Global Business Today, 11e (Hill)
Chapter 14 Exporting, Importing, and Countertrade
1) Only large companies have benefited significantly from the moneymaking opportunities of
exporting.
2) Most small firms actively seek opportunities for exporting rather than wait for demand from
another country.
3) Reactive firms do not consider exporting until their domestic market is saturated.
4) Germany is one of the world’s least successful exporting nations because it simply lacks
knowledge of opportunities.
5) For U.S. firms, the most comprehensive source of information on export opportunities is the
U.S. Department of Commerce.
6) Compared to a decade ago, commercial banks and major accounting firms are more willing to
assist small firms in starting export operations.
7) A company would hire a freight forwarder if it wanted to minimize shipping costs and combine
many smaller shipments into one large shipment.
8) It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of
any subsequent failure.
9) The CORE tool is used by all-sized companies to determine a company’s readiness to export a
product.
10) Lack of trust in international trade is exacerbated by the distance between the two parties in
space, language, and culture.
11) Issued by a bank at the request of an importer, a letter of credit states that the bank will pay a
specified sum of money to the exporter, on presentation of particular, specified documents.
12) A bill of lading verifies to the exporter that his or her company is guaranteed payment and, as
a result, the exporter will ship the products.
13) A draft instructs the exporter to ship product.
14) In international commerce, a person or business initiating a draft is known as the drafter and
the party to whom the draft is presented is known as the draftee.
15) In domestic trade transactions, a buyer can often obtain possession of merchandise without
signing a formal document acknowledging his or her obligation to pay.
16) An international business would use a sight draft when it wishes to delay payment.
17) In international commerce, time drafts are non-negotiable instruments.
18) A bill of lading proves that the carrier has received the merchandise described on the
document.
19) The Export-Import Bank provides financing aid to prospective U.S. exporters.
20) The mission of the Foreign Credit Insurance Association is to provide financing aid that will
facilitate exports, imports, and the exchange of commodities between the United States and other
countries.
21) Without a letter of credit, an exporter faces the risk that the foreign importer will not make
payment.
22) A countertrade indicates the exchange of money for goods and services.
23) Barter is primarily used with trading partners who are not creditworthy or trustworthy.
24) An offset agreement limits the flexibility to choose the goods an exporter wants to purchase.
25) Countertrade’s main attraction is that it can give a firm a way to finance an export deal when
other means are not available.
26) Exporting is nearly always a way to increase the revenue and profit base of a company because
A) there is little competition in the international market.
B) foreign governments encourage imports from other countries.
C) international markets are less complex than their domestic counterparts.
D) the international market is much larger than the domestic market.
E) it does not involve wasting resources on paperwork.
27) Jeff, the sales manager for Audio-Visual Systems, a small family business, is eager to get the
company on an export path. The CEO of the company is not convinced, however. To convince the
CEO, Jeff should point out that firms that do not export often
A) face problems of currency conversion.
B) lose out on significant opportunities for cost reduction.
C) are able to reduce their unit costs.
D) typically grow faster than those that do.
E) can more easily leverage their technology in foreign markets.
28) When seeking opportunities for profitable exporting, large firms generally tend to be
A) passive.
B) risk averse.
C) wary.
D) proactive.
E) neutral.
29) In terms of exporting, what can be said of medium-sized and small firms?
A) They are proactive about seeking opportunities for profitable exporting.
B) They consider exporting only after their domestic market is saturated.
C) They are not intimidated by the complexities of foreign legal systems.
D) They have a high degree of familiarity with foreign market opportunities.
E) They explore foreign markets to find opportunities for leveraging their technology.
30) Many medium-size firms are not proactive in seeking export opportunities because
A) they are familiar with the foreign market and do not find it challenging enough.
B) the export market is similar to the home market in terms of legal and business practices.
C) they are intimidated by the complexities and mechanics of exporting to foreign countries.
D) domestic regulations limit their ability to export profitably.
E) they can’t recruit managers with the expertise needed to cultivate business in foreign countries.
31) A common pitfall that novice exporters come across involves
A) poor understanding of the domestic market.
B) low unit costs.
C) increased economies of scale.
D) problems securing financing.
E) familiar distribution systems.
32) One characteristic of exporting that many first-time exporters do not realize is that
A) many foreign customers require face-to-face negotiations on their home turf.
B) large firms tend to wait for the world to come to them, rather than going out into the world to
seek opportunities.
C) exporters have the advantage of reduced paperwork and fewer formalities.
D) medium-size and small firms are proactive about seeking opportunities for profitable exporting.
E) firms that focus only on exporting often lose out on significant opportunities for growth and
cost reduction.
33) Unhappy with the speed with which the company’s export initiative was going, the CEO called
Ken, the person in charge of exports at Resolve Products. What aspect of exporting can Ken use to
validate the slow progress of Resolve Products’ efforts?
A) The U.S. government does not provide any help for exporters.
B) Novice exporters tend to overestimate the time required to cultivate business in foreign
countries.
C) Exporters often face voluminous paperwork, complex formalities, and many potential delays
and errors.
D) Small firms are usually familiar with foreign market opportunities.
E) Large firms do not consider exporting until their domestic market is saturated.
34) Sogo shosha in Japan are a type of
A) freight forwarder.
B) trading house.
C) currency exchange.
D) production site.
E) customer service center.
35) The function of sogo shosha in Japan is to
A) proactively and continuously seek export opportunities for their affiliated companies.
B) exclusively serve the largest and most prestigious companies in Japan.
C) have offices concentrated in the business district of Tokyo.
D) monopolize the export market in the country.
E) consider export only when there is excess production at home.
36) What is an accurate assessment when comparing exports of Germany, Japan, and the United
States?
A) Historically, only the United States has made its living as a trading nation.
B) Germany and Japan are relatively self-contained continental economies in which international
trade played a minor role.
C) Unlike Japan or Germany, U.S. firms have a strong information advantage when they seek
export opportunities.
D) The United States has not yet evolved an institutional structure for promoting exports similar to
that of Germany or Japan.
E) The Ministry of International Trade and Industry (MITI) in the United States is always on the
lookout for export opportunities. There is no such organization elsewhere.
37) Kristine works for Ringer Labs in Salt Lake City, Utah. Her company is seeking information
on export opportunities. What is the best source of information Kristine can use?
A) Small Business Administration
B) Department of Commerce
C) Federal Trade Commission
D) United Nations
E) Federal Deposit Insurance Corporation
38) Which institution within the U.S. Department of Commerce is dedicated to providing
businesses with intelligence and assistance for attacking foreign markets?
A) International Trade Administration
B) Small Business Administration
C) Federal Trade Commission
D) Bureau of Competition
E) Bank of New York
39) One way the U.S. Department of Commerce helps potential exporters is by
A) overseeing volunteers with international trade experience.
B) assembling a “comparison shopping service” for countries that are major markets for U.S.
exports.
C) coordinating a nationwide group of international trade attorneys who provide free initial
consultations to small businesses.
D) providing export specialists who act as the export marketing departments for their client firms.
E) starting exporting operations for firms until they are well established.
40) Manuel, the CEO of Gilson Products, a small manufacturer of office furniture, is going abroad
along with representatives of the U.S. Department of Commerce and other U.S. businesspeople to
meet with qualified agents, distributors, and customers. Manuel is most likely participating in the
A) matchmaker program.
B) “best prospects” listing.
C) SCORE program.
D) “comparison shopping service.”
E) export-import program.
41) The government organization that employs 76 district international trade officers and 10
regional international trade officers throughout the United States as well as a 10-person
international trade staff in Washington, D.C., to help to help potential exporters is the
A) Federal Trade Commission.
B) U.S. Commercial Service.
C) International Trade Administration.
D) Small Business Administration.
E) sogo shosha.
42) The Small Business Administration oversees almost 11,500 volunteers with international trade
experience to provide one-on-one counseling to active and new-to-export businesses through its
program known as the
A) Export Legal Assistance Network.
B) Service Corps of Retired Executives.
C) International Trade Veteran’s Group.
D) Network of Foreign Trade Executives.
E) Export Management Company.
43) The Small Business Administration coordinates a group of ________ in the ELAN program
who provide free initial consultations to small businesses on export matters.
A) engineers
B) politicians
C) accountants
D) attorneys
E) networkers
44) The Eks-Plore Company exports outdoor gear for firms on the east coast of the United States.
The company identifies companies in Europe and Asia that market and sell these products.
Eks-Plore handles all documentation, logistics, and transportation for the products. What type of
business is the Eks-Plore Company?
A) export trading company
B) wholly owned subsidiary
C) franchise
D) confirming house
E) piggyback marketers
45) A medium-size skincare company based in Minnesota plans to expand operations into four
countries in Europe. The company decides to hire a(n) ________ that can help the company with
the specific laws and documentation requirements for imports for the four countries.
A) confirming house
B) customs broker
C) export packaging company
D) franchisee
E) buying agent
46) Deli-Lite has a contract with a foreign client to provide low-fat deli trays. Deli-Lite does not
have one of the items the foreign client wants on the trays, so it decides to contract with Green
Source to fulfill this contract. What is this an example of?
A) piggyback marketing
B) an acquisition
C) a customs broker
D) licensing
E) a remarketer
47) Miami WindSails wants to export but, as a small family business, is cautious, particularly with
respect to financial risk. What is a strategic step that you would advise Miami WindSails to take to
increase its probability of exporting successfully?
A) avoid the use of export management companies to contain costs
B) enter several markets simultaneously to hedge risk
C) enter a foreign market on a small scale
D) wait for export opportunities to come to them
E) avoid recruitment of local personnel
48) Firms engaged in international trade deal with people they may have never seen, who live in
different countries, who speak different languages, and who abide by different legal systems.
These factors result in
A) easy tracking of the parties involved.
B) a lack of trust between the parties.
C) strict enforcement of contractual obligations.
D) rapid acculturation.
E) better understanding of how transactions should be configured.