Recap & Sample exam

Question 1

first session

Answer 1

An overview of internationale trade theory.
Acquire what they don’t do best.

Question 2

second session

Answer 2

Something something about a government action that affects international trade.
Trade agreements.
Multilateral institution
WTO, what’s its purpuse.
Insitution that helps monitor and facilitate international trade (arbitration).

Question 3

Third session

Answer 3

Exporting process.
Setting up logistics, risks, environments, costs.
SME focus.
WHY do you want to export. Increase margin, increase volume, …
The answer to the WHY will help resource allocation (material, human, financial) and planification process.
CAN WE EXPORTS? Diagnostic. Analyzing o.p. costs. Risks.
Identify the strength and weaknesses of the company.

Question 4

Fourth session

Answer 4

Pros and cons of entry modes.
Direct (every other methods) and indirect (sales your product to a local costumers (third party) and that product is consumed abroad).
Distributor = trading house (in the home country). Buys and resales. Takes possession of your merchandise.
Agent = Doesn’t possess your merchandise, but it sales it in exchange of commission.

In both cases, they are relatively low risk of entering a market.

Consortium = companies that join forces but at the short-term.

Question 5

Fifth session

Answer 5

Importing.
Many of the concepts are the same as the exporters.
Are we ready to become importers?
WHY? (same as exporting).
The process of choosing a market, is similar to the project.
Searching suppliers.

Question 6

Sixth session

Answer 6

Distance is one of a major challenges.
Good logistics can be a good advantage over competitors.
By sea is the cheapest, but the longest.
Service provider such as the Freight Forwarder, they can consolidate shipment and lower you costs, normally located in the country of export.
Documentation are SUPER important to obtain your goods. (Commercial invoice, bill of Ladin).

Question 7

Seventh session

Answer 7

HC codes. Determine the duty you will have to pay.
Custom brokers, helping to pay the duty on behalf of the importer and identify the HS Codes. Normally located in the country of importation.
Service providers:
- Freight Forwarders
- Custom broker
- 3PL (renting warehousing logistic services).
- Banks
- Insurances

Question 8

Eighth session

Answer 8

Incoterms = Terms of Sale: They define the responsibility of who gets the merch and when. (needs to have the name of the city)
- EXW (importer that pays for everything)
- FOB
- DDP (exporter that pays for everything)
- CIF

What goes it to calculating the price of the incoterms?

Incoterms are NOT the same as Term of Payments (how am I going to get paid).
The best Term of Payment is the Letter of Credit (the seller ask the buyer to issue one, thus the buyers (importers) goes to the banks to make sure the seller can pay and all of that with conditions).

Question 9

Nineth session

Answer 9

Letter of Credit disadvantages:
- Bank fees.
- Amend the letter of credit. They will change the condition if needed, but that change will result in costs for you.

Letter of Credit advantages:
- Advance payment.

Open account: sets the date of payments. (net30 days…). Get insurance if the other party doesn’t pay up.

Question 10

Tenth session

Answer 10

Risks political (corruption), ethical, cultural…

Question 11

Sample Exam
(true of false questions)
(multiple choice questions)
(Case)
(Francois questions or/and oral project questions)

Answer 11

What are 3 modes of transportation used in international trade and their main characteristic.

1. Describe for him two main reasons why he should expand his business abroad. Describe for him two main reasons why he should NOT expand his business abroad.
2. Briefly describe and justify the 2 main factors specific to his business you feel he should consider in choosing which market to expand to first? (not the U.S.) (2 bullets + explanation) (5 pts).
3. If he chooses to export the items, how can he realistically overcome the fact that items have shelf life of 7 days. (5 pts)
4. What are the 2 service providers or exports Henri consults in the early stages of his planning process if he chooses to export the items? Define briefly and specifically how each could helps. (2 bullets + explanations) (2 pts).
5. Assuming he chooses to start exporting directly to Sweden, describe the 2 mist important reasons for AND the 2 most important reasons against hiring the Swedish agent to sell the goods to various retail stores there. (4 bullets + explanations) (5 pts).
6. Suggest a different direct sales options instead of agents that might be simpler. Justify. (5 pts). “Credit and collection”
7. Suppose that after careful consideration, he decides not to try exporting at all. But you insist there are other ways of going international. Instead of exporting the goods from Montreal. Briefly describe and justify 2 other options he could use to expand his business abroad. (10 pts).

• Franchising.
• Licensing recipes and specific (patented) oven.