Part 6 Flashcards

1
Q
Which of the following is a government policy that discourages imports?
A. Import tariffs
B. NAFTA
C. Subsidies
D. Tax incentives
E. Free trade zones
A

A. Import tariffs

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2
Q

For centuries, nations have combined two opposing policy attitudes toward the movement of goods across national boundaries.
On the one hand, nations _______ exports; on the other hand, the flow of imports can be _______.
A. encourage; restricted
B. build; stimulated
C. are neutral to; restricted
D. restrict; encouraged
E. discourage; encouraged

A

A. encourage; restricted

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3
Q
Which of the following do governments use to discourage imports?
A. Tax incentives
B. Free trade zones
C. Subsidies
D. Export assistance
E. Quotas
A

E. Quotas

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4
Q
Governments commonly use activities to support and encourage firms that engage in exporting. Such activities include all the
following EXCEPT \_\_\_\_\_\_\_\_\_\_.
A. subsidies
B. free trade zones
C. debt forgiveness
D. tax incentives
E. export assistance
A

C. debt forgiveness

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5
Q

__________ are government rules, laws, or administrative regulations requiring that goods or services be purchased from
domestic companies.
A. Restrictive administrative and technical regulations
B. Tariffs
C. Discriminatory procurement policies
D. Harmonized tariff systems
E. Quotas

A

C. Discriminatory procurement policies

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6
Q
Under which of the following do importers and exporters have to determine the correct classification number for a given product
or service that will cross borders?
A. Countervailing duties (CVD)
B. Harmonized Tariff System (HTS)
C. Non-tariff barriers (NTB)
D. Normal trade relations (NTR)
E. Discriminatory procurement policies
A

B. Harmonized Tariff System (HTS)

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7
Q
Which of the following can be considered the "three Rs"rules, rates, and schedules of global business?
A. Custom duties
B. Quotas
C. Tariffs
D. Subsidies
E. Non-tariff trade barriers (NTB)
A

C. Tariffs

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8
Q

What is the purpose of the Harmonized Tariff System (HTS)?
A. The HTS outlaws discriminatory exchange rates.
B. The HTS is designed to ensure that developing nations do not have to pay tariffs.
C. The HTS is designed to limit the amount of tariffs a nation can impose.
D. The HTS provides that tariffs are not levied on imports of new products.
E. The HTS requires importers and exporters to determine the correct classification number for a given product
or service that will cross borders

A

E. The HTS requires importers and exporters to determine the correct classification number for a given product
or service that will cross borders

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9
Q

What does the Harmonized Tariff System’s (HTS) Schedule B stipulate?
A. That reduced tariffs are applied to certain product categories.
B. Schedule B stipulates the rates used in two-column tariff tables.
C. That the export classification number for any exported item is the same as the import classification number.
D. That a reduced tariff rate is applied to imports from certain countries.
E. That countries maintain a schedule of duties in which the tariff rate applies to imports from all countries on the same
basis.

A

C. That the export classification number for any exported item is the same as the import classification number.

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10
Q
Which of the following establishes classification numbers that must be used by importers and exporters?
A. The Harmonized tariff system (HTS)
B. Normal trade relations (NTR)
C. Countervailing duties (CVD)
D. Non-trade barriers (NTB)
E. Common Agricultural Policy (CAP)
A

A. The Harmonized tariff system (HTS)

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11
Q

Under the Harmonized Tariff System (HTS), products with a value of less than _______ are not counted as a U.S. export.
However, all imports, regardless of value, are counted.
A. $5,000
B. $1 million
C. $500,000
D. $150,000
E. $2,500

A

E. $2,500

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12
Q
Which of the following is an independent marketing intermediary that acts as the export department for two or more
non-competing manufacturers?
A. Cooperative exporter
B. Export management company (EMC)
C. Export commission representative
D. Export broker
E. Foreign purchasing agent
A

B. Export management company (EMC)

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13
Q

A __________ is one of the names for an export organization of a manufacturing company retained by other independent
manufacturers to sell their products in foreign markets.
A. export management company
B. freight forwarder
C. export merchant
D. piggyback exporter
E. export broker

A

D. piggyback exporter

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14
Q
Which of the following is sometimes referred to as a buyer for export or an export commission house that operates on behalf of
a buyer from a foreign country?
A. Export management company
B. Freight forwarder
C. Export broker
D. Export merchant
E. Foreign purchasing agent
A

E. Foreign purchasing agent

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15
Q

________ are licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules. They can be
considered as the travel agents for handling export goods.
A. Cooperative exporters
B. Foreign purchasing agents
C. Freight forwarders
D. Export merchants
E. Export brokers

A

C. Freight forwarders

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16
Q

________ is an independent marketing intermediary that acts as the export department for two or more manufacturers whose
product lines do not compete with each other.
A. An export management company
B. An export merchant
C. An export commission representative
D. A cooperative exporter
E. A manufacturer’s export agent (MEA)

A

A. An export management company

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17
Q

The _____________________ sometimes called a mother hen, a piggyback exporter, or an export vendor, is an export
organization of a manufacturing company retained by other independent manufacturers to sell their products in foreign markets.
A. export management company
B. export distributor
C. export commission representative
D. cooperative exporter
E. manufacturer’s export agent (MEA)

A

D. cooperative exporter

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18
Q

A company that assigns high priority to its export business will probably use which of the following arrangements for handling
export responsibilities?
A. An in-house organization
B. A part-time activity performed by domestic employees
C. Freight forwarders
D. An export facilitator
E. An independent manufacturer’s export agent (MEA)

A

A. An in-house organization

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19
Q

Which of the following is an advantage of making export responsibility a part of a domestic employee’s job description?
A. It gives a domestic employee an opportunity to learn about a foreign country.
B. It is a low-cost arrangement requiring no additional personnel.
C. It creates competence in market knowledge.
D. It creates competence in product knowledge.
E. It gives a domestic employee a chance to gain additional skills

A

B. It is a low-cost arrangement requiring no additional personnel.

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20
Q

When organizing for exporting in the manufacturer’s home country, how do most companies handle export operations?
A. Through indirect representation in the foreign country.
B. By using independent export distributors.
C. Through direct representation in the foreign country.
D. Within their own in-house export organization.
E. By working with an external organization specializing in a product or geographic region.

A

D. Within their own in-house export organization.

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21
Q

A manufacturing company that assigns a sufficiently high priority to its export business will establish an in-house organization
for exporting. The effectiveness of this organization depends on which two factors?
A. The company’s past success with this decision and its strategy for allocating resources to markets on a global basis.
B. The company’s appraisal of the opportunities in export marketing and its strategy for avoiding tariffs in the countries it
exports to.
C. The tariff rates in the country it is exporting to and its strategy for allocating resources to markets on a global basis.
D. The company’s appraisal of the opportunities in export marketing and its strategy for allocating resources to
markets on a global basis.
E. The company’s appraisal of the opportunities in export marketing and its pricing strategy.

A

D. The company’s appraisal of the opportunities in export marketing and its strategy for allocating resources to
markets on a global basis.

22
Q

For a company to make export responsibility part of a domestic employee’s job description, which of the following conditions
should be present?
A. The employee must have lived for at least 5 years in the target foreign country.
B. The company should only be exporting to one foreign country.
C. The domestic employee assigned to the task must be thoroughly competent in terms of product and
customer knowledge.
D. The employee should have at least 5 years of seniority.
E. The company should only be exporting durable goods.

A

C. The domestic employee assigned to the task must be thoroughly competent in terms of product and
customer knowledge.

23
Q

Possible arrangements for handling exports from the manufacturer’s home country include all of the following EXCEPT:
A. an export department that is independent of the domestic marketing structure.
B. direct representation.
C. a part-time activity performed by domestic employees.
D. an export partner affiliated with the domestic marketing structure that takes possession of the goods before they
leave the country.
E. an export department within an international division.

A

B. direct representation.

24
Q
Which of the following are the two major advantages to direct representation in a market?
A. Control and communication
B. Cost and return-on-investment (ROI)
C. Brand awareness and profits
D. Risk and control
E. Risk and reward
A

A. Control and communication

25
Q
Possibilities for feedback from the market to the corporation are much greater with which type of organization?
A. Export commission representative
B. Export broker
C. Manufacturer's export agent (MEA)
D. Export distributor
E. Direct representation
A

E. Direct representation

26
Q

A company must also make arrangements to distribute its product in the target market country. The two major advantages to
using direct representation for this task in a market are _______.
A. cost and speed
B. networking and relationships
C. control and communications
D. cost and execution
E. sales and marketing

A

C. control and communications

27
Q
In which type of market is it usually not feasible to establish direct representation?
A. Smaller markets
B. Growing markets
C. Larger markets
D. Pacific Rim markets
E. European markets
A

A. Smaller markets

28
Q

Which of the following is NOT an advantage of direct market representation?
A. Helping to sell products directly to the consumer in the market country.
B. Allowing decisions concerning program development and resource allocation.
C. Facilitating control and communications.
D. Ensuring marketer’s interest and special efforts.
E. Benefiting when a product is not yet established in a market.

A

A. Helping to sell products directly to the consumer in the market country.

29
Q

When considering organizing for exporting in the market country, which of the following enables decisions concerning program
development, resource allocation, or price changes to be implemented unilaterally?
A. A part-time activity performed by domestic employees
B. Using an export department within an international division
C. Indirect representation
D. Direct market representation
E. Through an export partner affiliated with the domestic marketing structure that takes possession of the goods before
they leave the country

A

D. Direct market representation

30
Q
In a discussion of trade financing, what document specifies how much and by what means the exporter-seller wants to be paid?
A. A letter of credit (L/C)
B. A bill of exchange
C. A pro forma invoice
D. A time draft
E. A documents against payment (D/P)
A

C. A pro forma invoice

31
Q
Which of the following methods of payments offers the exporter the best assurance of being paid?
A. Documents against payment (D/P)
B. Open account
C. A letter of credit (L/C)
D. Cash with order
E. Documentary collection
A

D. Cash with order

32
Q
Which of the following financing methods would be used by an exporter that enjoys good trustworthy relations with a buyer in a
well-established market?
A. Sales on open account
B. Arrival draft
C. Cash in advance
D. Letter of credit
E. Barter
A

A. Sales on open account

33
Q

Which of the following correctly states the role of banks in import/export transactions involving a letter of credit (L/C)?
A. The exporter’s bank is the advising and/or confirming bank; the importer’s bank is the issuing bank.
B. The importer’s bank is the advising, confirming, and issuing bank.
C. The exporter’s bank is the advising, confirming, and issuing bank.
D. The importer’s bank is the advising and/or confirming bank; the exporter’s bank is the issuing bank.
E. None of these are correct.

A

A. The exporter’s bank is the advising and/or confirming bank; the importer’s bank is the issuing bank.

34
Q
The most common type of L/C is a(n) \_\_\_\_\_\_\_\_.
A. sight draft
B. time draft
C. sales on open account
D. irrevocable letter of credit
E. documentary credit
A

D. irrevocable letter of credit

35
Q

For which payment method is the importer-buyer required in principle to make payment when presented with the draft and the
shipping documents even though the buyer may not have taken possession of the goods yet?
A. A sight draft
B. An arrival draft
C. A time draft
D. Sales on open account
E. A date draft

A

A. A sight draft

36
Q
Whether a company makes or buys its products, as well as where it makes or buys its products, is a \_\_\_\_\_\_\_\_.
A. sourcing decision
B. financing decision
C. marketing decision
D. public relations decision
E. distribution decision
A

A. sourcing decision

37
Q
Which of the following terms refers to the shift of production jobs or work assignments to another country in order to cut costs?
A. Sourcing
B. Realignment
C. Production relocation
D. Outsourcing
E. Sub-contracting
A

D. Outsourcing

38
Q
The organizational decision of whether a company makes or buys its products as well as where it makes or buys its products is
known as the \_\_\_\_\_\_ decision.
A. NTB
B. import/export
C. sourcing
D. security
E. preferential
A

C. sourcing

39
Q
Factor costs include which of the following?
A. Land, labor, materials, and capital
B. Labor, capital, and taxes
C. Land, taxes, and dividends
D. Land, capital, and dividends
E. Land, labor, and taxes
A

A. Land, labor, materials, and capital

40
Q

If a manufacturing company operates in several different countries, and if the currency in one of those countries becomes
seriously overvalued, what could the company do to achieve competitive advantage?
A. Reduc production and labor force simultaneously.
B. Cutt down production and wait until the currency rate is reasonable.
C. Buy different currencies before major fluctuations take place.
D. Conduct transactions in different currencies of the world.
E. Shift production among the different countries.

A

E. Shift production among the different countries.

41
Q

What has been the overall impact on labor in China with the application of advanced computer controls and other new
manufacturing technologies?
A. It has increased the need for more labor.
B. The need to establish manufacturing activities in China is increasing.
C. There has been no impact.
D. Direct labor cost has become a much larger percent of the total production cost.
E. The proportion of labor relative to capital has been reduced for many businesses.

A

E. The proportion of labor relative to capital has been reduced for many businesses.

42
Q

________ is defined as a contractual arrangement whereby one company makes a legally protected asset available to another
company in exchange for some form of compensation.
A. Licensing
B. Foreign direct investment
C. Equity stake
D. Joint ventures
E. Contract manufacturing

A

A. Licensing

43
Q

Which of the following is a potential disadvantage to licensing?
A. The licensee can, potentially, become a strong competitor
B. Dilution of brand image
C. Difficult entry strategy
D. Inability of the licensee to establish competitive advantage
E. Limited expansion opportunities

A

A. The licensee can, potentially, become a strong competitor

44
Q

One of the advantages of licensing is ________.
A. that licensing agreements have short lives
B. that licensees have considerable autonomy
C. that licensors have limited market control
D. that licensees can develop similar products
E. that licensees have limited control

A

B. that licensees have considerable autonomy

45
Q

_______ represent(s) a global market entry strategy whereby one company permits a foreign company to make use of its
patents, know-how, technology, company name, or other intangible assets in return for a royalty payment.
A. Licensing
B. One-hundred-percent ownership
C. Contract manufacturing
D. Exporting
E. Joint ventures

A

A. Licensing

46
Q

Which of the following statements regarding licensing as an entry mode to a foreign market is correct?
A. Licensors still must pay tariffs.
B. Licensing does not offer an attractive ROI for the life of the agreement.
C. Licensing is a viable entry strategy for the fashion industry only.
D. The licensed asset may be a brand name, company name, patent, trade secret, or product formulation.
E. Licensees have limited autonomy.

A

D. The licensed asset may be a brand name, company name, patent, trade secret, or product formulation.

47
Q

Which of the following statements about franchising is correct?
A. Franchising has little appeal to entrepreneurs.
B. Franchising is not a licensing agreement.
C. Franchisees must create a new business system
D. Expanding a franchise to a foreign market is no different than expanding within the home country market.
E. Franchising is a market-entry strategy that is typically executed with less localization than licensing.

A

E. Franchising is a market-entry strategy that is typically executed with less localization than licensing.

48
Q
Which of the following is a general term that refers to capital that flows out of the home country as companies invest in plants,
equipment, and other assets?
A. Joint ventures
B. Mergers and acquisitions
C. Greenfield investment
D. Equity stake
E. Foreign direct investment (FDI)
A

E. Foreign direct investment (FDI)

49
Q
Which of the following terms refers to the startup of new operations?
A. Joint venture
B. Equity stake
C. Full ownership
D. Acquisition
E. Greenfield investment
A

E. Greenfield investment

50
Q

What is the most extensive form of participation in global markets?
A. A joint venture
B. Franchising
C. Contract manufacturing
D. Investment that results in either an equity stake or full ownership
E. Licensing

A

D. Investment that results in either an equity stake or full ownership