Deck 17: Appendix B: Export and Import Practices

Question 1

Once a firm determines that a market exists for its products,it needs to decide to export directly or indirectly.

Answer 1

True
Explanation: Once the firm knows that a potential market exists, it needs to choose between exporting indirectly through U.S.-based exporters and exporting directly using its own staff. If it opts for indirect exporting as a way to test the market, a trade specialist, either from a consultancy or from one of the government programs, can provide assistance. If the firm sets up its own export operation, the next step is to find and establish overseas distribution.

Question 2

The first step in finding a foreign market for a product is to determine whether a market exists for a firm's products.

Answer 2

True
Explanation: The first step in locating foreign markets is to determine whether there is a need for the firm's products.

Question 3

In FAS (free alongside ship,named loading port),the seller pays all the transportation and delivery expense up to the ship's side and clears the goods for export.

Answer 3

True
Explanation: In FAS (named loading port), free alongside ship, the seller clears the goods for export and places them by the ship; risk passes at rail.

Question 4

In CIF (cost,insurance,freight,named destination port),the seller quotes a price that includes the cost of the goods,insurance,and all transportation and miscellaneous charges to the named foreign port in the country of final destination.

Question 5

In a DAT (delivered at terminal),the buyer is responsible to pay for all transportation cost from the seller's location,including customs clearing,to the buyer's location.

Question 6

Out of all the pricing methods mentioned,the preferred one for sellers is Ex-Works/factory door.

Question 7

CIBERs are international business research and education efforts located at U.S.universities.

Question 8

Mistakes in selecting foreign distributors and sales representatives are not an issue new exporters face.

Question 9

The export-marketing plan is essentially the same as the domestic marketing plan.

Question 10

Often small exporters don't consider the use of an export management company (EMC)when they should.

Question 11

Incoterms are 11 trade terms that describe the responsibilities of the buyer and seller in international trade.

Question 12

The sales agreement should specify as simply as possible the duties of the representative and the firm.

Question 13

In a DDP (delivered,duty paid),the seller delivers goods to the designated destination and covers all duties,taxes,and customs.

Question 14

Once in export markets,new exporters tend to maintain their focus on them,despite what is happening in the home market.

Question 15

The export marketing plan does not include product characteristics,promotional plans,and details on arrangements with foreign representatives.

Question 16

The two major reasons U.S.firms give for not exporting are (1)preoccupation with the vast American market and (2)reluctance to become involved in a new and unknown operation.

Question 17

On an open account,the buyer assumes all of the payment risk.

Question 18

Sales forecasts and budgets,pricing policies,product characteristics,holiday schedules,and cash flow projections are all part of the export marketing plan.

Question 19

Most international customers will pay cash in advance unless the order is for a custom-made product.

Question 20

Often new exporters think that they won't have to localize their approach,assuming that a marketing technique or distribution system that works in one country will work in another.

Question 21

The Small Business Administration (SBA)provides what kind of assistance?

A) Grant programs to support international research
B) Education assistance
C) Financial assistance
D) Coupon redemption service
E) Advocacy for market access

Question 22

A confirmed letter of credit guarantees payment to the seller.

Question 23

A shipper's export declaration (SED)is a document required by the Department of Agriculture to control exports and supply export statistics.

Question 24

Global Markets Unit specialists seek to provide which of the following services to U.S.firms?

A) Advocacy for market access
B) Monitor foreign country compliance with trade agreements
C) Shaping industry-specific trade policies and promotion strategies
D) Organizing trade missions and fairs

Question 25

When nonexporting firms are asked why they do not export,they commonly list each of the following as problems except

A) identifying foreign markets.
B) payment and finance procedures.
C) export procedures.
D) international marketing skills.

Question 26

Free trade zones are areas designated by the government of a country for duty-free entry of any nonprohibited good.

Question 27

Straight bills of lading are negotiable documents.

Question 28

Factoring allows the exporter to be more competitive by selling on open account rather than by means of the more costly letter of credit method.

Question 29

The U.S.Department of Education provides what program to support education related to international business and trade in 17 universities?

A) CIBER
B) STEP
C) ITA
D) FCIB
E) METI

Question 30

The Enforcement and Compliance unit of the ITA helps American business by

A) providing advocacy for market access.
B) monitoring foreign country compliance with trade agreements.
C) shaping industry-specific trade policies and promotion strategies.
D) organizing trade missions and fairs.

Question 31

Exporting using ocean freight rather than air freight is a much cheaper alternative,particularly when calculated on the basis of total costs.

Question 32

Why do companies not export?

A) They do not wish to increase their sales.
B) They do not feel a need for exporting.
C) They are preoccupied with the host market.
D) They are reluctant to embark on a new and unknown operation.

Question 33

What is the first step in locating foreign markets?

A) Identifying international agents.
B) Identifying international distributors.
C) Determining whether there is a need for the firm's products.
D) Hiring a customs broker.
E) Preparing an export marketing plan.

Question 34

Once the potential exporter has established that there may be a market for the firm's products,it's time to

A) identify international agents.
B) identify international distributors.
C) set up an export department.
D) hire a customs broker.
E) prepare an export marketing plan.

Question 35

For U.S.firms that already are exporting,which of the following organizations offers export promotion activities that include export counseling,analysis of foreign markets,assessment of industry competitiveness,and development of market opportunities and sales representation through export promotion events?

A) U.S. Commercial Service
B) International Trade Administration (ITA)
C) Export-Import Bank
D) Small Business Administration
E) Agency for International Development

Question 36

Which of the following does not belong to the International Trade Administration?

A) Market Access and Compliance (MAC)
B) Small Business Administration (SBA)
C) Trade Development
D) U.S. and Foreign Commercial Service (US&FCS)

Question 37

A disadvantage for companies that insist on less risky transactions,such as a letter of credit,is that they may be losing business to competitors who sell on open accounts.

Question 38

Customhouse brokers have functions parallel to those of foreign freight forwarders,but on the export side of the transaction.

Question 39

The concept of the L/C is a simple one,the bank as intermediary between buyer and seller.In fact,though,a simple irrevocable L/C requires five steps to clear payment.

Question 40

Export drafts must be paid before the buyer receives shipping documents.

Question 41

Of the 12 most common mistakes and pitfalls awaiting new exporters listed in the textbook,which one of the following is not in the list?

A) Making too much of a commitment during the initial stages of exporting.
B) Failing to obtain qualified export counseling.
C) Chasing orders from around the world instead of establishing a basis for profitable operations and orderly growth.
D) Failure to consider the use of an export management company.

Question 42

The total number of Incoterms as of 2015 is

A) 7.
B) 11.
C) 15.
D) 25.
E) variable (they vary as need dictates).

Question 43

Incoterms are developed and maintained by

A) the U.S. Chamber of Commerce.
B) the International Chamber of Commerce.
C) the WTO.
D) the United Nations.
E) a committee of major global companies.

Question 44

Ex-Works is a short way to say

A) cash in advance.
B) an open account.
C) consignment.
D) letters of credit.
E) shipment transferred to seller at factory.

Question 45

The Incoterm for the situation when carriage is paid to a specified destination,the seller pays for carriage,while risk passes to the buyer when the goods are handed to the carrier is

A) FCA.
B) DAT.
C) CIF.
D) CPT.
E) FAS.

Question 46

Incoterms describe three issues that arise in a commercial transaction.Which of the following is not one of these issues?

A) Which party covers the costs.
B) Which party's jurisdiction is used to resolve conflicts.
C) Which party bears the risk.
D) Which party does which tasks.

Question 47

Which of the following were not identified as being part of the export marketing plan?

A) Budgets
B) Promotion plans
C) Product characteristics
D) Production plans

Question 48

Of the 12 most common mistakes and pitfalls awaiting new exporters listed in the textbook,which one of the following is not in the list?

A) Assuming that a given market technique and product will automatically be successful in all countries.
B) Neglecting the home market when the export business booms.
C) Failing to modify products to meet regulatory or cultural preferences of other countries.
D) Failing to consider licensing or joint venture agreements.

Question 49

Which of the following were not identified as being part of the export marketing plan?

A) Sales forecasts
B) The marketing strategy for servicing the markets
C) Pricing policies
D) Staffing requirements in the firm's foreign branches

Question 50

Of the 12 most common mistakes and pitfalls awaiting new exporters listed in the textbook,which one of the following is not in the list?

A) Failure to provide readily available servicing for the product.
B) Failing to provide sales and warranty information in locally understood languages.
C) Failing to modify products to meet cultural preferences of other countries.
D) Failure to set up an export management company.

Question 51

Of the 12 most common mistakes and pitfalls awaiting new exporters listed in the textbook,which one of the following is not in the list?

A) Failure to develop an international marketing plan.
B) Treating international distributors on an equal basis with domestic counterparts.
C) Insufficient care in selecting overseas distributors.
D) Failure to consider the use of an export management company.

Question 52

Credit information can be available for new exporters through all of the following except

A) Dun & Bradstreet.
B) the FCIB (Finance, Credit, and International Business Association).
C) the exporter's bank.
D) the SBA (Small Business Administration).

Question 53

The Incoterm for the situation when carriage and insurance are paid to a specified destination,while risk passes to the buyer when the goods are handed to the carrier,is

A) CIP.
B) DAT.
C) CIF.
D) CPT.
E) FAS.

Question 54

The Incoterm for the situation where the product is delivered at the specified destination,the seller pays for carriage to the named place and assumes all risk until goods are unloaded,is

A) CIP.
B) DAT.
C) CIF.
D) DAP.
E) FAS.

Question 55

Once the firm knows that a potential market exists,it needs to do all of the following except

A) choose between exporting directly or indirectly.
B) set up a foreign subsidiary.
C) consider seeking assistance from a trade specialist if it wishes to engage in indirect exporting.
D) find and establish overseas distribution if it decides to set up its own export operation.

Question 56

The Incoterm for the situation where the product is delivered at a specified terminal,the seller pays for transport and insurance to that terminal and retains the risk until the goods are loaded at that terminal,is

A) CIP.
B) DAT.
C) CIF.
D) CPT.
E) FAS.

Question 57

Which of the following were not identified as being part of the export marketing plan?

A) Pricing policies
B) Details on arrangements with foreign representatives
C) Employee compensation systems
D) Break-even analysis

Question 58

Export marketing plans should be specific about all of the following except

A) the markets to be developed.
B) the marketing strategy for servicing the markets.
C) the tactics required to make the strategy operational.
D) the management plan.

Question 59

The Incoterm for the situation when the seller hands over goods to a carrier at a specified place,where risk then passes is to the buyer,is

A) FCA.
B) DAT.
C) CIF.
D) CFR.
E) FAS.

Question 60

52.Incoterms are divided into two basic categories-

A)open account and L/C.
B)general and water transport terms.
C)ship and ground transport.
D)export and domestic shipments.
E)risk and nonrisk terms of sale (buyer's perspective).

Question 61

Which of the following is the most risky for an importer?

A) Open account
B) Irrevocable letter of credit
C) Bank collection time draft
D) Cash in advance
E) Consignment

Question 62

Which of the following is not part of the pro forma invoice?

A) The exporter's formal quotation
B) A description of the merchandise
C) Delivery time
D) Type of packaging
E) Terms of sale

Question 63

For exporters,which of the following is the preferred pricing method?

A) FOB
B) FAS
C) Ex-works
D) FCA
E) CIP

Question 64

Which of the following is the least risky for an exporter?

A) Open account
B) Irrevocable letter of credit
C) Bank collection time draft
D) Cash in advance
E) Revocable letter of credit

Question 65

Most of what is contained in a sales agreement is the same in the contract for a domestic representative as for an export sale.However,which of the following is among the two areas requiring special attention in an export sales contract?

A) Designation of the deadline for concluding the agreement and disseminating funds.
B) Designation for managing promotion of the product.
C) Designation of responsibilities for shipping and insurance of the goods while in transit.
D) Designation of the country and state or province whose laws will govern any contractual dispute.

Question 66

The Incoterm for the situation where the seller loads the goods onto the ship and the risk passes to the buyer once they are aboard the ship,is

A) CFR.
B) DAT.
C) CIF.
D) FOB.
E) FAS.

Question 67

Which of the following is the least risky for an importer?

A) Cash in advance
B) Open account
C) Irrevocable letter of credit
D) Bank collection time draft

Question 68

Which of the following are not included among the miscellaneous costs incurred by the seller in making a CIF shipment?

A) Wharf storage and handling charges
B) Freight forwarder's charges
C) Landing charges
D) Consular fees

Question 69

The Incoterm for the situation where the product is delivered at the specified destination,the seller pays for carriage to the named place,as well as all duties,taxes,and customs charges,and assumes all risk until the goods are delivered to the buyer at the specified destination,is

A) DDP.
B) DAT.
C) CIF.
D) DAP.
E) FAS.

Question 70

An unconditional order drawn by the seller on the buyer instructing the buyer to pay the amount of the order on presentation is

A) an unconditional letter of credit.
B) a time draft.
C) a consignment.
D) a sight draft.

Question 71

On pricing,which of the following terms of sale are more convenient for foreign buyers because to establish their cost,they merely have to add the import duties,landing charges,and freight from the port of arrival to their warehouse?

A) CFR
B) CIP
C) DAT
D) DAP
E) DDP

Question 72

The Incoterm for the situation where the seller clears the goods for export and places them by the ship,and the risk passes to the buyer at the ship's rail,is

A) DDP.
B) DAT.
C) CIF.
D) DAP.
E) FAS.

Question 73

The Incoterm for the situation where the seller pays the costs of freight to bring goods to the destination port and the risk passes to the buyer once the goods are loaded aboard the ship,is

A) CFR.
B) DAT.
C) CIF.
D) FOB.
E) FAS.

Question 74

Which of the following is the most risky for an exporter?

A) Open account
B) Irrevocable letter of credit
C) Bank collection time draft
D) Cash in advance
E) Revocable letter of credit

Question 75

On a consignment sale,the payment risk is

A) assumed by the buyer.
B) assumed to be equally shared.
C) carried by the seller.
D) covered by insurance.
E) covered by the bank issuing the L/C.

Question 76

Most of what is contained in a sales agreement is the same in the contract for a domestic representative as for an export sale.However,which of the following is among the two areas requiring special attention in an export sales contract?

A) Designation of responsibilities for collection of monies.
B) Designation for managing promotion of the product.
C) Designation of responsibilities for patent and trademark registration.
D) Designation of the deadline and mechanisms for completing the sale.

Question 77

Which of the following is the least risky for an importer?

A) Irrevocable letter of credit
B) Open account
C) Consignment
D) Bank collection time draft

Question 78

Which of the following is the most risky for an exporter?

A) Cash in advance
B) Irrevocable letter of credit
C) Bank collection time draft
D) Consignment
E) Revocable letter of credit

Question 79

With which of the following payment mechanisms is it the case that once the seller has accepted the credit,the customer cannot alter or cancel it without the seller's consent?

A) Irrevocable letter of credit
B) Open account
C) Consignment
D) Bank collection time draft
E) Documentary draft

Question 80

The Incoterm for the situation where the seller pays the costs of freight and insurance to bring goods to the destination port and the risk passes to the buyer once the goods are loaded aboard the ship,is

A) CFR.
B) DAT.
C) CIF.
D) FOB.
E) FAS.