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International Business
Q:
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.
Q:
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.
Q:
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.
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
A driving factor for the growth in imports is the impact of ________.
A) government programs
B) labor specialization
C) consumer preferences
D) social trends
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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.
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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.
Q:
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
Q:
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.
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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
Q:
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%
Q:
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
Q:
Why are financial risks a key concern of SMEs considering international trade?
Q:
What is a born global? How has technology triggered the growth of born globals?
Q:
Why is countertrade considered inefficient?
Q:
What are export management companies, and how do they help potential exporters?
Q:
What role does the customs agency of a government play?
Q:
Discuss the various ways a broker or other import consultant can help an importer minimize import duties.
Q:
What are some reasons that firms decide to export their products or services? What does a firm need to consider when developing an export plan?
Q:
What difficulties of exporting can be minimized by customs brokers?
Q:
What are the three main types of exporters? What are the three main types of importers? Briefly describe the characteristics of each.
Q:
What is the difference between exporting and importing? What are the unique characteristics of service exports and service imports?
Q:
Export intermediaries are third-party firms that market products and services abroad on behalf of manufacturers, farm groups, and distributors.
Q:
In the U.S., international trade is hampered by homeland security issues and delays.
Q:
According to the text, technological advances such as e-mail and VoIP have increased the appeal of international trade because it is now easy and inexpensive to manage customer needs and communicate with customers frequently.
Q:
According to surveys, the most common concern regarding international trade is a shortage of working capital to finance exporting activities.
Q:
Pender Pet Products is considered an opportunistic importer because the firm seeks products around the world that it can import and sell profitably to domestic consumers.
Q:
Exporting helps firms improve productivity by utilizing unused capacity and spreading research costs over more customers.
Q:
Smithson Pottery is considered a regular exporter because the firm fills unsolicited orders from foreign buyers and passively investigates international trade options.
Q:
Countertrade is an efficient way of doing business.
Q:
Countertrade refers to any one of several different arrangements that parties negotiate so that they can trade goods and services with limited or no use of currency.
Q:
The foreign freight forwarder is the largest export intermediary in terms of value and weight of products managed.
Q:
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.
Q:
An export trading company (ETC) works with many manufacturers rather than representing a single manufacturer.
Q:
Major types of indirect intermediaries include export trading companies, distributors, and freight forwarding companies.
Q:
Exporters employ an export management company as part of an indirect exporting strategy.
Q:
Indirect exporters sells goods to a foreign intermediary, who then sells the product in the domestic market to the final consumer.
Q:
The U.S. government has more than 10,000 tariff classifications and more than half of them are subject to interpretation.
Q:
The primary duty of the customs agency of a government is the assessment and collection of all duties, taxes, and fees on imported merchandise.
Q:
An arbitrageur is an exporter that seeks to conduct countertrade in emerging markets.
Q:
One advantage of importing is that an importer can diversify its operating risks by developing alternative suppliers.
Q:
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.
Q:
Companies new to exporting most frequently suffer over-commitment by top management in taking on the initial difficulties and financial requirements of exporting.
Q:
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.
Q:
The stages of development in a company's export expansion are tied to company size.
Q:
"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.
Q:
The probability of a company being an exporter is independent of the size of the company.
Q:
Export intensity, the percentage of total revenues coming from exports, is not always correlated with company size.
Q:
Serendipity is often an export trigger for companies that purposefully look to internationalize their operations.
Q:
Why do most companies examine expansion proposals one at a time rather than comparing various expansion proposals? Do you think this is effective? Why or why not?