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International Business
Q:
Flexible machine cells, a flexible manufacturing technology, cannot be used for mass customization.
Q:
Flexible manufacturing technologies allow a company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.
Q:
A wide product variety makes it easier for a firm to increase its production efficiency and thus reduce its unit costs.
Q:
In terms of minimum efficient scale of output, the "unit cost curve" rises with output until a certain output level is reached, at which point further increases in output realize little reduction in unit costs.
Q:
The level of output at which most plant-level scale economies are exhausted is referred to as the minimum efficient scale of output.
Q:
The concept of economies of scale tells us that as plant output expands, unit costs decrease.
Q:
In international business, a relatively high level of fixed costs can make it economical to perform a particular activity in several locations at once.
Q:
Currency appreciation can transform a low-cost location into a high-cost location.
Q:
In international business, when consumer demand is prone to large and unpredictable shifts, the firm that can adapt most quickly to these shifts will gain an advantage.
Q:
In recent years, time-based competition has lost its importance in international business.
Q:
In international business, production and logistics functions need not accommodate demands for local responsiveness.
Q:
In terms of Six Sigma, the higher the number of sigmas, the greater the number of errors.
Q:
W. Edward Deming believed that achieving better quality requires the commitment of everyone in a company.
Q:
A firm that improves its quality control cannot reduce its costs of value creation simultaneously.
Q:
The objectives of reducing costs and increasing quality in a firm are independent of each other.
Q:
The production and logistics functions of an international firm are independent of each other.
Q:
In recent years, the trend among U.S. firms is to outsource the production of certain service activities to developing nations where labor costs are lower.
Q:
_____, a type of countertrade, occurs when a third-party trading house buys the firm's counterpurchase credits and sells them to another firm that can better use them.
A. Barter
B. Switch trading
C. Offset
D. Buyback
E. Compensation
Q:
When a firm enters a(n) _____ agreement with a country, it often ends up with what are called counterpurchase credits, which can be used to purchase goods from that country.
A. arbitrage
B. offset
C. switch trading
D. buyback
E. compensation
Q:
The use of a specialized third-party trading house in a countertrade arrangement is known as _____.
A. counterpurchase
B. offset
C. switch trading
D. buyback
E. barter
Q:
From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?
A. It is the simplest countertrade arrangement.
B. It gives the exporter greater flexibility to choose the goods that it wishes to purchase.
C. It allows the use of a specialized third-party trading house.
D. It gives the exporter counterpurchase credits, which can be used to purchase goods from another country.
E. It allows direct exchange of goods and/or services between two parties without a cash transaction.
Q:
A(n) _____ refers to a buying agreement similar to counterpurchase, but the exporting country can then fulfill the agreement with any firm in the country to which the sale is being made.
A. switch trade
B. offset
C. buyback
D. arbitrage
E. barter
Q:
A firm sells some products to a foreign country. The foreign country pays the firm in dollars, but in exchange, the firm agrees to spend some of the proceeds from the sale on textiles produced by the foreign country. In which of the following types of countertrade arrangement are the two parties engaged?
A. Switch trading
B. Buyback
C. Counterpurchase
D. Barter
E. Compensation
Q:
_____, a type of countertrade, occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.
A. Barter
B. Counterpurchase
C. Compensation
D. Switch trading
E. Buyback
Q:
Which of the following is true of counterpurchase?
A. It is the most restrictive countertrade arrangement.
B. It is a reciprocal buying agreement.
C. It is the simplest countertrade arrangement.
D. It uses a specialized third-party trading house.
E. It is the direct exchange of goods without a cash transaction.
Q:
To cater to the growing demand of luxury cars, Terabithia Republic agreed to buy 5,000 cars from MotoSporto Inc. in exchange for 5,000 gallons of oil. Due to a lack of trust, Terabithia decided to make it a one-time-only deal. Which of the following forms of countertrade is the country most likely to use?
A. Counterpurchase
B. Offset
C. Switch trading
D. Barter
E. Buyback
Q:
Which of the following is a disadvantage of barter as a countertrade arrangement?
A. It is a very complex arrangement.
B. In a barter system, if goods are exchanged simultaneously, one party ends up financing the other.
C. Firms engaged in barter run the risk of having to accept goods they do not want or cannot use.
D. It involves huge cash transactions.
E. It cannot be used in transactions with trading partners who are not creditworthy.
Q:
Which of the following is true of barter as a countertrade arrangement?
A. It is a very complex arrangement.
B. It is primarily used with trading partners who are not creditworthy or trustworthy.
C. It involves cash transactions.
D. When goods are exchanged simultaneously, one partner ends up financing the other.
E. It is the most flexible countertrade arrangement.
Q:
The most restrictive countertrade arrangement is _____ because if goods are not exchanged simultaneously, one party ends up financing the other for a period.
A. counterpurchase
B. offset
C. barter
D. switch trading
E. buyback
Q:
Which of the following types of countertrade is the simplest, although not common?
A. Switch trading
B. Counterpurchase
C. Barter
D. Offset
E. Buyback
Q:
The direct exchange of goods and/or services between two parties without a cash transaction is referred to as _____.
A. switch trading
B. counterpurchase
C. barter
D. offset
E. buyback
Q:
Which of the following is a distinct type of countertrade arrangement?
A. Merger
B. Arbitrage
C. Dirty float
D. Barter
E. Deregulation
Q:
Which of the following is true of countertrade?
A. The governments of developing nations sometimes insist on a certain amount of countertrade.
B. Countertrade is a means of structuring an international sale when conventional means of payment are cost-effective.
C. Nonconvertibility is an advantage for exporters.
D. Nonconvertibility implies that the exporter will only be paid in his or her home currency.
E. Most exporters desire payment in a currency that is not convertible.
Q:
In the modern era, countertrade arose in the 1960s as a way for _____ to purchase imports.
A. the United States
B. the Soviet Union
C. Germany
D. Japan
E. Africa
Q:
Organizations resort to countertrade of goods and services when:
A. the importer defaults on payment.
B. the goods and services cannot be traded for money.
C. the exporter is not able to get a letter of credit from a local bank.
D. a formal document for acknowledgement is not available.
E. the conventional means of payment are cheaper.
Q:
Countertrade occurs when the:
A. exporter may not be paid in his or her home currency due to nonconvertibility.
B. exporter can convert the currency only in U.S. dollars.
C. exporter is dealing with a country that has huge foreign reserves.
D. exporter has easy access to export credit to fund its international trade.
E. importer defaults on payment.
Q:
The principle of _____ is to trade goods and services for other goods and services when they cannot be traded for money.
A. a letter of credit
B. countervailing duty
C. a bill of exchange
D. countertrade
E. the Export Legal Assistance Network
Q:
A range of barterlike agreements by which goods and services are traded for other goods and services when they cannot be traded for money is known as _____.
A. countertrade
B. carry trade
C. free trade
D. counter sale
E. countervailing duty
Q:
_____ refers to an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.
A. Guanxi
B. Factoring
C. Securitization
D. Countertrade
E. Sogo shosha
Q:
Countertrade is most likely to be used when:
A. the foreign currency is easily convertible.
B. the exporter has a letter of credit.
C. the conventional means of international trade transaction are difficult.
D. there is mutual trust between the exporter and the importer.
E. an export management company is used.
Q:
Which of the following is an advantage of export credit insurance?
A. It gives a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.
B. It protects exporters from the risk that the foreign importer will default on payment.
C. It puts the importer in a strong bargaining position.
D. It enables exporters to insist on a letter of credit.
E. It allows for a delay in payment.
Q:
The Foreign Credit Insurance Association (FCIA) is an association of private commercial institutions operating under the guidance of the _____.
A. Federal Mediation and Conciliation Service
B. U.S. Department of Commerce
C. ExportImport Bank
D. International Trade Administration
E. Ministry of International Trade and Industry
Q:
In the United States, export credit insurance is provided by _____, an association of private commercial institutions.
A. Export-Import Bank
B. Bank of New York
C. Foreign Credit Insurance Association
D. Federal Deposit Insurance Corporation
E. Federal Reserve Bank
Q:
An export credit insurance is necessary when the:
A. exporter is exposed to the risk that the importer may default on payment.
B. exporter is dealing in a country that has a nonconvertible currency.
C. exporter is unable to obtain any pre-export financing.
D. exporter has received a letter of credit from the importer's bank.
E. exporter has to enter a barterlike agreement.
Q:
The lack of a letter of credit exposes the exporter to the risk that the foreign importer will default on payment. The exporter can insure against this possibility by:
A. approaching the World Bank.
B. buying export credit insurance.
C. obtaining pre-export financing.
D. filing a suit against the importer in court.
E. taking financial aid from ExIm Bank.
Q:
An exporter has to forgo a letter of credit when:
A. competing exporters also require letters of credit.
B. the importer is facing stiff competition from other importers.
C. the exporter is a dominant player in a noncompetitive market.
D. the importer is in a strong bargaining position.
E. he or she knows that the importer will default on payment.
Q:
_____ has a direct lending operation under which it lends dollars to foreign borrowers for use in purchasing U.S. exports.
A. The Department of Commerce
B. The World Bank
C. Ex-Im Bank
D. Bank of New York
E. The Small Business Administration
Q:
The _____ guarantees repayment of medium- and long-term loans U.S. commercial banks make to foreign borrowers for purchasing U.S. exports.
A. United Nations
B. Central Bank
C. World Bank
D. Ex-Im Bank
E. Export Credit Insurance Association
Q:
The mission of the _____ is to provide financing aid that will facilitate exports, imports, and the exchange of commodities between the United States and other countries.
A. sogo shosha
B. World Bank
C. Overseas Commercial Service
D. Ex-Im Bank
E. Export Credit Insurance Association
Q:
Which of the following is the first step in a typical international trade transaction?
A. The exporter agrees to ship under a letter of credit and specifies relevant information such as prices and delivery terms.
B. The importer applies to a trusted third party (usually a bank) for a letter of credit to be issued in favor of the exporter for the merchandise the importer wishes to buy.
C. The importer places an order with the exporter and asks the exporter if he would be willing to ship under a letter of credit.
D. The exporter ships the goods to the importer on a common carrier. An official of the carrier gives the exporter a bill of lading.
E. The trusted third party (usually a bank) issues a letter of credit in the importers favor and sends it to the exporters bank.
Q:
When serving as a _____, a bill of lading is used to obtain payment or a written promise of payment before the merchandise is released to the importer.
A. document of title
B. contract
C. receipt
D. time draft
E. collateral
Q:
When serving as collateral, the bill of lading:
A. can be used to advance funds to the exporter by its local bank before or during shipment.
B. specifies that the carrier is obligated to provide a transportation service in return for a certain charge.
C. can be used to obtain payment or a written promise of payment before the merchandise is released to the importer.
D. states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.
E. is an order written by an exporter instructing an importer, or an importers agent, to pay a specified amount of money at a specified time.
Q:
When serving 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. bill of exchange
Q:
A _____ is issued to an exporter by a common carrier transporting the merchandise and it serves as a receipt, a contract, and a document of title.
A. bill of lading
B. collateral
C. draft
D. letter of credit
E. bill of exchange
Q:
Which of the following is a characteristic of a time draft?
A. It has no value given the deferred nature of the document.
B. It is generally not preferred in international transactions.
C. It is a negotiable instrument.
D. It is also known as a bill of lading.
E. It cannot be sold by an exporter.
Q:
When a time draft is drawn on and accepted by a business firm, it is known as a(n) _____.
A. trade acceptance
B. in-transit bill
C. banker's acceptance
D. bill of lading
E. letter of credit
Q:
When a time draft is drawn on and accepted by a bank, it is known as a _____.
A. trade acceptance
B. banker's check
C. banker's acceptance
D. bill of lading
E. letter of credit
Q:
Once accepted by the drawee, a time draft becomes a(n):
A. asset for the drawee.
B. in-transit bill.
C. promise to pay by the accepting party.
D. bill of lading.
E. letter of credit.
Q:
When a time draft is presented to a drawee, he or she signifies acceptance of it by:
A. delivering the goods immediately.
B. paying the draft amount immediately.
C. providing a collateral for the amount specified in the bill.
D. writing or stamping a notice of acceptance on its face.
E. selling the draft to an investor at a discount from its face value.
Q:
Which of the following drafts allows for a delay in payment?
A. Sight draft
B. Time draft
C. Bill of lading
D. Counterpurchase
E. Offset
Q:
Which of the following drafts is payable on presentation to the drawee?
A. Bill of lading
B. Sight draft
C. Letter of credit
D. Time draft
E. Offset
Q:
The two categories of drafts (or bills of exchange) are:
A. contract drafts and lending drafts.
B. single-party drafts and multi-party drafts.
C. title drafts and quantity drafts.
D. sight drafts and time drafts.
E. offset draft and counter draft
Q:
In international commerce, a party initiating a draft is known as the _____.
A. maker
B. drawee
C. buyer
D. agent
E. drafter
Q:
Which of the following is true with respect to the international and domestic practices of settling trade transactions?
A. In an international transaction, a formal promise to pay is required before the buyer can obtain the merchandise.
B. In an international transaction, the seller usually ships merchandise on an open account.
C. In a domestic transaction, a draft is used to settle trade transactions.
D. In an international transaction, the exporter sends a commercial invoice that specifies the amount due and the terms of payment to the importer.
E. In an international transaction, there is more trust between the exporter and the importer than in a domestic transaction.
Q:
In international commerce, a _____ refers to 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. counterpurchase
E. buyback
Q:
In international commerce, a draft is sometimes referred to as a _____.
A. bill of exchange
B. letter of credit
C. bill of lading
D. counterpurchase
E. buyback
Q:
A letter of credit reduces an importer's ability to borrow funds for other purposes because:
A. the importer has to request for it.
B. it is a financial liability against the importer.
C. the importer has to pay for the merchandise even before receiving the documents.
D. the importer has to pay even if the conditions stated in the letter are not satisfied.
E. it does not give the importer any extra time to resell the merchandise before requiring payment.
Q:
For an importer, which of the following is a disadvantage of using a letter of credit for international transactions?
A. It results in the importer losing control over the process of trading.
B. It reduces the exporter's level of trust in the importer.
C. It reduces the importer's ability to borrow funds for other purposes.
D. It requires the importer to repay the loan even before the merchandise is sold.
E. It is not issued at the importer's request.
Q:
Which of the following is an advantage of a letter of credit for an importer?
A. The importer does not have to pay for the merchandise until the documents have arrived.
B. Obtaining pre-export financing becomes easier.
C. It helps the importer to get goods for a lower price.
D. It results in lower shipping costs.
E. The importer does not have to pay the third party a fee for facilitating the transaction.
Q:
Which of the following is an advantage of having a letter of credit?
A. It allows payment for merchandise after its delivery.
B. It facilitates an exporter to obtain pre-export financing.
C. It allows an exporter to get a higher price for his or her goods.
D. It helps exporters incur lower shipping costs.
E. It does not require the importer to pay any fee.
Q:
Which of the following is true of a letter of credit in international trade?
A. No cash deposit or collateral is required from the importer.
B. The exporter pays the trusted third party (usually a bank) a fee for the service.
C. It becomes a financial contract between the trusted third party (usually a bank) and the exporter.
D. It is issued by the exporter at the request of the importer.
E. The creditworthiness of the importer is irrelevant when issuing a letter of credit.
Q:
Which of the following is true of a letter of credit?
A. It states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents.
B. It is a document written by an exporter instructing an importer to pay a specified amount of money at a specified time.
C. It serves as a receipt, a contract, and a document of title.
D. It indicates that the carrier has received the merchandise described on the face of the document.
E. It allows buyers to obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.
Q:
A _____ is issued by a bank, and it indicates that the bank will make payments under specific circumstances.
A. bill of exchange
B. bill of lading
C. letter of credit
D. time draft
E. usance draft
Q:
Which of the following stands at the center of international commercial transactions and is issued by a bank at the request of an importer?
A. Bill of lading
B. Time draft
C. Letter of credit
D. Sight draft
E. Bill of exchange
Q:
In terms of using a third party in international trade, title to the products is given to a bank by the exporter in the form of a document known as a _____.
A. merchandise bill
B. bill of lading
C. bill of exchange
D. draft
E. letter of credit
Q:
A lack of trust between two parties engaged in international trade is exacerbated by the:
A. saturation of the domestic market.
B. similar preferences of the parties regarding how a transaction should be configured.
C. narrowing distance between the two parties due to technological advances.
D. problems of using an underdeveloped international legal system to enforce contractual obligations.
E. possibility of doing business with someone with whom they have been associated for a long time.
Q:
In international trade, an exporter wants to be paid before a consignment is shipped. Correspondingly, the importer wants to pay only upon receipt of the consignment. These conflicting preferences of the parties are a manifestation of _____.
A. corporate greed
B. acculturation
C. lack of trust
D. cultural insensitivity
E. countertrading opportunities
Q:
Firms engaged in international trade deal with people they may have never seen, who live in different countries, who speak different languages, and who abide by different legal systems. These factors result in:
A. easy tracking of the parties involved.
B. a lack of trust between the parties.
C. strict enforcement of contractual obligations.
D. rapid acculturation.
E. better understanding of how transactions should be configured.
Q:
Which of the following is a strategic step taken to increase a firm's probability of exporting successfully?
A. Avoiding the use of export management companies to contain costs
B. Entering several markets simultaneously to hedge risk
C. Entering a foreign market on a small scale
D. Waiting for export opportunities
E. Avoiding recruitment of local personnel
Q:
A firm that enters many markets at once:
A. runs the risk of spreading its limited management resources too thin.
B. becomes established in all the markets.
C. gets the time to learn about each market.
D. has fewer export opportunities.
E. reduces the costs of any subsequent failure.