Scenario: Gro-Tru Grows To Europe
Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several unsolicited inquiries from potential importers in the region, but in most cases, they have expressed difficulty in getting the hard currency to pay for the imports. Alistair Green, vice president for new business development, is exploring how Gro-Tru might meet the needs of the potential market.
-If Gro-Tru prefers an arrangement in which it offsets a hard-currency sale to a nation by making a hard-currency purchase of an unspecified product from the nation in the future, it would be engaging in a(n) ________ transaction.
A) barter
B) offset
C) switch trading
D) buyback

Question

Quizplus · Accepted Answer

An offset transaction involves balancing a hard-currency sale with a hard-currency purchase of an unspecified product from the same country in the future. This allows Gro-Tru to meet the needs of potential importers who are struggling to acquire hard currency to pay for their imports. It is not a barter transaction because the product being purchased in the future is unspecified, and it is not switch trading because there is no exchange of different products involved. Buyback involves repurchasing a product sold to a customer in the future, which is not applicable in this scenario.

Scenario: Gro-Tru Grows to Europe