6

Question 1

Exporting is

Answer 1

the sale of products and services in foreign countries that are sourced or made in the home country.

Question 2

Importing refers to

Answer 2

buying goods and services from foreign sources and bringing them back into the home country.

Question 3

Sourcing decision; whether

Answer 3

a company makes or buys its products as well as where it makes or buys its products.

Question 4

Export selling involves

Answer 4

selling the same product, at the same price, with the same promotional tools in a different place. It is an activity.

Question 5

Export marketing involves

Answer 5

tailoring the marketing mix to international customers. It is a strategy that includes export selling.

Question 6

Government Programs That Support Exports

Answer 6

o Tax incentives
o Subsidies
o Governmental assistance
o Free trade zones

Question 7

Governmental Actions to Discourage Imports

Answer 7

• Tariffs: rate schedules and regulations
• Import controls
• Nontariff barriers (hidden)
• Quotas
• Restrictive customs procedures
• Restrictive administrative & technical regulations

Question 8

Methods of Payment (4 types)

Answer 8

• Cash with order
• Open account
• Documentary credits (letter of credit)
• Documentary collections (bill of exchange)

Question 9

What should governments who is concerned about trade deficits or economic development do?

Answer 9

Enlist Government Programs That Support Exports

Question 10

Cash with order (CWO) presents the … to the …

Answer 10

least transaction risk

exporter.

Question 11

Cash With Orders payment arrangement

Answer 11

The exporter sends the importer a pro-forma invoice with the details and costs of a future shipment. After receiving this invoice, the importer then sends its purchase order with
prepayment (CWO) to the exporter.

Question 12

Open Account payment presents … to the exporter.

Answer 12

the greatest transaction risk

Question 13

Open Account arrangement

Answer 13

The importer sends a purchase order to the exporter, which then produces, ships, and subsequently invoices the importer for this shipment. The importer than remits payment to the exporter via wire transfer.

Question 14

Documentary collections (Bill of Exchange) is

Answer 14

a method of payment that uses a bill of exchange, also known as a draft.

Question 15

A draft is a … that transfers all the risk … onto the ….

Answer 15

payment instrument

of nonpayment

exporter/seller

Question 16

Documentary collections (Bill of Exchange) arrangment

Answer 16

The draft is presented to the importer; payment takes place in accordance with the terms specified in the draft.

Question 17

Which are the parties of Letter of Credit (L/C) arrangment? and what do they do?

Answer 17

Exporter, importer, issuing bank and confirming bank.
Exporter sells, importer buyes, issuing bank sends L/C to advising bank who ensures money to exporter from importer. Then the goods are sent.