Question 1

Indirect exporting is exporting that is accomplished by contracting with intermediaries located in the foreign market.

Accepted Answer

False

Question 2

After managers have chosen an appropriate market for exporting, the next step is to ________.
A)decide about the resources to be committed
B)acquire the skills and competencies to handle export operations
C)engage appropriate international trade attorneys
D)modify advertising and promotional activities to suit individual markets

Accepted Answer

After choosing an appropriate market, the next step for managers would be to decide about the resources to be committed. This includes determining the financial, human, and material resources necessary for exporting operations.

Question 3

Which of the following most likely supports OTC exporting their towels to Earth Waves?
A)Domestic sales of OTC towels have dwindled, and a new market is needed.
B)Earth Waves is located in an excellent location in central Toronto.
C)OTC is an SME that can readily adapt to the demands of the Canadian market.
D)The founder of OTC has numerous contacts in Canada.

Accepted Answer

C

Question 4

The Internet facilitates international trade in the service sector by ________.
A)providing the means to export some types of services to foreign markets
B)providing the means to avoid taxes in the foreign market
C)allowing firms to attain maximum control by establishing ownership of key assets
D)eliminating the need to deal with foreign currency exchange rates

Accepted Answer

The internet allows service providers to export some types of services to foreign markets, which facilitates international trade in the service sector. This can be done by providing services online or remotely, making it easier to reach customers in different countries without establishing a physical presence in those markets. The other choices (B, C, and D) are not accurate.

Question 5

________ will internationalize via FDI because they require direct contact with customers.
A)Insurance firms
B)Accountants
C)Construction firms
D)Retailing firms

Accepted Answer

Retailing firms require direct contact with customers, making foreign direct investment (FDI) a good option for internationalization. Insurance firms, accountants, and construction firms do not necessarily require direct customer contact, so they may seek other methods of internationalization such as licensing or franchising.

Question 6

Exporting and importing collectively refers to international trade.

Accepted Answer

Exporting and importing are activities that involve international trade, where goods and services are exchanged between two or more countries.

Question 7

In a short essay, explain the factors involved in a firm's decision to use indirect exporting or direct exporting.

Accepted Answer

The answer of In a short essay, explain the factors...

Question 8

Which of the following should be considered first in making the decision to export OTC towels to Canada?
A)What is the probability of OTC and Earth Waves entering into a joint venture?
B)How much fluctuation occurs in the exchange rate between the Canadian dollar and the British pound?
C)What is the likelihood of Earth Waves opening a subsidiary in Canada?
D)What documentation would be required for OTC to export towels to Asia?

Accepted Answer

Knowing the exchange rate between the currencies is important as it will affect the pricing and profitability of the exporting transaction.

Question 9

Which of the following activities is applicable to the final stage of exporting?
A)The firm engages appropriate bankers and international trade attorneys.
B)The firm screens the most attractive export markets.
C)The firm modifies advertising and public relations to suit individual markets.
D)The firm acquires product development and foreign language skills.

Accepted Answer

Modifying advertising and public relations to suit individual markets is applicable to the final stage of exporting, where the firm is preparing to enter and operate in the chosen export market. This involves customizing marketing and communication strategies to meet local needs and preferences. The other options are applicable to earlier stages of the exporting process. Acquiring product development and foreign language skills may be necessary in the initial stages of preparing for export, while engaging bankers and trade attorneys and screening potential markets are part of the market selection and entry phase.

Question 10

Which of the following most strongly suggests OTC should not export its towels to Earth Waves?
A)OTC managers are risk-takers with the determination to expand OTC.
B)OTC's towel manufacturing at the Liverpool facility is nearing maximum capacity.
C)Earth Waves has a large client base and publishes a semi-annual catalog.
D)Earth Waves has offered to guide OTC through Canadian regulations.

Accepted Answer

The fact that OTC's towel manufacturing at the Liverpool facility is nearing maximum capacity suggests that exporting towels to Earth Waves may not be feasible or efficient. If OTC is already operating at full capacity, it may not be able to fulfill the demands of Earth Waves or other potential customers, which could negatively impact the company's reputation and profitability. The other options are not relevant or do not provide compelling reasons to reject the export offer.

Question 11

Describe the four-step process many managers use to achieve successful exporting.

Accepted Answer

The answer of Describe the four-step process many managers use...

Question 12

Which of the following is an advantage of exporting?
A)It allows focal firms to attain maximum control by establishing ownership of key assets in the foreign market.
B)It is a high-control strategy that requires substantial resource commitment when compared to equity joint ventures.
C)It minimizes exposure to tariffs and other trade barriers, as well as fluctuations in exchange rates.
D)It increases overall sales volume, improves market share, and reduces per-unit costs of manufacturing.

Accepted Answer

Exporting allows firms to increase overall sales volume by reaching new markets, improve market share by competing with local players, and reduce per-unit costs of manufacturing by producing in larger quantities. This can lead to economies of scale and increased profitability for the firm. While some risks such as exposure to trade barriers and fluctuations in exchange rates exist, these can be managed through proper planning and risk management strategies. Option A describes a strategy for internationalization that involves a high degree of control, but this is not necessarily an advantage of exporting. Option B is incorrect as exporting typically requires less resource commitment than equity joint ventures.

Question 13

Compared to other entry strategies, exporting minimizes risk and maximizes flexibility.

Accepted Answer

Exporting allows a company to enter a foreign market without making a large upfront investment or requiring a physical presence in the foreign market, which minimizes risk. Additionally, the company can adjust its export volume based on market demand, maximizing flexibility.

Question 14

Focal firms that internationalize through exporting will most likely perform ________ in the home market.
A)sales
B)distribution
C)marketing
D)manufacturing

Accepted Answer

The answer of Focal firms that internationalize through exporting will...

Question 15

Which of the following is a characteristic of direct exporting?
A)exporter uses few corporate resources and personnel
B)exporter develops a closer relationship with foreign buyers
C)exporter contracts with domestic intermediaries
D)exporter delegates responsibility of finding buyers

Accepted Answer

Direct exporting involves the exporter directly engaging with the foreign market, which allows for the development of closer relationships with foreign buyers, as opposed to using intermediaries.

Question 16

Which of the following is most likely a disadvantage to firms who use exporting as an entry strategy?
A)high cost of foreign market entry
B)difficulties withdrawing from foreign markets
C)high risk of low sales due to fluctuations in exchange rates
D)high risk due to uncertainty in the political environment of the foreign market

Accepted Answer

Exporting exposes firms to fluctuations in exchange rates, which can lead to unpredictable sales revenues in foreign markets, and potentially lead to losses. This can be considered a major disadvantage for firms that rely on exporting as their primary entry strategy. The other options (A, B, and D) may also present challenges, but they are not necessarily unique to exporting as an entry strategy.

Question 17

Company-owned subsidiary is ________.
A)accomplished by contracting with intermediaries located in the firm's home market
B)typically achieved by contracting with intermediaries located in the foreign market
C)a foreign intermediary that serves as an extension of the exporter, negotiating on behalf of the exporter and assuming such responsibilities as local supply-chain management, pricing, and customer service
D)a representative office of the focal firm that handles marketing, physical distribution, promotion, and customer service activities in the foreign market

Accepted Answer

A company-owned subsidiary is a representative office of the focal firm that handles marketing, physical distribution, promotion, and customer service activities in the foreign market.

Question 18

Which of the following services cannot be exported?
A)insurance services
B)education
C)pure services
D)construction

Accepted Answer

Pure services are intangible and cannot be exported in the traditional sense as they do not involve a physical product or presence.

Question 19

The Internet provides the means to export pure services.

Accepted Answer

The answer of The Internet provides the means to export...

Question 20

Which of the following questions must be evaluated by OTC managers as a first step to exporting?
A)What are the risks involved in exporting OTC towels to Earth Waves?
B)Do Canadian towel companies have a high success rate when they export?
C)Will OTC save money on domestic marketing by exporting?
D)How can OTC adapt its distribution strategy in Canada?

Accepted Answer

The answer of Which of the following questions must be...

Quiz 13: Exporting and Global Sourcing

Indirect exporting is exporting that is accomplished by contracting with intermediaries located in the foreign market.

After managers have chosen an appropriate market for exporting, the next step is to ________.

Which of the following most likely supports OTC exporting their towels to Earth Waves?

The Internet facilitates international trade in the service sector by ________.

________ will internationalize via FDI because they require direct contact with customers.

Exporting and importing collectively refers to international trade.

In a short essay, explain the factors involved in a firm's decision to use indirect exporting or direct exporting.

Which of the following should be considered first in making the decision to export OTC towels to Canada?

Which of the following activities is applicable to the final stage of exporting?

Which of the following most strongly suggests OTC should not export its towels to Earth Waves?

Describe the four-step process many managers use to achieve successful exporting.

Which of the following is an advantage of exporting?

Compared to other entry strategies, exporting minimizes risk and maximizes flexibility.

Focal firms that internationalize through exporting will most likely perform ________ in the home market.

Which of the following is a characteristic of direct exporting?

Which of the following is most likely a disadvantage to firms who use exporting as an entry strategy?

Company-owned subsidiary is ________.

Which of the following services cannot be exported?

The Internet provides the means to export pure services.

Which of the following questions must be evaluated by OTC managers as a first step to exporting?