International Business, 14e (Daniels et al.)
Chapter 13 Export and Import
1) Which of the following transactions refers to the sale of goods or services produced by a company
based in one country to customers that reside in a different country?
A) importing
B) countertrading
C) exporting
D) freight forwarding
2) Small and medium-size enterprises, such as SpinCent as seen in the opening case for chapter 13,
account for ________ of all U.S. exporters.
A) 38%
B) 54%
C) 79%
D) 97%
3) Which of the following best explains why SpinCent decided to export?
A) growth opportunities in Asia
B) labor demands in the U.S.
C) declining tariffs in the EU
D) promising market locations in South America
4) Iverson Products is a U.S. firm that is considering expanding internationally by exporting. Which of
the following is the LEAST likely benefit for Iverson?
A) boosting marketplace flexibility
B) improving economies of scale
C) facing lower business risk compared to other foreign market entry options
D) requiring fairly few resources
5) Which of the following transactions refers to the purchase of goods or services produced by a
company based in one country from sellers that reside in a different country?
A) importing
B) countertrading
C) exporting
D) freight forwarding
6) Which of the following is NOT an example of a service export?
A) a management firm providing advice to a foreign client
B) an investment bank arranging financing for a foreign firm
C) a coffee chain opening a new store in a foreign country
D) an engineering firm building roads in a foreign country
7) This spring break you are planning to leave the U.S. and visit London, where you will stay in a hotel
for 10 days. The London hotel will be performing a ________.
A) indirect merchandise export
B) merchandise export
C) service export
D) service import
8) The benefits of retaining a core competency within a company and purposefully threading that core
competency through the value chain are referred to as ________ advantages.
A) internalization
B) domestic
C) location
D) ownership
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9) Companies are likely to export products abroad in all of the following situations EXCEPT which one?
A) when their average cost per unit of home country production declines substantially by increasing
output
B) when they want to use the riskiest but most profitable method to engage international trade
C) when they aim to increase degree of market diversification
D) when they are new to international business
10) Boyce Dynamics, a U.S. maker of LED flashlights, fills unsolicited orders from foreign buyers. It
has not proactively investigated international trade options. Boyce Dynamics is best categorized as a(n)
________.
A) regular exporter
B) non-exporter
C) occasional exporter
D) domestic exporter
11) Which of the following is usually NOT a factor that triggers companies to look to exports to boost
total sales?
A) maturity of the domestic market
B) potential to leverage core competencies in foreign markets
C) social needs in developing countries
D) response to the market entry of a foreign rival
12) The CEO of Coffman Enterprises wants to export products to foreign markets. However, top
executives at Coffman are concerned that the firm will face fierce competition from foreign rivals
because Coffman lacks significant core competencies. The executives are most likely worried that
Coffman lacks ________.
A) capital advantages
B) internalization advantages
C) location advantages
D) ownership advantages
13) The probability that a business is engaged in exporting tends to ________.
A) decrease with the size of the firm
B) increase with the product life cycle
C) decrease with the product life cycle
D) increase with the size of the firm
14) Barton Accessories has two retail stores and one production facility where the firm’s line of leather
belts and purses are assembled. Barton employs 430 people and generates nearly $1 million in revenue
each year through domestic and international sales. Which term best describes the status of Barton?
A) SME
B) MNE
C) MNC
D) FDI
15) The ________ of a firm is the share of its total output that is exported.
A) freight forward
B) incremental export
C) export intensity
D) intermodal export
16) Which of the following statements about small and medium-sized enterprises (SMEs) is true?
A) SMEs are steadily reducing their export intensity ratios.
B) SMEs make up the majority of all U.S. exporters.
C) SMEs are the source of more than half of the monetary value of U.S. exports.
D) SMEs that export goods have fewer than 20 employees.
17) According to the research described in your text, which of the following is among the factors that
would increase a firm’s probability of exporting?
A) low domestic productivity
B) high domestic labor costs
C) high level of operational efficiency
D) high R & D demands
18) Vantex Fabrics is a U.S. firm that designs, manufactures, and sells high-quality fabrics used for
home decor. Executives at the firm believe that Vantex could significantly increase its profitability by
exporting fabrics to foreign markets. The vice president of marketing is in favor of exporting to England,
while the vice president of finance asserts that the firm would benefit most from exporting to China.
Which of the following, if true, best supports the vice president of marketing’s suggestion?
A) Incremental internalization reduces the exporting risks facing Vantex.
B) Rapid internationalization decreases the likelihood of failure for Vantex.
C) Vantex plans to diversify its product offerings within the next ten years.
D) Vantex employs 450 people and will likely develop worldwide operations within 12 months.
19) Vandelay Designs is a small firm based in Boston that makes and sells scrapbooking products
through its retail store and Web site. Many of Vandelay’s first sales were made to customers located in
Canada, England, and Japan. Vandelay Designs would best be identified as a(n) ________.
A) incremental exporter
B) occasional exporter
C) born global
D) geo-expo
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20) An Australian company makes athletic wear for women, men, and adults. After several years of
successfully exporting its products to the U.K. and the U.S., the company began exporting to Japan. This
is an example of ________.
A) a born-global company
B) a location advantage
C) third-party exporting
D) incremental internationalization
21) The perspective of ________ holds that as a company gains experience, resources, and confidence, it
progressively increases its scope of countries to which it exports.
A) serendipity
B) export management
C) the born-global theory
D) incremental internalization
22) Which of the following best describes the concept of serendipity in exporting?
A) modifying products to meet cultural preferences
B) initiating global sales through e-commerce methods
C) relying too much on exports when domestic sales suddenly increase
D) opportunistically responding to unsolicited orders from foreign customers
23) Which of the following has been the LEAST likely outcome of e-commerce on exporting?
A) enhancing supply chains
B) triggering a rise in born globals
C) overcoming capital limitations for SMEs
D) expanding market opportunities for traders
24) What is the most likely reason that firms avoid aggressively seeking export opportunities?
A) Exporting is an activity best left to large, resource rich firms.
B) Firms are unaware of opportunities in foreign markets.
C) Foreign customers cannot easily communicate their needs.
D) Firms are reluctant to adjust their established business practices.
25) All of the following are common problems associated with exporting and importing EXCEPT
________.
A) managing financial risks
B) finding reliable intermediaries
C) matching foreign rivals’ prices
D) establishing distribution networks
26) The basis for designing an effective export strategy most likely begins with ________.
A) identifying how a firm can leverage its core competencies into foreign markets
B) hiring local personnel in target markets to build the business
C) enlisting the support of an export management company
D) simultaneously targeting a large number of foreign markets
27) In designing an export plan, managers initially do all of the following EXCEPT ________.
A) sequence tactics
B) specify objectives
C) identify useful resources
D) organize financial support
28) You are the manager of an SME in the United States, and your firm wants to begin exporting. Since
you have never been involved with exporting, there are many compelling reasons that encourage
contacting the ________ to obtain expert counseling on exporting.
A) U.S. Treasury Department
B) Small Business Administration
C) Federal Credit Insurance Association
D) U.S. Commerce Department
29) The incremental internationalization view of exporting holds that companies first target countries
that are ________ their home market.
A) different from
B) similar to
C) smaller than
D) larger than
30) Which of the following is NOT one of the three main types of importers?
A) importers looking for suppliers abroad to concentrate their operating risks
B) importers looking for any product around the world they can deliver to local citizens for a profit
C) importers looking to foreign-sourcing to get the highest quality products at the lowest possible price
D) importers using foreign sourcing to optimize their supply chains
31) A driving factor for the growth in imports is the impact of ________.
A) government programs
B) labor specialization
C) consumer preferences
D) social trends
32) A broker or other import consultant can help an importer minimize import duties by ________.
A) bypassing duty rebates available through drawback provisions
B) incurring duties by using non-bonded warehouses and foreign trade zones
C) maximizing liability by improperly marking an import’s country of origin
D) valuing products in such a way that they qualify for more favorable duty treatment
33) The primary responsibilities of the ________ are the assessment and collection of all duties, taxes,
and fees on imported merchandise, the enforcement of customs and related laws, and the administration
of certain navigation laws and treaties.
A) Bureau of Customs and Border Protection
B) U.S. Secret Service
C) Internal Revenue Service
D) Food and Drug Administration
34) All of the following are primary duties of the Bureau of Customs and Border Protection EXCEPT
which one?
A) assessing all duties, taxes, and fees on imported merchandise
B) collecting import and export tariffs
C) protecting the U.S. from threatening imports
D) policing smuggling operations
35) In conducting ________, a business sells goods directly to or through an independent domestic
intermediary in the exporter’s home country that exports the products to foreign markets.
A) direct exporting
B) global marketing
C) strategic planning
D) indirect exporting
36) Which of the following is NOT one of the common ways that trade intermediaries are paid by
exporters?
A) commission rate
B) buy-sell basis
C) fixed salary
D) special event contribution
37) Corbin Coffee plans to initiate activities in foreign markets through indirect exporting. The firm is
most likely to use ________.
A) local managers to pay tariffs and duties
B) external specialists to assist in the export process
C) the International Trade Administration to monitor exports
D) freight forwarders to act as distributors in foreign markets
38) Meade Clocks has hired an intermediary to manage its export activity. Meade should most likely
expect ________.
A) lower profit margins
B) greater control over global sales
C) more responsibility for customer satisfaction
D) frequent misunderstandings about trade regulations
39) A(n) ________ operates on a contractual basis and provides exclusive representation for an
exporter’s goods and services in a foreign market.
A) export management company
B) import broker
C) invoice agent
D) countertrader
40) Which of the following is typically true of an export management company?
A) It is usually a division of a manufacturing company.
B) Most EMCs in the United States are large, representing a wide range of products and large number of
companies.
C) It operates on a contractual basis for a manufacturer by helping obtain orders for its clients’ products.
D) It usually takes title to products rather than act as an agent.
41) Which of the following is a difference between export management companies (EMCs) and export
trading companies (ETCs)?
A) ETCs deal with both exports and imports, while EMCs deal only with exports.
B) ETCs are subject to antitrust laws, while EMCs are not.
C) ETCs typically carry inventory, while EMCs typically do not.
D) ETCs operate more on the basis of demand, while EMCs operate more on the basis of supply.
42) Which of the following is true of export trading companies in the United States?
A) They are like independent distributors that match buyers with buyers.
B) They are prohibited from working with a firm’s competitors due to antitrust laws.
C) They must be established independently of the company in order to avoid a conflict of interest.
D) They have been a successful form of export intermediary in recent years.
43) Exporters who opt for direct exporting are most likely to _______.
A) sustain long-term profitability
B) sell products to domestic retailers
C) depend on international marketers
D) sell products to a foreign distributor
44) An exporter that implements a(n) ________ strategy does so with the intent to develop its own
international marketing capability.
A) indirect selling
B) freight forwarding
C) direct exporting
D) export intermediation
45) The Internet supports more companies’ efforts to launch a direct exporting strategy by ________.
A) providing information quickly and inexpensively
B) eliminating the need for highly detailed export plans
C) letting software take over customer service responsibilities
D) countering the power of electronic data interchange systems
46) Federal, state, and local governments that recognize the benefits of international trade, actively aid
the efforts of potential and active exporters and ________.
A) ensure the quality of exported products
B) establish barriers to punish foreign rivals
C) collect a fee for each successful export sale
D) protect the interests of struggling importers
47) Morris Lighting is a U.S. firm that wants to start exporting its high-end lighting fixtures to foreign
markets. Morris Lighting should seek assistance from U.S. government agencies for all of the following
EXCEPT ________.
A) organizing trade events that help potential exporters make foreign contacts and explore export
opportunities
B) understanding how to comply with domestic and foreign trade regulations
C) acting as an export marketing department or international department for the company
D) providing information about market demographics and product demand
48) A freight forwarder performs which of the following functions?
A) arranging the fastest and cheapest transportation of products to and from foreign suppliers
B) taking title to the goods it exports and imports from country to country
C) acting as a sales representative in a foreign market
D) valuing products that qualify for favorable tariffs
49) Which of the following types of agents moves international cargo, facilitates shipment tracking, and
handles product returns for exporters and importers?
A) trade intermediaries
B) third party logistics
C) customs brokers
D) freight forwarders
50) What is typically the most difficult aspect of an export plan for SMEs?
A) finding a freight forwarder
B) identifying core competencies
C) creating countertrade activities
D) targeting the right foreign market
51) Jordan Jewelry is a U.S. firm that designs, manufactures, and sells inexpensive jewelry and
accessories. Executives at the firm believe that Jordan Jewelry could significantly increase its
profitability by exporting products to foreign markets. Before engaging in international trade, Jordan
executives need to develop an export plan. Which of the following questions is LEAST relevant to this
activity?
A) Would Jordan’s resources be better utilized developing business in the United States?
B) How much will it cost to get Jordan’s products to the targeted markets?
C) What marketing campaign would be best for Jordan’s foreign markets?
D) Is exporting consistent with Jordan’s long-term goals?