreign embassies
E) Foreign Affairs, Trade, and Development Canada

Question 33

3M has built its export success on all of these principles except:

A) adding additional product lines once export operation is successful.
B) cultivating personal relationships with customers.
C) hiring local to promote the firm's products.
D) entering on a small scale to reduce risks.
E) using a first mover strategy.

Question 34

When was the BDC conceived?

A) at the end of World War II
B) in the 1950s
C) in the 1960s
D) in the 1970s
E) in the 1980s

Question 35

Which of these stands at the centre of international commercial transactions?

A) bill of lading
B) time draft
C) way bill
D) sight draft
E) letter of credit

Question 36

The set of international trading rules that set out the rights and obligations of buyers and sellers in international trade is known as what?

A) DFAIT
B) FITT
C) Incoterms
D) The Paris declaration
E) EMCs

Question 37

Unlike their German and Japanese competitors,Canadian firms are still somewhat ____________ when they seek export opportunities.

A) information disadvantaged
B) money strapped
C) regulation-bound
D) much better prepared
E) overly cautious

Question 38

Global Trading,Inc.is considering export operations for the first time.It can increase the probability of success by taking all of these steps except:

A) be proactive about seeking export opportunities.
B) hire an EMC.
C) focus on one market.
D) hire the home country personnel to build commitment.
E) enter on a small scale.

Question 39

Which of the following financing and venture capital services does the BDC not provide?

A) start-up financing
B) interest-free loans
C) working capital
D) new equipment financing
E) financing for commercial real estate

Question 40

Mechanisms for financing exports and imports have evolved over the centuries in response to a problem that can be particularly acute in international trade: ________________.

A) the letter of credit
B) the lack of trust
C) government regulations
D) undeveloped international political system
E) currency exchange rate differences

Question 41

What percent of world trade by value in 1998 was in the form of countertrade?

A) less than 5 percent
B) approximately 42 percent
C) more than 20 percent
D) about 33 percent
E) about 12 percent

Question 42

A bill of lading is a:

A) receipt
B) contract
C) document of title
D) transportation agreement
E) all of these answers are correct

Question 43

The person or business initiating the draft is known as the ____________.

A) drawee
B) importer
C) importer's agent
D) maker
E) banker

Question 44

When a firm agrees to purchase a certain amount of materials back from a country to which a sale is made,it is called:

A) barter
B) counter-purchase
C) offset
D) switch trading
E) buybacks

Question 45

As a ______________,a bill of lading specifies that the carrier is obligated to provide a transportation service in return for a certain charge.

A) contract
B) receipt
C) document of title
D) letter of credit
E) cargo document

Question 46

For the service of providing letter of credit,the bank's service charge ranges between ____________ of the value of L/C.

A) 5 to 7 percent
B) 10 to 15 percent
C) 3 to 4 percent
D) 0.5 to 2 percent
E) 1 to 3 percent

Question 47

The letter of credit is issued by a bank at the request of a(n):

A) exporter
B) government
C) importer
D) shipping company
E) exporter's bank

Question 48

A typical international trade transaction involves ____________ steps,with the first step being ____________.

A) 12; an importer placing an order with an exporter asking if the importer would be willing to ship under a letter of credit
B) 12; an importer placing an order with an exporter asking if the exporter would be willing to ship under a letter of credit
C) 14; an exporter placing an order with an importer asking if the exporter would be willing to ship under a letter of credit
D) 14; an exporter placing an order with an importer asking if the importer would be willing to ship under a letter of credit
E) 14; an importer placing an order with an exporter asking if the exporter would be willing to ship under a letter of credit

Question 49

A ____________'s principle is to trade goods and services when they cannot be traded for money.

A) letter of credit
B) draft
C) bill of exchange
D) countertrade
E) switch trading

Question 50

Time drafts:

A) have no value given the deferred nature of document
B) are generally not preferable in international transaction
C) are negotiable instruments
D) are also called bill of ladings
E) are replaced by sight drafts after all conditions are met

Question 51

When a specialized third-party trading house is used in a countertrade arrangement,it is called:

A) counter-purchase
B) offset
C) managed barter
D) buyback
E) switch trading

Question 52

Which of these is payable on presentation to the drawee?

A) bill of lading
B) sight draft
C) L/C
D) time draft
E) banker's draft

Question 53

Issued by a bank at the request of an importer,the ________________ states that the bank will pay a specified sum of money to the beneficiary on presentation of particular,specified documents.

A) bill of lading
B) letter of credit
C) time draft
D) sight draft
E) draft

Question 54

A ______________ is simply an order written by an exporter instructing an importer to pay a specified amount of money at a specified time.

A) bill of lading
B) draft
C) letter of credit
D) barter
E) bank order

Question 55

As a receipt,the _______________ indicates that the carrier has received the merchandise described on the face of the document.

A) letter of credit
B) time draft
C) sight draft
D) bill of lading
E) trade acceptance

Question 56

Which of these allows for a delay in payment?

A) sight draft
B) time draft
C) bill of lading
D) barter
E) post-dated draft

Question 57

In an international transaction between an Asian exporter and a German importer,the German company will request a ____________ whereas the Asian company will issue a ____________.

A) draft; letter of credit
B) bill of lading; letter of credit
C) letter of credit; draft
D) bill of exchange; bill of lading
E) bill of lading; banker's order

Question 58

Which of the following correctly states the role of banks in import/export transactions involving a letter of credit (L/C)?

A) the importer's bank is the advising and/or confirming bank; the exporter's bank is the issuing bank
B) the exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing bank
C) the exporter's bank is the advising, confirming, and issuing bank
D) the importer's bank is the advising, confirming, and issuing bank
E) the exporter's bank is the drawee; the importer's bank is the payee

Question 59

When a time draft is drawn on and accepted by a business firm,it is called a(n):

A) trade acceptance
B) in-transit
C) banker's acceptance
D) bill of lading
E) commercial acceptance

Question 60

A draft is sometimes referred to as a:

A) bill of exchange
B) letter of credit
C) bill of lading
D) counter purchase
E) payment order

Question 61

A bill of lading serves what purpose?

A) a receipt
B) a contract
C) a document of title
D) A, B and C are correct
E) none of the answers are correct

Question 62

Neophyte exporters tend to underestimate the time and expertise needed to cultivate business in foreign countries.

Question 63

What is the main attraction of countertrade?

A) it is cheap
B) it is easy to structure
C) it gives a firm a way to finance and export deal when there are no other means
D) it is the most popular way of doing an export deal
E) none of the answers are correct

Question 64

The way to overcome ignorance in exporting is to collect information.

Question 65

The most restrictive countertrade arrangement is:

A) counter-purchase
B) offset
C) buybacks
D) switch trading
E) barter

Question 66

Who are considered to be the masters of countertrade?

A) the sogo shosha
B) small firms
C) DFAIT
D) the Canadian Commercial Corporation
E) the World Bank

Question 67

The highest rate of defaults on commercial transactions for Canadian exporters comes from whom?

A) Japanese firms
B) The EDC
C) Crown corporations
D) U.S. firms
E) The World Bank

Question 68

Most exporters understand the amount of management resources that must be dedicated to exporting.

Question 69

A large vertically integrated Japanese trading house is known as a sogo shosha.

Question 70

According to the UN,the time involved in preparing documentation and costs of common errors in paper work often amounts to 25 percent of the final value of goods exported.

Question 71

The volume of export activity in the world economy is declining as exporting has become more difficult and regulated.

Question 72

A reciprocal buying arrangement is known as what?

A) a commercial invoice
B) counter purchase
C) offset
D) packing list
E) switch trading

Question 73

What Crown corporations play vital roles in providing advisory and financial services to Canadian exporters?

A) EMCs; Trade commissioners
B) CBA; DOD
C) EDC; CCC
D) DFAIT; WTO
E) The World Bank; Team Canada

Question 74

Unlike large firms,small and medium-sized firms tend to go out into the world to seek opportunities.

Question 75

Given the financial and other risks,today,governments at all levels in Canada are not willing to assist small firms in starting export operations.

Question 76

Germany is one of the world's most successful exporting nations.

Question 77

SteelMaster,as described in the opening case,was able to use a Web site to reach more international prospects.

Question 78

When a firm builds a plant in a country-or supplies technology,equipment,training,or other services to the country-and agrees to take a certain percentage of the plant's output as partial payment for the contract,it is called:

A) counter-purchase
B) offset
C) switch trading
D) buyback
E) industrial barter

Question 79

Which of the following is not a drawback of countertrade?

A) firms would normally prefer cash
B) firms may be stuck with unusable goods
C) firms may be stuck with poor-quality goods
D) firms may be able to use buybacks to make a quick profit
E) firms may not be able to dispose of goods at a profit

Question 80

Countertrade is most attractive to:

A) medium-sized exporters
B) large multinational enterprises
C) trading houses
D) commodities brokers
E) crown corporations