52) Countertrade is an alternative means of structuring an international sale when ________.
A) natural resources are highly desirable
B) an importer is able to obtain a bank loan
C) an importer does not belong to the World Bank
D) conventional forms of payment are difficult, costly, or nonexistent
53) ________ refers to any one of several different arrangements that business parties negotiate so that
they can trade goods and services with limited or no use of currency.
A) Factoring
B) Offset
C) Countertrade
D) Barter
54) Ultimately, countertrade is an inefficient way of doing business because it ________.
A) encourages buyers and sellers to use customs brokers to handle exchanges
B) requires buyers and sellers to negotiate a fair value on the exchange
C) reduces the risk that the goods sent as payment are of poor quality
D) eliminates the potential for price and financial distortion
55) Companies can anticipate conducting countertrade with businesses in countries that ________.
A) experience widespread economic problems
B) command strong negotiation positions
C) have sufficient access to cash
D) weakly regulate international trade
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56) Proctor & Gamble exchanges cleaning products for machinery with Russia and Hungary. The nature
of this transaction indicates that Proctor & Gamble is engaging in ________.
A) third-party logistics
B) freight forwarding
C) countertrade
D) e-commerce
57) Fundamentally, countertrade is best described as a(n)________ transaction.
A) simple
B) common
C) desirable
D) inefficient
58) All of the following are benefits of countertrade EXCEPT ________.
A) decreasing trade protectionism
B) increasing access to innovative technology
C) developing new trade relationships with foreign companies
D) preserving foreign exchange reserves
59) Fair Day Paper Products is a family-owned start up that imports bamboo paper from China to make
custom greeting cards. The firm has experienced many problems in receiving the supplies from China;
recurring problems include lost shipments, delays, and damaged products. Fair Day would most likely
benefit by enlisting the help provided by which of the following?
A) countertraders
B) customs brokers
C) import agents
D) third party logistics
60) As described in the opening case, SpinCent’s CEO analyzed foreign markets, assessed industries,
prepped his company, traveled overseas, and hired trustworthy distributors. SpinCent manages the
export process including making and marketing its products for foreign buyers. The nature of these
activities shows that the leadership of SpinCent is committing the company to ________.
A) countertrade
B) direct exporting
C) indirect exporting
D) third party logistics
61) The opportunity to increase profitability is the primary reason that firms decide to export.
62) A company classified as a small and medium-sized enterprise (SME) has fewer than 500 employees.
63) Ownership advantages refer to a firm’s specific assets, international experience, and the ability to
develop either low-cost or highly differentiated products within the context of its particular value chain.
64) Serendipity is often an export trigger for companies that purposefully look to internationalize their
operations.
65) Export intensity, the percentage of total revenues coming from exports, is not always correlated with
company size.
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66) The probability of a company being an exporter is independent of the size of the company.
67) “Born global” firms are those that step straight onto the world stage, making exporting the primary
goal of the firm from day one of operations.
68) The stages of development in a company’s export expansion are tied to company size.
69) A major pitfall of exporting is misclassifying products in terms of the destination country’s tariff
schedule, thereby incurring a higher tax or slower delivery.
70) Companies new to exporting most frequently suffer over-commitment by top management in taking
on the initial difficulties and financial requirements of exporting.
71) Advocates of exporting e-waste assert that the activity helps entrepreneurs in developing countries
create value by recovering and recycling scarce resources such as copper.
72) One advantage of importing is that an importer can diversify its operating risks by developing
alternative suppliers.
73) An arbitrageur is an exporter that seeks to conduct countertrade in emerging markets.
74) The primary duty of the customs agency of a government is the assessment and collection of all
duties, taxes, and fees on imported merchandise.
75) The U.S. government has more than 10,000 tariff classifications and more than half of them are
subject to interpretation.
76) Indirect exporters sells goods to a foreign intermediary, who then sells the product in the domestic
market to the final consumer.
77) Exporters employ an export management company as part of an indirect exporting strategy.
78) Major types of indirect intermediaries include export trading companies, distributors, and freight
forwarding companies.
79) An export trading company (ETC) works with many manufacturers rather than representing a single
manufacturer.
80) In what is known as direct exporting, the exporter sells goods directly to or through an independent
domestic intermediary in the exporter’s home country that then exports the products to foreign markets.
81) The foreign freight forwarder is the largest export intermediary in terms of value and weight of
products managed.
82) Countertrade refers to any one of several different arrangements that parties negotiate so that they
can trade goods and services with limited or no use of currency.
83) Countertrade is an efficient way of doing business.
84) Smithson Pottery is considered a regular exporter because the firm fills unsolicited orders from
foreign buyers and passively investigates international trade options.
85) Exporting helps firms improve productivity by utilizing unused capacity and spreading research
costs over more customers.
86) Pender Pet Products is considered an opportunistic importer because the firm seeks products around
the world that it can import and sell profitably to domestic consumers.
87) According to surveys, the most common concern regarding international trade is a shortage of
working capital to finance exporting activities.
88) According to the text, technological advances such as e-mail and VoIP have increased the appeal of
international trade because it is now easy and inexpensive to manage customer needs and communicate
with customers frequently.
89) In the U.S., international trade is hampered by homeland security issues and delays.
90) Export intermediaries are third-party firms that market products and services abroad on behalf of
manufacturers, farm groups, and distributors.
91) What is the difference between exporting and importing? What are the unique characteristics of
service exports and service imports?
92) What are the three main types of exporters? What are the three main types of importers? Briefly
describe the characteristics of each.
93) What difficulties of exporting can be minimized by customs brokers?
94) What are some reasons that firms decide to export their products or services? What does a firm need
to consider when developing an export plan?
95) Discuss the various ways a broker or other import consultant can help an importer minimize import
duties.
96) What role does the customs agency of a government play?
97) What are export management companies, and how do they help potential exporters?
98) Why is countertrade considered inefficient?
99) What is a born global? How has technology triggered the growth of born globals?
100) Why are financial risks a key concern of SMEs considering international trade?