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Module B Export and Import Practices Answer Key
True / False Questions
1.
The two major reasons U.S. firms give for not exporting are (1) preoccupation with the
vast American market and (2) reluctance to become involved in a new and unknown
operation.
2.
The first step in finding a foreign market for a product is to determine whether a market
exists for a firm's products.
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3.
CIBERs are international business research and education efforts located at U.S.
universities.
4.
Once a firm determines that a market exists for its products, it needs to decide to export
directly or indirectly.
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5.
Mistakes in selecting foreign distributors and sales representatives are not an issue new
exporters face.
6.
Once in export markets, new exporters tend to maintain their focus on them, despite what
is happening in the home market.
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7.
Often new exporters think that they won't have to localize their approach, assuming that a
marketing technique or distribution system that works in one country will work in another.
8.
Often small exporters don't consider the use of an export management company (EMC)
when they should.
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9.
The export-marketing plan is essentially the same as the domestic marketing plan.
10.
The export marketing plan does not include product characteristics, promotional plans,
and details on arrangements with foreign representatives.
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11.
Sales forecasts and budgets, pricing policies, product characteristics, holiday schedules,
and cash flow projections are all part of the export marketing plan.
12.
Incoterms are 11 trade terms that describe the responsibilities of the buyer and seller in
international trade.
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13.
In FAS (free alongside ship, named loading port), the seller pays all the transportation and
delivery expense up to the ship's side and clears the goods for export.
14.
In CIF (cost, insurance, freight, named destination port), the seller 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.
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15.
In a DDP (delivered, duty paid), the seller delivers goods to the designated destination and
covers all duties, taxes, and customs.
16.
In a DAT (delivered at terminal), the buyer is responsible to pay for all transportation cost
from the seller's location, including customs clearing, to the buyer's location.
17.
Out of all the pricing methods mentioned, the preferred one for sellers is Ex-Works/factory
door.
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18.
The sales agreement should specify as simply as possible the duties of the representative
and the firm.
19.
Most international customers will pay cash in advance unless the order is for a custom-
made product.
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20.
On an open account, the buyer assumes all of the payment risk.
21.
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 who sell on open accounts.
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22.
A confirmed letter of credit guarantees payment to the seller.
23.
The concept of the L/C is a simple one, the bank as intermediary between buyer and
seller. In fact, though, a simple irrevocable L/C requires five steps to clear payment.
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24.
Export drafts must be paid before the buyer receives shipping documents.
25.
Factoring allows the exporter to be more competitive by selling on open account rather
than by means of the more costly letter of credit method.
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26.
Free trade zones are areas designated by the government of a country for duty-free entry
of any nonprohibited good.
27.
A shipper's export declaration (SED) is a document required by the Department of
Agriculture to control exports and supply export statistics.
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28.
Straight bills of lading are negotiable documents.
29.
Exporting using ocean freight rather than air freight is a much cheaper alternative,
particularly when calculated on the basis of total costs.
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30.
Customhouse brokers have functions parallel to those of foreign freight forwarders, but on
the export side of the transaction.
Multiple Choice Questions
31.
Why do companies not export?
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32.
When nonexporting firms are asked why they do not export, they commonly list each of the
following as problems except
33.
What is the first step in locating foreign markets?
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34.
Once the potential exporter has established that there may be a market for the firm's
products, it's time to
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35.
For U.S. firms that already are exporting, which of the following organizations offers export
promotion activities that include export counseling, analysis of foreign markets,
assessment of industry competitiveness, and development of market opportunities and
sales representation through export promotion events?
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36.
Which of the following does not belong to the International Trade Administration?
37.
Global Markets Unit specialists seek to provide which of the following services to U.S.
firms?
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38.
The Small Business Administration (SBA) provides what kind of assistance?
39.
The Enforcement and Compliance unit of the ITA helps American business by
