Question 1

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

Accepted Answer

The answer of Sales forecasts and budgets, pricing policies, product...

Question 2

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

Accepted Answer

The sales agreement should clearly outline the responsibilities and duties of both parties involved in the agreement to avoid any confusion or misunderstandings.

Question 3

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.

Accepted Answer

The answer of CFR (cost and freight, foreign port) is...

Question 4

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

Accepted Answer

In a DAP, the seller assumes risk until the goods are delivered to the named place of destination.

Question 5

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

Accepted Answer

In an open account transaction, the seller assumes more of the payment risk because they ship the goods or provide services before receiving payment from the buyer.

Question 6

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

Accepted Answer

The Carlos Calvo Doctrine, originating from Argentina, advocates for the jurisdictional sovereignty of a nation and argues against the intervention of foreign governments in local judicial matters, particularly in cases involving foreign investors or creditors. It does not specifically address protection against fraud.

Question 7

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

Accepted Answer

Export pricing and sales agreements are important components of the marketing mix when dealing with foreign representatives. This helps to ensure that the product reaches the target market at the right price and with the necessary support from the foreign representatives. Therefore, option A is correct.

Question 8

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

Accepted Answer

Ex-Works/factory door pricing method is preferred by sellers as it transfers most of the responsibility and cost to the buyer, making it a favorable option for the sellers.

Question 9

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.

Accepted Answer

In DAP terms, the seller is responsible for arranging and paying for transportation to the named destination, but the buyer is responsible for import clearance and any applicable local taxes or import duties.

Question 10

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

Accepted Answer

The answer of The export marketing plan is essentially the...

Question 11

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.

Accepted Answer

CIF (Cost, Insurance, and Freight) and CFR (Cost and Freight) are terms used in international trade for the delivery of goods from a seller to a buyer. These terms are more convenient for foreign buyers because they include the cost of transportation and insurance up to the point of arrival at the port of destination. This means that the buyer only needs to add the import duties, landing charges, and freight from the port of arrival to their warehouse, instead of having to arrange and pay for the transportation and insurance from the seller's location to the port of destination.

Question 12

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

Accepted Answer

On an open account, payment is typically due within a specified period after the goods have been delivered, not after the exports have been sold by the importer.

Question 13

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.

Accepted Answer

In FAS, the buyer is responsible for transportation and delivery expenses up to the ship's side, and is also responsible for clearing the goods for export. The risk passes at the ship's rail, which means that once the goods are loaded onto the ship, the buyer bears the risk of any damage or loss during the voyage.

Question 14

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.

Accepted Answer

Open accounts are a more flexible option for buyers and sellers, and may attract more business as a result. Companies using a letter of credit or other forms of secure transactions may lose out on potential customers.

Question 15

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

Accepted Answer

Licensing and joint venture agreements can be very useful for new exporters. Licensing agreements allow the exporter to grant permission to a foreign company to manufacture or sell their products in a specific geographic area, while joint venture agreements allow the exporter to team up with a foreign company to share resources and expertise to enter a new market or develop a new product. Both of these agreements can help new exporters expand their reach and minimize risks associated with entering a new market.

Question 16

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

Accepted Answer

Incoterms are a set of 11 terms that define the responsibilities of the buyer and seller in international trade. These terms help to ensure that both parties understand their obligations and reduce the risk of disputes.

Question 17

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

Accepted Answer

An export marketing plan typically includes product characteristics, promotional plans, and details on arrangements with foreign representatives as these elements are crucial for entering and succeeding in foreign markets.

Question 18

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

Accepted Answer

Incoterms were created by the International Chamber of Commerce (ICC) in Paris in 1936, and they are revised periodically but not every year.

Question 19

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

Accepted Answer

The sales agreement should include provisions for where disputes will be resolved and by what legal system in order to avoid confusion or disagreements later on.

Question 20

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.

Accepted Answer

In CIF, it is the seller who 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.

Quiz 14: Export and Import Practices