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MGT 3660 > Chapter 16- Exporting, Importing, and Countertrade > Flashcards

Chapter 16- Exporting, Importing, and Countertrade Flashcards

1
Q

a solution to the problem of getting paid by a foreign company; it is an agreement putting the bank in the middle of an international transaction

A

letter of credit

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2
Q

when a company gets a letter of credit from a smaller bank, and you want them to get that letter of credit backed up by a larger bank that you know for sure will be able to pay you

A

confirmed letter of credit

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3
Q

a letter of credit pays on _____

A

documents; the bank never sees the goods; they just have to have all of the right documents required by the letter of credit before they will pay it off

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4
Q

something issued by a common carrier; contract between you and the shipper stating where the thing is going

A

bill of lading

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5
Q

bill of exchange; when the bank receives this they have to pay

A

draft

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6
Q

what are the two types of drafts

A

sight and time

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7
Q

upon the bank getting this type of draft and the other documents required by the letter of credit, it has to immediately pay

A

sight draft

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8
Q

upon the bank getting this type of draft, it will pay but within a certain number of days

A

time draft; stipulates when the bank pays

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9
Q

______ try to get time drafts so that they have time to sell the goods

A

buyers

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10
Q

_____ normally prefers sight drafts so that they can be paid as soon as possible

A

sellers

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11
Q

person initiating a draft

A

maker

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12
Q

the party to whom the draft is presented (has to pay it)

A

drawee (ex. the foreign bank)

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13
Q

the letter of credit can require an ________ from an inspector

A

inspector’s certificate; do this to make sure the goods are there and accounted for before paying

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14
Q

what are three documents that might have to be presented to a bank that has issued a letter of credit in order to get paid

A

a bill of lading, a draft (bill of exchange), and/or an inspector’s certificate

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15
Q

fancy word for bartering and trading; exchanging and trading in goods (commodities)

A

countertrade

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16
Q

why do people engage in countertrade

A

the purchasing party may not have enough money or cash in order to trade

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17
Q

associated with counter trade; GE wants to sell a power plant, the larger one will be cheaper in the long run but they can only afford the small one; promise to buy back the extra capacity that it produces until you need that extra

A

buyback

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18
Q

if contract is silent on something and those countries signed this treaty then the treaty covers it; if you don’t want this as the default then you either need to cover it in the contract or opt out

A

United Nations Convention on Contracts for the International Sale of Goods (CISG)

19
Q

what do shipping terms help us to determine

A

where ownership and risk of loss passes

20
Q

FOB shipping point

A

title passes to the buyer when the goods ship; changes hands in the seller’s city

21
Q

FOB destination

A

title passes when it arrives at its destination

22
Q

international shipping terms published by the International Chamber of Commerce in Paris

A

INCOTERMS

23
Q

the two most common types of shipping contracts

A

FOB and CIF

24
Q

one other type of shipping contract

A

EXW

25
Q

cost insurance freight

A

CIF

26
Q

freight on board

A

FOB

27
Q

a shipping contract but has the economic effect of a destination contract

A

CIF; title passes to buyer in Atlanta but seller insures it until it gets to destination

28
Q

what is important in exporting

A

having an adequate market analysis

29
Q

what is are three impediments that make it difficult for some companies to gain knowledge of opportunities in foreign countries

A

time, language, and distance

30
Q

Kevin is in charge of finding out all of the available export opportunities for his company; the best source for him to begin is

A

the US Department of Commerce

31
Q

what would be included on a “best prospects” list supplied by the US Department of Commerce

A

the name of a potential distributor in a foreign market and the products sold by that potential distributor in a foreign market

32
Q

what is the primary task of a freight forwarder

A

to combine smaller shipments into a single large shipment to lower shipping costs

33
Q

what firms are export specialists that handle all aspects of marketing for their clients

A

export management companies (EMC)

34
Q

Michelle contacted another company to see if they could provide the lawnmowers she needed for an overseas client because her company does not produce lawnmowers

A

piggyback marketing

35
Q

what are the four diagnostic tools found on globalEDGE that assist companies with exporting

A

CORE, PARTNER, DISTRIBUTOR, and FREIGHT

36
Q

______ and _____ are both financial devices that were created in response to a lack of trust that can develop when companies export products

A

the letter of credit and a bill of lading

37
Q

what can you (the seller of goods) use as collateral

A

the letter of credit

38
Q

while a ____ draft is negotiable, a ____ draft is not

A

time

sight

39
Q

a _____ acts as a receipt, contract, and document of title

A

bill of lading

40
Q

what are the two negatives associated with a letter of credit

A

the importer has to pay the bank’s fee for the letter of credit; it could limit the importer’s ability to borrow since it is a liability

41
Q

an organization that is an independent agency of the US government that was set up to provide financing to facilitate exports, imports, and the exchange of commodities

A

Export-Import Bank

42
Q

what is one way to avoid payment default on a foreign export sent without a letter of credit

A

to purchase export credit insurance

43
Q

trading goods for other goods when they can’t be traded for money

A

countertrade

44
Q

what are three forms of countertrade

A

offset, buyback, and barter

MGT 3660 (15 decks)

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