Which of the following is the most common method of buying and selling goods internationally? Show
A) exporting and importing A) exporting and importing Which of the following steps of the strategy development process for exports involves performing market research and interpreting results obtained from the research? A) identification of a potential market A) identification of a potential market Which of the following steps of the strategy development process for exports involves establishing relationships with potential local distributors? A) identification of a potential market C) initiation of meetings Which of the following is the first step in developing a successful export strategy? A) identification of a potential market A) identification of a potential market Which of the following is true of distributors? A) The use of distributors increases the exporter's control over the price buyers are charged. D) They can stunt the growth of the exporter's market share by charging very high prices. Which of the following occurs when a company sells its products to intermediaries who then resell to buyers in a target market? A) indirect exporting A) indirect exporting Which of the following allows a country to earn back some of the currency it pays out for imports? A) switch trading B) counterpurchase Which of the following is the oldest known form of countertrade? A) counterpurchase D) barter The sale of goods and services to a country by a company that promises to buy a specific product from that country in the future is called a(n) ________. A) counterpurchase A) counterpurchase A company proposes that in exchange for a hard-currency sale, it will make a hard-currency purchase of an unspecified product from the buyer nation in the future. Which of the following is the company proposing? A) a counterpurchase B) an offset An offset agreement differs from a counterpurchase agreement in that an offset agreement ________. A) fails to specify the type of product that must be purchased A) fails to specify the type of product that must be purchased ________ is a countertrade whereby one company sells to another its obligation to make a purchase in a given country. A) Franchising C) Switch trading Buyback is defined as ________. A) the export of industrial equipment in return for products produced by that equipment A) the export of industrial equipment in return for products produced by that equipment A form of countertrade that usually typifies long-term relationships between the companies involved is called ________. A) barter D) buyback Which of the following statements is true of countertrade? A) Countertrade is practiced by countries when there is a lack of hard currency. A) Countertrade is practiced by countries when there is a lack of hard currency. Which of the following is a strategic factor that influences a company's international entry mode selection? A) market consumption capacity C) market size Which of the following statements is true of the strategic factors that influence a company's international entry mode selection? A) Low tariffs and high quota limits encourage market entry by means of investment. D) Markets that are likely to remain relatively small consider exporting as a viable option. Owen McCain, owner of Owen's HomeCare Products, is considering going international. He feels that the products he manufactures will be well-received, especially in developing countries. He wants to understand the exporting process and then scale his exporting activities accordingly. Through his research, Owen learns that the first step in developing a successful export strategy is ________. A) initiation of meetings with intermediaries B) identification of a potential market Owen McCain, owner of Owen's HomeCare Products, is considering going international. He feels that the products he manufactures will be well-received, especially in developing countries. He wants to understand the exporting process and then scale his exporting activities accordingly. Which of the following steps would Owen implement toward the end while developing a successful export strategy? A) initiation of meetings with intermediaries C) commitment of resources Owen McCain, owner of Owen's HomeCare Products, is considering going international. He feels that the products he manufactures will be well-received, especially in developing countries. He wants to understand the exporting process and then scale his exporting activities accordingly. If Owen's HomeCare Products decides to sell their products to intermediaries who then resell them to buyers in target markets, the company would be engaging in ________. A) indirect exporting A) indirect exporting Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market. Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports. Which of the following will most likely help Techno Toys sell its toys directly to buyers in the target market? A) agents B) sales representatives True or False: The most common method used for buying and selling goods internationally is licensing. False
True or False: Most large companies use exporting as a means of expanding total sales when the domestic market has become saturated. True True or False: Companies can achieve economies of scale by expanding into international markets. True True or False: Direct exporters always sell directly to end users. False True or False: Typically, indirect exporting relies on local sales representatives or distributors. False True or False: Using a distributor increases an exporter's risk. False True or False: Agency relationships are popular among exporters because they are easy to terminate should difficulties arise. False True or False: Countertrade provides a way for firms to trade either by using a small amount of hard currency or even none at all. True True or False: Countertrade is not an option for smaller companies because of the cash outlays involved. False True or False: Switch trading is the export of industrial equipment in return for products produced by that equipment. False True or False: A confirmed letter of credit guaranteed by both the exporter's bank in the country of export and importer's bank in the country of import. True True or False: Letters of credit are popular among traders because banks assume most of the risks. True True or False: The brand name or trademark of a company is normally the single most important item desired by a franchisee. True Which of the following occurs when a company sells its products to buyers in a target market without going through intermediary companies? A) export through local distributors A) export through local distributors ________ take ownership of the merchandise when it enters their country and accept all the risks associated with generating local sales. A) Agents B) Distributors Companies involved in direct exporting typically rely on ________. A) distributors A) distributors A(n) ________ exports products on behalf of an indirect exporter. A) local distributor D) export management company Which of the following is a method of export/import financing? A) offset D) documentary collection Which of the following normally takes the form of a wire transfer of money from the bank account of the importer directly to that of the exporter prior to shipment of merchandise? A) documentary collection C) advance payment Advance payment is commonly used for export/import financing when ________. A) two parties are unfamiliar with each
other A) two parties are unfamiliar with each other Export/import financing in which a bank acts as an intermediary without accepting financial risk is called ________. A) documentary collection A) documentary collection Which of the following financing methods entails the greatest risk for importers? A) documentary collection B) advance payment Which of the following financing methods entails the greatest risk for exporters? A) supersedeas
bond D) open account ________ is a payment method commonly used when there is an ongoing relationship between the involved parties. A) Advance payment B) Documentary collection A document ordering the importer to pay the exporter a specified sum of money at a specified time is called a ________. A) bill of lading C) bill of exchange Which of the following requires an importer to pay for the imported goods when they are delivered? A) sight draft A) sight draft A(n) ________ becomes a negotiable instrument that can be traded among financial institutions when inscribed "accepted" by an importer. A) sight draft C) time draft Which of the following refers to a contract between the exporter and shipper that specifies merchandise destination and shipping costs? A) sight draft B) bill of lading Which of the following is a method of export/import financing in which the importer's bank issues a document stating that the bank will pay the exporter when the exporter fulfills the terms of the document? A) sight draft C) letter of credit A(n) ________ allows the bank to modify the terms of the letter only after obtaining the approval of both exporter and importer. A) bill of exchange D) irrevocable letter of credit Which of the following letters of credit can be modified without obtaining approval from either the exporter or the importer, by the bank issuing the letter of credit? A) revocable letter of credit A) revocable letter of credit A(n) ________ is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import. A) confirmed letter of credit A) confirmed letter of credit Letters of credit are popular among traders because most of the risks are assumed by ________. A) distributors D) banks Export/import financing in which an exporter ships merchandise and later bills the importer for its value is called ________. A) advance payment B) open account Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market. Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports. In some countries, people exchange electronic goods for Techno Toys instead of paying money for them. This practice is known as ________. A) offset D) barter Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market. Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports. Which of the following methods of export/import financing is Techno Toys' bank using if it acts as an intermediary without accepting financial risk? A) documentary collection A) documentary collection Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several inquiries from potential importers in the region, but in most cases, the potential importers have expressed difficulty in obtaining the hard currency to pay for Gro-Tru's products. Alistair Green, vice-president for business development, is exploring how Gro-Tru can meet the needs of the potential market. Alistair has identified an option that might help the firm deal with the importer's inability to pay with hard currency. The option involves selling goods or services that are paid for in whole or part with other goods or services. Which of the following methods is Alistair considering? A) auction C) countertrade Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several inquiries from potential importers in the region, but in most cases, the potential importers have expressed difficulty in obtaining the hard currency to pay for Gro-Tru's products. Alistair Green, vice-president for business development, is exploring how Gro-Tru can meet the needs of the potential market. Which of the following methods would Gro-Tru be implementing if it exchanges its products directly for other goods or services without the use of money? A) barter A) barter Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several inquiries from potential importers in the region, but in most cases, the potential importers have expressed difficulty in obtaining the hard currency to pay for Gro-Tru's products. Alistair Green, vice-president for business development, is exploring how Gro-Tru can meet the needs of the potential market. Gro-Tru would be engaging in ________, if it decides that in exchange for a hard-currency sale it would make a hard-currency purchase of an unspecified product from the importing nation in the future. A) barter B) offset Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several inquiries from potential importers in the region, but in most cases, the potential importers have expressed difficulty in obtaining the hard currency to pay for Gro-Tru's products. Alistair Green, vice-president for business development, is exploring how Gro-Tru can meet the needs of the potential market. One option that intrigues Alistair is the process in which one company sells to another its obligation to make a purchase in a given country. This arrangement is known as ________. A) barter C) switch trading Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several inquiries from potential importers in the region, but in most cases, the potential importers have expressed difficulty in obtaining the hard currency to pay for Gro-Tru's products. Alistair Green, vice-president for business development, is exploring how Gro-Tru can meet the needs of the potential market. In his research, Alistair discovers a type of arrangement in which industrial equipment is exported in return for products produced by that equipment. This arrangement is known as ________. A) barter D) buyback Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there. Herb knows that much of the success his company enjoys is due to the patents and copyrights that protect the company's products. If Sports Stuff chooses an entry mode in which it grants another firm the right to use its intangible property for a specified period of time, it would be engaging in ________. A) a turnkey project C) licensing Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there. Herb has been exploring another type of entry mode that requires ongoing assistance on the part of one firm, often in the form of start-up capital, management training, or location advice. Herb is most likely considering ________. A) a strategic alliance B) franchising True or False: Matching market needs to the company's abilities is the first step in developing a successful export strategy. False True or False: Advance payment is the least favorable method of payment collection for exporters. False True or False: Advance payment made by an importer to an exporter normally takes the form of a sight draft. False True or False: A sight draft extends the period of time following delivery by which the importer must pay for goods. False True or False: The open account method of export/import financing is used when the two parties are unfamiliar with each other. False True or False: Cross licensing occurs when companies use licensing agreements to swap intangible property with one another.
True The biggest advantage of an export management company is usually its ________. A) knowledge of the target market's cultural, political, legal, and economic conditions A) knowledge of the target market's cultural, political, legal, and economic conditions Selling goods or services that are paid for, in whole or part, with other goods or services is called ________. A) indirect exporting B) countertrade Which of the following refers to the exchange of goods or services directly for other goods or services without the use of money? A) offset B) barter Which of the following is a contractual entry mode? A) wholly owned subsidies B) turnkey projects Which of the following is a contractual entry mode in which a company owning intangible property grants another firm the right to use that property for a specified period of time? A) franchising B) licensing Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there. Which of the following entry modes would Sports Stuff be implementing if it hires a company to design, construct, and test a production facility on its behalf? A) joint venture
B) turnkey project True or False: In the backward integration joint venture, the parties choose to invest together in downstream business activities. False True or False: The most important disadvantage of a strategic alliance is that it can create a future local or even global competitor. True True or False: Low tariffs and high quota limits encourage market entry by means of investment. False 88) Which of the following statements is true of licensing? A) Licensing restricts finances needed for international expansion. C) A major advantage of licensing is that it is the least risky method of international expansion. Which of the following is a contractual entry mode in which one company supplies another with intangible property and other assistance over an extended period? A) franchising A) franchising When one company is hired to design, construct, and test a production facility for a client, the arrangement is called ________. A) a turnkey project A) a turnkey project Which of the following is an investment entry mode? A) licensing C) joint venture Which of the following is an advantage of wholly owned subsidiaries? A) The parent company receives all profits generated by the subsidiary. A) The parent company receives all profits generated by the subsidiary. A ________ is a separate company created and owned by two or more independent entities to achieve a common business objective. A) wholly owned subsidiary B) joint venture Which of the following types of joint ventures involve parties investing together in downstream business activities? A) backward integration B) forward integration A ________ joint venture is formed when each partner requires the same component in its production process. A) backward D) buyback Which of the following is a disadvantage of strategic alliances? A) They are the most expensive among the investment entry modes. C) They create future competitors Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there. The CEO of Sports Stuff has decided that the company needs to retain complete control over its operations in Europe. To achieve this objective, Herb would most likely recommend that the firm establish a ________. A) joint venture C) wholly owned subsidiary Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there. The board of directors of Sports Stuff is concerned with the firm's lack of experience in foreign markets. To minimize this problem, Herb recommends that the firm create a ________ with a local partner. A) joint venture A) joint venture True or False: Franchising is primarily used in the manufacturing industries. False True or False: The primary advantage of franchising is that franchisees have a great degree of organizational flexibility. False True or False: Under a turnkey project, one company supplies another with managerial expertise for a specific period of time. False Which of the following statements best differentiates between franchising and licensing? A) Licensing gives a company greater control than franchising over the
sale of its product in a target market. C) Franchising requires ongoing assistance from the franchiser while licensing normally involves a one-time transfer of property. True or False: Products for which there are fewer substitutes can more easily absorb higher shipping and production costs. True Which one of the following is the sale of goods or services to a country by a company that promises to make a future purchase of a specific product from that country?A counterpurchase refers to the sale of goods and services to a company in a foreign country by a company that promises to make a future purchase of a specific product from the same company in that country.
Which one of the following occurs when a company sells its products to intermediaries that then resell to buyers in a target market?Direct exporting is when a company sells its products directly to buyers in a target market, and indirect exporting occurs when a company sells its products to intermediaries who then resell to buyers in a target market.
Which of the following is true of distributors quizlet?Which of the following is true of distributors? Selected Answer: The use of distributors increases the exporter's control over the price buyers are charged.
Which of the following refers to a contract between the exporter and shipper that specifies merchandise destination and shipping costs?A bill of lading is a contract issued by a transport company to a shipper that spells out the quantity, type, and destination of the goods being shipped.
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Who takes ownership of the merchandise when it enters their country and accepts all the risks associated with generating local sales?
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