Deck 14: Export and Import Practices

Question 1

New exporters often fail to provide local language translation of service, sales, and warrantee information.

Answer 1

True

Question 2

New exporters always come to the process with a carefully developed marketing strategy.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Generally, trade missions consist of 5 to 12 business professors.

Question 5

Lack of top management commitment to export is often a problem with new exporters.

Question 6

Reverse trade missions try to find import sources in foreign countries for U.S. producers.

Question 7

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

Question 8

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

Question 9

One of the most common mistakes made by new exporters is not getting advice.

Question 10

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

Question 11

The International Trade Administration (ITA) is a good place for U.S. beginning exporters to start out.

Question 12

If a firm decides to set up its own export operation rather than do indirect exporting, the firm must obtain overseas distribution.

Question 13

The FTA's Market Access and Compliance Department monitors foreign country compliance with trade agreements.

Question 14

Companies decide to export to increase their sales and profits or to protect them from being eroded.

Question 15

The only export support available in the United States at the federal level is through trade. gov.

Question 16

U.S. pavilions are located in every country around the world and provide background information and displays on foreign companies.

Question 17

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

Question 18

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

Question 19

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

Question 20

Responding to any demand rather than executing a planned growth strategy is not a mistake new exporters tend to make.

Question 21

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

Question 22

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

Question 23

CFR (cost and freight, foreign port) is similar to CIF except that the buyer purchases the insurance because it can obtain it at lower cost or because its government, to save foreign exchange, insists that it use a local insurance company.

Question 24

In a DAP (delivered at named place), the seller assumes risk when the goods leave the seller's factory or warehouse.

Question 25

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

Question 26

Some nations, especially in Asia, follow the Carlos Calvo doctrine, which protects them against fraud.

Question 27

Export pricing and sales agreements for foreign representatives are part of the marketing mix.

Question 28

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

Question 29

In a DAP (delivered at named place), the buyer is responsible for paying for all transportation costs from the seller's location, including customs clearing, to the buyer's location.

Question 30

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

Question 31

CIF and CFR terms are more convenient for foreign buyers because they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouses to establish their cost.

Question 32

On an open account, payment can be made once the exports have been sold.

Question 33

In FAS (free alongside ship, loading port) the buyer pays all the transportation and delivery expenses up to the ship's side and clears the goods for export. Risk passes at the ship's rail.

Question 34

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 that sell on open accounts.

Question 35

Licensing and joint venture agreements cannot be useful business forms for new exporters.

Question 36

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

Question 37

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

Question 38

Incoterms were created by the New York Chamber of Commerce and are revised every year.

Question 39

The sales agreement should not address where disputes will be resolved and by what legal system. That belongs in a side document.

Question 40

In CIF (cost, insurance, freight, foreign port) the buyer 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 41

Every importer should know how the U.S. Customs calculates import duties and know the importance of the product classification.

Question 42

Products placed in a bonded warehouse do not pay import duties until they are removed.

Question 43

Straight bills of lading are negotiable documents.

Question 44

When nonexporting firms are asked why they do not export, they generally list the following as problems:

A) locating foreign markets.
B) payment and finance procedures.
C) As stated directly in the text.
D) lack of foreign language expertise.
E) A, B, and C.

Question 45

Exporters should consider both private and public export financing.

Question 46

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 47

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

Question 48

Payment terms are incidental once the customer need has been identified and a sales price agreed to.

Question 49

The L/C sets up the bank as an intermediary between the seller and the buyer and reduces risk of nonpayment.

Question 50

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

Question 51

A confirmed letter of credit guarantees payment to the seller.

Question 52

The EU uses the CE mark to certify health and safety.

Question 53

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

Question 54

If assembly or manufacturing is done in an FTZ using imported components, no duties need to be paid when the finished product is imported.

Question 55

Credit information is 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).
E) all of the above.

Question 56

Market Access and Compliance (MAC) specialists seek to open foreign markets to American products. MAC specialists do not do the following:

A) develop strategies to overcome obstacles faced by U.S. business in foreign countries and regions.
B) monitor foreign country compliance with trade agreements.
C) monitor exchange rate movement.
D) all of the above.
E) A and B.

Question 57

When engaging in international business, banks are concerned with the merchandise, not the documents.

Question 58

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

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 get good advice
E) None of the above (They are all on the list.)

Question 59

Firms that include imported parts in their finished products must pay duty on the imports, but this duty is returned when the product is exported (customs drawback).

Question 60

By accepting a time draft, the buyer assumes the responsibility for making payment at maturity of the draft.

Question 61

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 62

The U.S. Export-Import Bank (Ex-Im Bank) offers the following:

A) export credit insurance.
B) guarantees.
C) direct and intermediary loans.
D) Working Capital Guarantee.
E) all of the above.

Question 63

The Gold Key Service provided through many American embassies offers companies the following:

A) orientation briefings.
B) market research.
C) introductions to potential partners.
D) assistance in developing a marketing strategy for the particular country.
E) all of the above.

Question 64

"Comparing the total cost of ocean freight versus air freight, air freight may be cheaper." What components are considered when making the previous statement?

A) Insurance rates
B) Packing
C) Replacement cost of damaged goods
D) Inventory cost
E) All of the above

Question 65

Export marketing plans should be specific about:

A) the markets to be developed.
B) the marketing strategy for servicing them.
C) the tactics required to make the strategy operational.
D) cash flow projections.
E) A, B, and C.

Question 66

A shipper's export declaration (SED) includes:

A) names and addresses of the shipper and consignee.
B) U.S. port of exit and foreign port of unloading.
C) export license number and bill-of-lading number.
D) description and value of the goods.
E) all of the above.

Question 67

Incoterms are developed and maintained by:

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

Question 68

As stated directly in the text.

Question 69

The premiums charged by marine insurance companies on an international transaction depend on:

A) the age of the ship.
B) whether the goods are stowed on deck or under deck.
C) the volume of business.
D) how the good are packed.
E) all of the above.

Question 70

What is an export license?

A) Permission from the U.S. government to export
B) An international quality performance rating
C) A shipping qualification
D) Permission from the top management team to export
E) Permission to transfer domestic currency abroad

Question 71

The total number of Incoterms as of 2011 is:

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

Question 72

The Department of Commerce organizes events called "Show and Sells" that are helpful in both locating foreign representatives and making sales. Which of the following is not an event offered by the Department of Commerce?

A) U.S. pavilions
B) Reverse trade missions
C) Product literature center
D) Education seminars
E) None of the above

Question 73

Freight forwarders' responsibilities may include all of the following except:

A) booking space on a ship.
B) preparing the export documents.
C) verifying that the seller has money in the bank.
D) arranging to have the merchandise delivered to the port.
E) D and C.

Question 74

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) None of the above

Question 75

An export bill of lading serves as:

A) a contract for carriage between the shipper and the carrier.
B) a receipt from the carrier for the goods shipped.
C) a certificate of ownership.
D) a receipt for the IRS.
E) A, B, and C.

Question 76

The kinds of marine insurance policies include:

A) basic named perils.
B) broad named perils.
C) partial risk.
D) all risk.
E) A, B, and D.

Question 77

Collection documents vary from country to country. The most common types of collection documents that the seller provides to the buyer include all of the following except:

A) commercial invoices.
B) consular invoices.
C) income statements.
D) certificates of origin.

Question 78

Foreign trade zones are also called:

A) free trade zones.
B) transit zones.
C) free perimeters.
D) export processing zones.
E) all of the above.

Question 79

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 80

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.