Final International Logistics Flashcards
the risk presented by the fluctuations in exchange rates between the time at which the sale is made and the time at which it is paid
Exchange Rate Risk
A currency that can be easily converted into another currency
Hard/Convertible Currencies
A currency that cannot always be converted into another currency
Soft Currency
The exchange rate of a foreign currency for immediate delivery (within 48 hours)
Spot Exchange Rate
The exchange rate of a foreign currency for delivery in 30,60, or 180 days from the day of the quote
Forward Exchange Rate
The right - but not the obligation - to purchase (or sell) a currency at a certain price sometime in the future
Currency Options
A currency option with which a firm buys the right to sell a currency at a given price sometime in the future
Put Options
a currency whose value is determined by a fixed exchange rate with a more widely traded currency, such as the dollar or the euro
Pegged Currencies
A currency whose value is determined by market forces. Value changes frequently
Floating Currency
The price at which a currency option is exercised
Strike Price
Used by large companies operating in multiple (volatile) markets. Use of 2 forward contracts in both directions
Swaps
an arrangement between two companies where one uses the other’s intellectual property in exchange for a royalty
Licensing
a company that purchases goods in one country for the purpose of reselling them in another country at a profit
Export Trading Company
A company that puts suppliers in touch with potential buyers, and earns a commission if a sale is completed
Export Management Company
A form of restrictive trade where barriers to trade are set up and take a form other than a tariff.
Non-tariff barriers
A strategy, followed by some exporters, that consists of selling the goods at a price considered too low by the importing country’s authorities
Dumping
a company elects to keep its entire inventory in one, or a few major hubs that focus on a large region.
Centralization of Inventory
What are the Pros of Centralization of Inventory
lower operation costs
Reduced inbound costs
better customer service
what are the cons of centralization of inventory?
potential high cost of rush delivery
lack of preparation for emergencies, and potential problems with local managers
these strive for a narrow range of products customers, and processes. Result is a factory that is smaller, simpler, and totally focused on one or two key manufacturing tasks
Focused Factories
Thumb rule for supply chain
Cost Before Inventory/Cost After Inventory equals square root of # of locations before/# of locations after
Square Root Rule
a company specialized in shipping cargo on behalf of shippers - importers and exporters
Foreign Freight Forwarders
a firm which groups together orders from different companies into one shipment
consolidators
a person authorized by Customs authorities to file entries
Customs House Broker