127) A letter of credit reduces the financial risk for the exporter by substituting a bank’s
creditworthiness for that of the purchaser.
Topic: Exporting
AACSB: Analytic Skills
128) A letter of credit is a document the seller draws on the buyer, requiring the buyer to pay the
face amount (the purchase price of the goods) either on sight (a sight draft) or on a specified date
(a time draft) once the goods are shipped.
Topic: Exporting
AACSB: Analytic Skills
129) Companies should be flexible and willing to make adjustments to their products and
services, promotional campaigns, packaging, and sales techniques when selling abroad.
Topic: Domestic Barriers
AACSB: Analytic Skills
130) A tax, or duty, that a government imposes on goods and services imported into that country
is considered to be a tariff.
Topic: International Barriers
AACSB: Analytic Skills
131) Embargo is when there is a limit on the amount of a product imported into a country.
Topic: International Barriers
AACSB: Analytic Skills
132) An embargo is a total ban on imports of certain products or all products from a particular
nation.
Topic: International Barriers
AACSB: Analytic Skills
27
133) The culture of a nation includes the beliefs, values, views, and mores that its inhabitants
share.
Topic: Culture
AACSB: Multicultural and Diversity
134) Why it is important for small businesses to “go global?”
Topic: Why Go Global?
AACSB: Reflective Thinking
135) What questions should an entrepreneur ask before venturing into the global marketplace?
Topic: Why Go Global?
AACSB: Reflective Thinking
136) How can a small business use the Web to go global?
Topic: Strategies For Going Global
AACSB: Analytic Skills
28
137) One of the seven ways a small business owner can “go global” is through trade
intermediaries. Identify the six types of trade intermediaries and explain why a small
businessperson might use each one.
Topic: Relying on Trade Intermediaries
AACSB: Analytic Skills
138) Discuss joint ventures, identifying the two primary types, and why a small business might
consider using a joint venture to go global.
Topic: Joint Ventures
AACSB: Analytic Skills
29
139) How do foreign licensing and international franchising differ? Why would a small business
owner choose one over the other in going global?
licensing its assets, a small company collects royalties from the sales of its foreign licenses.
International Franchising: Franchising has become a major export industry for the United States.
Over the past decade, a growing number of franchises have been attracted to international
markets to boost sales and profits as the domestic market has become increasingly saturated with
outlets and much tougher to wring growth from. International franchisors sell virtually every
kind of product or service imaginable—from fast-food to child day care—in global markets.
In some cases, the products and services sold in international markets are identical to those sold
in the United States.
Topic: International Franchising
AACSB: Analytic Skills
140) Explain the concepts of countertrade and barter and what role they play in international
business.
Topic: Countertrading and Bartering
AACSB: Analytic Skills
141) Describe how culture can be a barrier to “going global” and offer examples from three
different countries.
Topic: Cultural Barriers
AACSB: Analytic Skills
30
142) For the small business owner there are two major trade agreements, GATT and NAFTA.
Explain each one and its impact on the small business “going global.”
Topic: International Trade Agreements
AACSB: Analytic Skills
31