Chapter 10 — Worldwide Sourcing
51. Which of the following is not an example of cost differentials that arise between countries?
a.
Lower labor rates.
b.
Fewer documentation requirements.
c.
Possible willingness to accept a lower profit margin.
d.
Exchange rate differences.
e.
Government subsidies.
52. All of the following are considered barriers to worldwide sourcing except _____.
a.
use of simplified Incoterms compared to complex domestic terms of sale
b.
lack of knowledge and skills concerning global sourcing
c.
different business customs, language, and culture
d.
currency fluctuations
e.
resistance to change
53. All of the following are common methods for overcoming barriers to worldwide sourcing except _____.
a.
b.
c.
d.
e.
54. Which of the following is not one of the usual roles of an international purchasing office (IPO)?
a.
Identify potential suppliers.
b.
Solicit quotes or proposals..
c.
Obtain product samples.
d.
Manage countertrade requirements.
Chapter 10 — Worldwide Sourcing
e.
Conduct overseas sales and marketing-related activities.
Easy
Analytic
55. Which of the following is not one of the usual roles of an international purchasing office?
a.
Expedite and trace shipments.
b.
Negotiate supply contracts.
c.
Make payments and bribes to foreign officials to secure or retain business.
d.
Represent the buying firm to suppliers.
e.
Manage technical and commercial concerns.
Easy
Analytic
56. _____ is the sum of the understandings that govern human interaction in a society.
a.
Values
b.
Beliefs
c.
Language
d.
Behavior
e.
Culture
Easy
Analytic
57. Which of the following is not an element of culture?
a.
Language.
b.
Religion.
c.
Values and attitudes.
d.
Infrastructure.
e.
Social institutions.
Easy
Analytic
58. _____ is/are shared beliefs or group norms that are internalized and affect(s) the way people think, while _____ is/are
based on values and attitudes and affect(s) the people act.
Chapter 10 — Worldwide Sourcing
a.
Behavior…values
b.
Culture…infrastructure
c.
Values…behavior
d.
Infrastructure…behavior
e.
Jurisprudence…culture
Moderate
Bloom’s: Remembering
Analytic
59. According to Dick Locke, all of the following are advice about language and communication except _____.
a.
if a supplier is using English as a second language, the buyer should be responsible for preventing
communication problems
b.
always pay in U.S. dollars when dealing with worldwide suppliers
c.
to aid in communication, speak slowly, use more communication graphics, and eliminate jargon, slang, and
sports and military metaphors from your language
d.
bring an interpreter to all but the most informal meetings
e.
document, in writing, the conclusions and decisions made in a meeting before adjourning
Moderate
Bloom’s: Remembering
Analytic
60. _____ are internationally recognized commercial terms that describe the responsibilities of the buyer and seller in the
arrangement of transportation and clarify when the ownership of the merchandise takes place.
a.
Incoterms
b.
Duties
c.
Letters of credit
d.
Values
e.
Tariffs
Moderate
Bloom’s: Remembering
Analytic
61. According to the CISG, a/an _____ is one of the countries that have ratified the treaty.
a.
rogue state
b.
independent commonwealth
c.
trading block
d.
contracting state
e.
The CISG is no longer in force.
62. The _____ was passed by Congress in 1977 to prevent companies from making questionable or illegal payments to
foreign government officials, politicians, and political parties.
a.
Foreign Corrupt Practices Act (FCPA)
b.
Sherman Antitrust Act
c.
CISG
d.
Incoterms Act
e.
Clayton Act
Moderate
Analytic
5
63. _____ is a broad term that refers to all international and domestic trade where buyer and seller have at least a partial
exchange of goods for goods.
a.
Six Sigma
b.
Countertrade
c.
Re-shoring
d.
IPO
e.
CISG
b
Easy
Analytic
5
64. All of the following are typical reasons why a country imposes countertrade demands except _____.
a.
some countries simply lack the hard currency to purchase imported goods
b.
countertrade provides a means of selling products in markets to which a company may have otherwise lacked
access
c.
developing nations often require Western multinationals to accept goods as at least partial payment for sales
within their country
d.
the country may need assistance to produce its own goods and services
e.
All of the above.
d
Moderate
Analytic
5
Easy
Analytic
5
65. Which of the following statements regarding countertrade is false?
a.
Items involving large dollar amounts, such as military contracts, are prime candidates for countertrade.
b.
Companies can expect countertrade demands from a country when that country’s goods may have a low or
nondifferentiated perception in the world marketplace.
c.
Highly valued items or those sought after by the buying country are less susceptible to countertrade demands.
d.
Countertrade may include items that are available from many sources, commodity-type items, or items not
perceived as technologically superior or having higher quality compared with other available products.
e.
Countertrade is a simple process as it avoids currency exchange fluctuations.
Moderate
Analytic
66. _____ is a process that involves the straight exchange of goods for goods with no exchange of currency.
a.
Counterpurchase
b.
Offset
c.
Barter
d.
Buy-back
e.
Switch trading
Easy
Analytic
67. _____ requires a selling firm to purchase a specified amount of goods from the country that purchased its products.
a.
Nearshoring
b.
Barter
c.
Compensation trading
d.
Counterpurchase
e.
Buy-back
Easy
Analytic
68. _____ agreements require the seller to purchase some agreed-uponpercentage of goods from a country over a specified
period but allow a company to fulfill its countertrade requirement with any company or industry in the country.
a.
Offset
b.
Compensation trading
c.
Switch trading
d.
Buy-back
e.
Barter
Chapter 10 — Worldwide Sourcing
Moderate
Analytic
69. _____ occurs when a firm physically builds a plant in another country or provides a service, equipment, or technology
to support the plant; the firm then agrees to take a portion of the plant’s output as payment.
a.
Switch trading
b.
Buy-back
c.
Offset
d.
Counterpurchase
e.
Barter
Easy
Analytic
70. _____ occurs when a selling company agrees to accept goods from the buying country as partial payment.
a.
Compensation trading
b.
Buy-back
c.
Barter
d.
Counterpurchase
e.
Switch trading
Easy
Analytic
71. A/An _____ is a secure location approved by the appropriate U.S. Customs and Border Protection (CBP) office.
a.
offshore supplier
b.
international purchasing office
c.
agent
d.
offset
e.
foreign trade zone
Easy
Analytic
72. A FTZ _____ is typically housed in a port or an industrial park and is available to multiple companies.
a.
warehouse
Chapter 10 — Worldwide Sourcing
b.
twilight zone
c.
subzone
d.
general-purpose zone
e.
None of the above.
Easy
Analytic
73. A FTZ _____ is approved for a specific use or a specific company.
a.
general-purpose zone
b.
offset zone
c.
subzone
d.
CISG
e.
None of the above.
Easy
Analytic
74. _____ mean(s) that no duties or quota charges will be placed on goods that are reexported from the FTZ.
a.
Inverted tariff
b.
Duty deferral
c.
EXW
d.
Duty exemption
e.
Streamlined customs procedures
Easy
Analytic
75. All of the following are elements of total cost for worldwide sourcing except _____.
a.
domestic corporate sales, general, and administrative expenses
b.
packaging
c.
base price
d.
inventory carrying cost
e.
insurance premiums
Easy
Analytic
76. All of the following are elements of total cost for worldwide sourcing except _____.
a.
payment terms
b.
customs brokers fees
c.
additional fees or commissions
d.
domestic income taxes
e.
inventory carrying costs
Easy
Analytic
77. All of the following are elements of total cost for worldwide sourcing except _____.
a.
payment and currency fees
b.
port terminal and handling fees
c.
communication costs
d.
base price
e.
new product advertising
Easy
78. A/An _____ is issued by the purchaser’s bank in conjunction with an affiliate bank in the seller’s country which
assures the seller that the funds are in the bank.
a.
bill of lading
b.
letter of credit
c.
Incoterm
d.
hedging contract
e.
tariff
Easy
Analytic
79. A/An _____ can be changed or canceled at any time by the buyer without the seller’s consent.
a.
irrevocable letter of credit
b.
Incoterm
c.
revocable letter of credit
d.
CISG
e.
switch trade
Chapter 10 — Worldwide Sourcing
80. A/An _____ can only be changed or canceled upon agreement of all parties.
a.
compensation trade
b.
revocable letter of credit
c.
buy-back
d.
optional commission
e.
irrevocable letter of credit
81. All of the following are common measures used to manage currency fluctuation in international purchasing except
_____.
a.
letters of credit
b.
purchase in U.S. dollars
c.
sharing currency fluctuation risk
d.
currency adjustment contract clauses
e.
currency hedging
82. With a _____, both parties agree that payment occurs as long as exchange rates do not fluctuate outside an agreed-
upon range or band.
a.
hedging agreement
b.
payment in a foreign currency
c.
speculation agreement
d.
currency adjustment clause
e.
payment in U.S. dollars
83. If the purpose of buying currency contracts is to realize a net gain, then the purchaser is _____ and not _____.
Chapter 10 — Worldwide Sourcing
a.
hedging….speculating
b.
speculating….hedging
c.
speculating….financing
d.
hedging….financing
e.
Purchasers do not get involved in managing currency fluctuation as this is solely a finance department activity.
Bloom’s: Understanding
84. All of the following are examples of how a finance department can support international currency requirements except
_____.
a.
pay in U.S. dollars
b.
identify the currency a firm should use for payment based on projections of currency fluctuations
c.
provide advice about hedging and currency forecasts
d.
act as a clearinghouse for offshore currencies to make payment for offshore purchases
e.
provide advice as to whether to seek a new contract or renegotiate an existing one because of currency changes
Bloom’s: Understanding
85. Which of the following is not one of the factors that drive global sourcing performance?
a.
Centrally coordinated and centrally led decision making.
b.
Site-based control of operational activities.
c.
Ability to speak multiple foreign languages.
d.
Sourcing and contracting systems.
e.
International purchasing office support.
Bloom’s: Remembering
86. All of the following are examples of the reliable and timely information required for successful global sourcing except
_____.
a.
a listing of existing contracts and suppliers
b.
reports on supplier capabilities and performance
c.
worldwide volumes by purchase type and location
d.
information about potential new suppliers
e.
truck traffic patterns around the supplier’s facility
87. Which of the following is not an example of resources that affect global sourcing success?
a.
Budget support for travel.
b.
A large corporate headquarters building.
c.
Access to qualified personnel.
d.
Time for personnel to develop global strategies.
e.
Availability of required information and data.