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International Business > chapter 16 > Flashcards

chapter 16 Flashcards

1
Q

what has facilitated the increase in export trade in the past 30. years (2)

A

decline in trade barriers
advances in technology making communication easier

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2
Q

why is exporting intimidating for some firms

A

process can be made difficult due to shifting trade barriers
when currencies are not freely convertible

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3
Q

what are the promises of exporting (2)

A

-large revenues and profit opportunities in foreign markets
-economies of scale

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4
Q

what are the 6 challenges of exporting

A

-voluminous paperwork
-complex formalities
-potential delays and errors
-time and costs scares inexperienced exporters
-border compliance
-documentary compliance

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5
Q

what is the biggest impediment to exporting

A

simple lack of knowledge of the opportunities that are available

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6
Q

how do you overcome the lack of knowledge of the opportunities thay are available from exporting

A
  • collect info on how diff countries operate
    -US hasnt created institutional structure for promoting exports similar to japan and germany
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7
Q

what is the sogo shosha in japan

A

a general trading company in japan, that has diversified business lines
they also have large scale in house market info systems which give them economies of sccale to pursue new opportunities

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8
Q

what is MITI in germany

A
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9
Q

how can be improve export performance

A

information sources
service providers
have an export strategy
use the globalEDGE exporting tool

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10
Q

what type of information sources can be used to improve export perfomance

A

-the US department of commerce (US export assistance centers (USEAC))
-small business administration (SBA)
-centers for international business education and research (CIBERS)

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11
Q

how is the US department of commerce used to improve exporting performance

A

US department of commerce has the US and foreign commercial service and international trade administration

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12
Q

how do small business administrations help improve exporting performance

A
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13
Q

how do centers for international business education and research

A

regional and city trade commissions help businesses export

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14
Q

what are the 9 service providers that help improve export performance

A

1-freight forwarders,
2 export management companies
3 export trading companies
4 export packaging companies
5 customs brokers
6 confirming houses
7 export agents, merchants and remarketers
8 piggyback marketing
9 export processing zones

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15
Q

what do freight forwarders do (2)m

A

combine smaller shipments into a single large shipment to minimize the shipping costs
they help w documentation, payment and carrier selection

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16
Q

what do export management companies do

A

like your internal exporting department they help manage exporting affairs
-act as export marketing department for client firms

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17
Q

what do export trading companies do

A

the provide comprehensive exporting services, like exporting documentation, logistics, and transportation

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18
Q

what do export packaging companies do

A

they advise companies on appropriate design and materials for the packaging of their items
Assist companies in minimizing packaging to maximize the number of items to be shipped.

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19
Q

what do customs brokers do

A

Customs regulations can be overwhelming so the brokers offer a complete package of services essential in dealing with potential pitfalls when a firm is exporting to many countries.

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20
Q

what do confirming houses of buying agents do

A

Represent foreign companies that want to buy your products.

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21
Q

what do export agents,merchants and remarketers do

A

Buy products directly from the manufacturer and package and relabel the products.

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22
Q

what do piggyback marketers do

A

One firm distributes another firm’s products, Usually requires complementary products and the same target market
of customers.

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23
Q

what are export processing zones

A

Include foreign trade zones (FTZs), special economic zones, bonded warehouses, free ports, and customs zones.

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24
Q

what are the 4 steps in an export strategy

A
  • hire an EMC or an experienced exporter to identify opportunities and help navigate paperwork
  • focus on one market or a handful of markets
    -enter a foreign market on a small scale to reduce the costs of failure
    -recognize the time and managerial commitement in building export sales and hire additional personnel to oversee the process
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25
Q

once you have established the 4 steps in exporting strategy, what are the 4 further steps

A
  • devote attention to building strong and enduring relationships with local distributors and customers
    -hire local personnel to help you establish yourself in the market
    -be proactive about seeking more export opportunities
    -retain the option of local production
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26
Q

what is the GLOBAL EDGE exporting tool

A

a tool that assesses a companys readiness to export , and the products readiness to be exported

27
Q

how does the global edge tool do exactly

A

assists firms in self assessment of their exporting proficiency
evaluates both the firms and the intended products readiness to be taken internationally
systematically identifies the companies strengths and weaknesses when it comes to exporting

28
Q

companys overall readiness to export =

A

product readiness + company readiness

29
Q

how is the company readiness quantified ( 4)

A
  • competitive abilities in the domestic market
    -motivation for going international
    -commitment of owners and top management
    -experience and training
    -skills, knowledge, and resources
30
Q

firms engaging in foreign trade must — someone

A

trust

31
Q

why is it difficult for a firm to trust someone when trying to carry out exporting

A

-most of the time it is someone they have never met, who lives in a diff country, who speaks a diff language, who abides by a different legal system, they could be very hard to track down if they default on an obligation

32
Q

what is a letter of credit

A

states that the bank will pay a specified sum to an exporter when they present specified documents

33
Q

what is a draft of bill of exchange

A

indicates the specified amount of money that should be paid as a specific time to settle trade transactions

34
Q

who makes the bill of exchange

A

the exporter makes it

35
Q

the bill of exchange includes

A

a promise to pay before the buyer can obtain the merchandise

36
Q

what is a sight draft

A

a draft that is payable on presentation to the drawee

37
Q

what is a time draft

A

a draft that says there is a promise to pay by the accepting party at some future date

38
Q

when a time draft is drawn and accepted by the bank it is called a — and it becomes a —

A

bankers acceptance, and it becomes a promise to pay

39
Q

when a time draft is drawn and accepyed by a business firm is it called a

A

trade acceptance

40
Q

time drafts are —- instruments

A

negotiable

41
Q

if the exporter does not wait until the maturity date of the time draft it can

A

sell it to the bank at a discount and use the cash right now

42
Q

what is a bill of lading

A

a bill that is issued to the exporter by the carrier that is transporting the merchandise

43
Q

what are the 3 purposes of a bill of lading

A
  • acts as a receipt that the carrier received the merchandise
    -acts as a contract that the carrier is obligated to transport it
    -acts as a document of title - meaning it is used to get paid of obtain written promise of payment before the merchandise arrives to its destination
44
Q

what is an extra function of the bill of lading

A

functions as collateral against which funds may be advanced to the exporter by its local bank before or during shipment and before final payment by the importer

45
Q

what are the 2 tyoes of export assistance

A

the export-import bank, the export credit insurance

46
Q

the function of the export-import bank is to (4)

A
  • assist in the financing of US exports of products and services to support US employment and market competitiveness
    -supplement private capital lending
    -gives long term loans to foreign borrowers for purchasing US exports
    -lends dollars to foreign borrowers for use in purchasing US exports
47
Q

what does the lack of letter of credit expose the exporter to

A

-the risk that the foreign importer will default on payment

48
Q

to reduce the risk of foreign importer defaulting of payments, the exporter must

A

buy export credit insurance

49
Q

who provides export credit insurance

A

the foreign credit insurance association

50
Q

what is countertrade

A

trade of goods and services for other goods and services through a barterlike agreement

51
Q

countertrade occurs when

A

structuring the international sale is difficult due to means of payments being difficult, costly or non existenent

52
Q

when is countertrade most popular

A

between developing countries that lack foreign exchange reserves required to purchase inputs

53
Q

what are the 5 types of counter trade

A

-barter
counter-purchase
offset
-switch trading
-compensation for buybacks

54
Q

what is barter

A

direct exchange of goods and services between two parties without a cash transaction

54
Q

what is offset

A

an agreement to purchase good and services with a specified percentage of proceeds from an original sale in that country from any firm in the country

54
Q

what is counter purchase

A

reciprocal buying agreement

54
Q

what is switch trading

A

the use of specialized third party trading house in a countertrade agreement

54
Q

what are the pros of counter trade (3)

A

-gives a frim a way to finance an export deal when other means arent possible
-may be required by the gov of a country to which a firm is exporting goods and services
-can become a strategic marketing weapon to penetrate the market

54
Q

what is compensation of buy backs

A

an agreement to accept a percentage of a plants output as payment for a contract to build a plant

54
Q

what are the cons of counter trade (2)

A

-firms prefer to be paid in hard currency
-may involve the exchange of unusable or poor quality goods that firms cant dispose of without losing money

55
Q

who is counter trade the most attractive to

A

most attractive to large diverse multinational enterprises that can use their worldwide network of contacts to dispose of goods acquired in countertrading

56
Q

important factors to consider before exporting or picking an export strategy

A
  • change in trade barriers can effect strategy,
    -must weigh attractiveness of exporting as a strategy against establishing production facilities
    -must keep tabs on movements of currencies against eachother
    -must consider long term economic prospects of a country before deciding whether it would make sense to export there
57
Q
A

International Business (7 decks)

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