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Student name:__________
1) Why do so many firms take a reactive approach to exporting rather than a proactive
approach?
2) What problems do novice exporters typically face when trying to export?
3) Compare and contrast the export assistance provided to German and Japanese companies
with that given to American companies. Discuss the implications of the differences between the
countries.
4) Describe the information sources that are available to American companies to learn about
export opportunities.
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5) Explain 3M’s main export principles that have made the company’s exporting business so
successful.
6) Why is there a problem of trust that persists in international business?
7) Describe the process involved in financing imports and exports using a letter of credit.
Why has this system developed? What is the advantage of using this system?
8) Compare and contrast time drafts and sight drafts.
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9) Describe the 14 steps in a typical international trade transaction.
10) Discuss the importance of the Export-Import Bank, its goals, and its operations.
11) What is the Foreign Credit Insurance Association?
12) Explain why barter is viewed as the most restrictive countertrade arrangement.
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13) Compare and contrast counterpurchase agreements and offset arrangements. Why might
an exporter prefer an offset to a counterpurchase deal?
14) Discuss the idea of compensation or buybacks as they relate to countertrade. Provide an
example of a buyback arrangement.
15) What type of firm is most likely to engage in countertrade? Why?
16) What is true of exporting?
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A) A common pitfall of exporting is a poor understanding of competitive conditions in
the foreign market.
B) Securing financing is rarely a problem for exporters.
C) A common pitfall of exporting is trying too hard to customize a product offering
rather than “sticking with what you know.”
D) Most exporters have a very good understanding of the competitive conditions in the
foreign market.
17) Which of the following statements is true of exporting?
A) It increases the trade deficit that nations have.
B) Exporting leads to diseconomies of scope.
C) It helps a firm achieve economies of scale.
D) Exporting is not beneficial to a country’s economy.
18) The great promise of exporting is that
A) large revenue opportunities are often found in foreign markets.
B) it provides more opportunities to smaller firms than larger firms.
C) international trade is protected against exchange risks.
D) it reduces the need for insuring businesses against political risks.
19) What is true of reactive firms?
A) Reactive firms consider a variety of markets for selling their products and services.
B) They consider exporting only after their domestic market is saturated.
C) They systematically scan foreign markets for profitable export opportunities.
D) They create excess productive capacity and actively hunt for opportunities in foreign
markets.
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20) What is a reason that firms take a reactive approach to exporting rather than a proactive
approach?
A) Most firms are familiar with the foreign market opportunities and therefore do not
need to utilize proactive approaches.
B) They are intimidated by the complexities and mechanics of exporting to countries
where business practices, language, culture, legal systems, and currency are very different from
the home market.
C) Most firms already know where the market potential and opportunities are and they
do not need to be proactive.
D) They are not intimidated by the complexities and mechanics of exporting to foreign
countries and can, therefore, use the same reactive approaches that work in their home market.
21) What is a common difficulty that traders face when exporting goods or services to other
countries?
A) Small firms tend to be more aggressive than larger firms in global trade.
B) Governments do not provide much assistance to exporters.
C) Growth opportunities are often limited in global markets.
D) Exporters often face voluminous paperwork and complex formalities.
22) _____ can help new exporters identify opportunities and avoid common pitfalls.
A) An MITI
B) An export-import bank
C) An in-house trading department
D) An export management company
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23) _____ are export specialists that offer a full menu of services to handle all aspects of
exporting, similar to having an internal exporting department within your own firm.
A) Small business development centers (SBDCs)
B) Centers for international business education and research (CIBERs)
C) Export legal assistance networks (ELANs)
D) Export management companies (EMCs)
24) Which of the following statements is true of export management companies (EMCs)?
A) An EMC is a transportation company that engages in international business.
B) EMCs are export-import banks that manage foreign exchanges.
C) EMCs are export specialists that act on behalf of their client firms.
D) An EMC is an intermediary that facilitates talks between two nations.
25) Japan’s _____ have offices all over the world, and they proactively, continuously seek
export opportunities for their affiliated companies large and small.
A) sogo shosha
B) kaizen
C) MITI
D) Samurai
26) In the _____ program organized by the U.S. Department of Commerce, department
representatives accompany groups of U.S. businesspeople abroad to meet with qualified agents,
distributors, and customers.
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A) best prospects
B) SCORE
C) capital assistance
D) matchmaker
27) Which of the following statements is true about the Small Business Administration
(SBA)?
A) It is the most comprehensive source of export opportunities information.
B) The SBA is a private organization managed by leaders of large corporations.
C) The SBA employs trade officers throughout the United States.
D) The SBA offers help exclusively to small businesses that sell products within the
United States.
28) Which of the following is a nationwide group of international trade attorneys who
provide free initial consultations to miniature businesses on export-related matters?
A) ELAN
B) EMC
C) MITI
D) SCORE
29) Through its _____ program, the SBA oversees about 11,500 volunteers with international
trade experience to provide one-on-one counseling to active and new-to-export businesses.
A) matchmaker
B) SCORE
C) ELAN
D) trade fair
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30) Japan’s great trading houses are called
A) Nikei.
B) sogo shosha.
C) Yen houses.
D) Samurai houses.
31) In theory, the advantage of export management companies is that they are
A) managed by governments that provide export subsidies.
B) not-for-profit organizations that provide free service.
C) subsidized by the Department of Commerce.
D) experienced specialists who can help the neophyte exporter.
32) Which of the following is a successful exporting strategy used by 3M?
A) Add additional products once exporting becomes successful.
B) Enter many markets at one time to gain maximum exposure.
C) Bring in expert marketing specialists to promote the firm’s products.
D) Enter on a large scale to flood the market.
33) In a letter of credit transaction, the importer secures the letter of credit
A) before product shipment.
B) after product shipment.
C) from the exporter’s bank.
D) after receiving the product.
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34) The exporter endorses the ________ so title to the goods is transferred to the bank.
A) bill of lading
B) letter of credit
C) draft
D) promissory note
35) A _____ states that the bank will pay a specified sum of money to a beneficiary, normally
the exporter, on presentation of particular, specified documents.
A) bill of exchange
B) bill of lading
C) letter of credit
D) bank statement
36) Bank charges on letters of credit will depend on the
A) exporter’s creditworthiness.
B) size of the transaction.
C) exporter’s means of finance.
D) time taken to approve the sale.
37) A draft used in international transactions
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A) is a document requesting payment.
B) explains the conditions of a contract.
C) is the same as a letter of credit.
D) gives a bank guarantee to an exporter.
38) In an international transaction involving a bank as a third party, the exporter ships the
product after
A) the bank receives materials from the importer.
B) receiving a cleared payment through the bank.
C) the importer has paid the bank.
D) the bank promises to pay on the importer’s behalf.
39) Which of the following is a major advantage of using a letter of credit?
A) It gives the importer time to resell the merchandise before payment.
B) It guarantees the exporter preexport financing.
C) It helps international traders engage in trade with trust.
D) It guarantees the importer extra funds for other purposes.
40) Which of the following is a disadvantage of using a letter of credit (L/C)?
A) A letter of credit does not give protection to the importer.
B) A letter of credit does not give protection to the exporter.
C) The exporter cannot avail pre-export financing when using a L/C.
D) The importer must pay a bank fee for the letter of credit.
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41) The person or business initiating a draft is known as the
A) beneficiary.
B) drawee.
C) maker.
D) trustee.
42) A _____ is simply an order written by an exporter instructing an importer, or an
importer’s agent, to pay a specified amount of money at a specified time.
A) letter of credit
B) bill of lading
C) draft
D) banker’s letter
43) A _____ is payable on presentation to the drawee.
A) bill of lading
B) time draft
C) sight draft
D) letter of credit
44) A _____ allows for a delay in payment.
A) bill of lading
B) time draft
C) sight draft
D) letter of credit
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45) A banker’s acceptance
A) is payable to the drawee immediately on presentation in a bank.
B) is a time draft that has been drawn on and accepted by a bank.
C) is a sight draft that can be used as a negotiable instrument in banks.
D) allows a buyer possession of the merchandise without signing any formal documents.
46) A _____ is issued to the exporter by the common carrier transporting the merchandise.
A) bill of lading
B) sight draft
C) time draft
D) letter of credit
47) As a receipt, the bill of lading indicates that the carrier
A) provides a written promise of payment before releasing the merchandise.
B) has obtained the merchandise described on the face of the document.
C) receives payment from a third-party such as a bank or trading house.
D) is obligated to provide a transportation service in return for a certain charge.
48) In a typical international trade transaction, the
A) exporter should obtain a letter of credit to initiate transactions.
B) importer and exporter maintain an account with the same bank.
C) importer’s bank sends a letter of credit to the exporter’s bank.
D) importer’s bank sends the draft and bill of lading to the exporter’s bank.
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49) Firms commonly employ _____ as a third party in international transactions.
A) a reputable bank
B) a stock exchange
C) an export management company
D) a customs broker
50) A ____ is the instrument normally used in international commerce to effect payment.
A) bill of lading
B) letter of credit
C) draft
D) countertrade
51) A _____ allows for a delay in payment—normally 30, 60, 90, or 120 days.
A) bill of lading
B) sight draft
C) bill of exchange
D) time draft
52) The _____ is issued to the exporter by the common carrier transporting the merchandise.
A) bill of lading
B) sight draft
C) letter of credit
D) time draft
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53) A _____ serves as a receipt, a contract, and a document of title.
A) letter of credit
B) bill of lading
C) draft
D) bill of exchange
54) An importer obtains a _____ from a local bank in a typical international transaction.
A) draft
B) bill of lading
C) letter of credit
D) bill of exchange
55) As a document of title, a _____ can be used to obtain payment or a written promise of
payment before the merchandise is released to the importer.
A) bill of lading
B) letter of credit
C) bill of exchange
D) draft
56) The Export-Import Bank
A) is an international financial institution that provides loans for capital programs.
B) provides finance to facilitate cross-border trade between the United States and other
countries.
C) is an independent agency of the United Nations.
D) focuses on policies that have an impact on the exchange rate and the balance of
payments.
57) Which of the following statements is true of export credit insurance?
A) Exporters will require more insurance if a letter of credit is used in transactions.
B) The Foreign Credit Insurance Association provides coverage against commercial
risks and political risks.
C) Private associations cannot offer export insurance in the United States.
D) Organizations do not receive coverage against political risks of global trade.
58) _____ is an alternative means of structuring an international sale when conventional
means of payment are difficult, costly, or nonexistent.
A) Barter
B) Offset
C) Countertrade
D) Buyback
59) Countertrade emerged in the 1960s as a way for the _____ to purchase imports.
A) United States
B) European Union
C) ASEAN countries
D) Soviet Union and the then-communist states of Eastern Europe