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Global Marketing, 9e, GE (Keegan)
Chapter 8 Importing, Exporting, and Sourcing
1) The only marketing mix element that is applicable in export selling is:
A) price.
B) product.
C) promotion.
D) place.
E) process.
Answer: D
Difficulty: 2: Moderate
Chapter LO: 8.1: Compare and contrast export selling and export marketing.
AACSB: Application of knowledge
2) Which of the following is not true about a personal visit to size up the market firsthand
and begin the development of an actual export-marketing program?
A) Confirm assumptions regarding market potential
B) Contradict assumptions regarding market potential
C) Gather additional data to help make decisions
D) Develop a marketing plan in cooperation with local agents
E) Arrange a face-to-face meeting and avoid going to trade shows
Answer: E
3) Export marketing requires all of the following except:

A) an understanding of the target market environment.
B) the use of marketing research.
C) identification of market potential.
D) decisions concerning product design.
E) reaching retail customers.
Answer: E
4) After the research effort has zeroed in on potential markets, marketers should:
A) work on understanding the target market environment.
B) modify methods used for marketing research.
C) identify products that can be marketed.
D) make decisions concerning product design.
E) plan a personal visit.
Answer: E
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5) The advantages of a market visit include all of the following except:
A) confirm market potential.
B) contradict market potential.
C) gain confidence in firm's ability for exporting.
D) gather additional data to reach final decision.
E) build confidence in firm's ability for exporting.
Answer: C
Difficulty: 3: Challenging
6) The possible arrangements of the responsibilities for handling exports include all of the
following except:
A) as a part-time activity performed by domestic employees.
B) through an export partner affiliated with the domestic marketing structure.
C) through an export department within an international division.
D) through an export department that is independent of the domestic marketing structure.
E) through an export department of an embassy in a foreign
country. Answer: E
7) Switzerland exports 51 percent of their GDP, compared to the United States, which
exports only about 14 percent.
Answer: TRUE
Difficulty: 1: Easy
8) In his 2010 State of the Union address, U.S. President Barack Obama had vowed to double
U.S. exports by 2015; doing so would require boosting exports 25 percent
annually. Answer: FALSE
Difficulty: 1: Easy
9) In 2013, U.S. goods and services exports totaled $2.3 trillion, which comes to about 15
percent of the GDP. This means that nearly 85 percent of the goods and services produced in the
United States are consumed at home.
Answer: TRUE
Difficulty: 1: Easy
10) According to President Obama, "The more American companies export, the more they
produce. And the more they produce, the more people they hire–and that means more jobs."
Answer: TRUE
Difficulty: 1: Easy
11) The terms "export selling" and "export marketing" are

interchangeable. Answer: FALSE
Difficulty: 1: Easy
12) "Export selling" involves tailoring various elements of the marketing mix to global
market requirements.
Answer: FALSE
Difficulty: 1: Easy
13) The export marketer takes the domestic product "as is" and sells it to international
customers. Answer: FALSE
Difficulty: 1: Easy
14) After research has zeroed in on potential markets, there is no substitute for a personal visit to
size up the market firsthand and begin the development of an actual export marketing program.
Answer: TRUE
15) Research discovered that even the most experienced exporters express lack of confidence
in their knowledge about shipping arrangements, payment procedures, and regulations.
Answer: TRUE
16) In his 2010 State of the Union address, U.S. President Barack Obama vowed to double
U.S. exports by 2015. To this end, President Barack Obama created a National Export Initiative
and established the President's Export Council. What is meant by export marketing and export
selling?
Answer: Export marketing is the integrated marketing of goods and services that are destined
for customers in international markets. Export selling does not involve tailoring the product, the
price, or the promotional material to suit the requirements of global markets. The only marketing
mix that gets impacted is location or place. As companies mature in the global marketplace or as
new competitors enter the market, export marketing becomes important. Export marketing
targets the customer in the context of the total market environment. The export marketer does not
simply take the domestic product "as is" and sell it to the international customers. The product
offered in the home market is just the starting point. Based on the preferences of the international
target markets, many modifications and adaptations are necessary. Also, the export marketer sets
prices to fit the market and does not merely sell at the home-country price. There are several
charges in export such as packaging, transportation, and financing that have to be taken into
account, which in turn will have an impact on the prices charged in other markets. The price
charged in one market may be completely different than the one that is charged in another
country for the same product. The export marketing requires: (a) a thorough understanding of the
target market environment; (b) the use of marketing research; (c) the identification of market
potential; and (c) decision concerning product design, pricing, distribution and channels,
advertising, and communication.
AACSB: Analytical thinking
17) Governments in Japan, Singapore, South Korea, and China have supported exports for years
which have tremendously helped their economies. Since exporting is a very important
component of a country's business strategy, many government programs are offered that support
exports. Describe ways by which governments can support exports.
Answer: Countries benefit a lot based on their facilitating of export and import business. For
example, China has attracted increased foreign investment from DaimlerChrysler,
Hewlett-Packard, GM, and other similar corporations by accommodating them to set up
production facilities that will support local sales as well as exports to world markets.
Governments commonly use four activities to support and encourage firms that engage in
exporting. These are tax incentives, subsidies, export assistance, and free trade zones. Tax
incentives treat earnings from export activities preferentially either by applying a lower rate to
earnings or by refunding taxes already paid on income associated with exporting. Also, tax
benefits are offered by governments which may include tax exemption or tax deferral on export
income, accelerated depreciation of export-related assets, and generous tax treatment of overseas
market development activities. Governments also support export performance by providing
outright subsidies. Subsidies are direct or indirect financial contributions or incentives that
benefit producers. Governments also provide assistance to exporters. Companies can avail
themselves of a great deal of governmental information concerning the location of markets and
credit risks. Assistance may also be oriented toward export promotion. Various agencies at
different levels hold trade fairs and trade missions designed to promote sales to foreign
customers. In an effort to facilitate exports, countries are designating certain areas as "free trade
zones" and particular "special economic zones." These zones are geographic entities that offer
manufacturers simplified customs procedures, operational flexibility, and a general environment
of relaxed regulations. Thus, these ways are very helpful and have helped several companies.
18) Export marketing is the integrated marketing of goods and services that are destined for
customers in international markets. What does the marketing require?
Answer: Export marketing targets the customer in the context of the total market environment.
The export marketer does not simply take the domestic product "as is" and sell it to international
customers. To the export marketer, the product offered in the home market represents a starting
point. It is then modified as needed to meet the preferences of international target markets. In
order to formulate a good exporting strategy the following points should be considered:
1. An understanding of the target market environment
2. The use of marketing research and identification of market potential
3. Decisions concerning product design, pricing, distribution channels, advertising,
and communications–the marketing mix.
The export marketer should also set prices to fit the marketing strategy and does not merely
extend home-country pricing to the target market. Charges incurred in export preparation,
transportation, and financing must be taken into account in determining prices. Finally, the
export marketer also adjusts strategies and plans for communication and distribution to fit the
market. In other words, effective communication about product features or uses to buyers in
different export markets may require creating brochures with different copy, photographs, or
artwork.
19) Research has shown that exporting is essentially a developmental process that proceeds in
different stages. Before a firm reaches stage 4, it must do which one of the following activities?
A) explore the feasibility of exporting
B) commit resources for exporting
C) receive unsolicited export orders
D) believe in attractiveness of exporting
E) build confidence in firm's ability for exporting
Answer: C
Chapter LO: 8.2: Identify the stages a company goes through, and the problems it is likely
to encounter, as it gains experience as an exporter.
20) is the most important aspect of a company's international orientation.

A) Experience
B) Commitment
C) Dynamism
D) Confidence
Answer: B
21) According to research, exporting is essentially a developmental process starting with the
first stage when the firm exports to one or more markets on a trial basis.
Answer: FALSE
22) In the last stage of the developmental process for exporting, a firm evaluates global
market potential before screening for the "best" target markets to include in its marketing
strategy and plan.
Answer: TRUE
Chapter LO: 8.2: Identify the stages a company goes through, and the problems it is likely to
encounter, as it gains experience as an exporter.
23) Exporting is considered as essentially a developmental process. What are the stages in
which this process can be divided?
Answer: The stages can be divided as shown in the following points:
1. If the firm is unwilling to export; it will not even fill an unsolicited export order. This may
be due to perceived lack of time or to apathy or ignorance.
2. The firm fills unsolicited export orders but does not pursue unsolicited orders. Such a firm is
an export seller.
3. The firm explores the feasibility of exporting.
4. The firm exports to one or more markets on a trial basis.
5. The firm is an experienced exporter to one or more markets.
6. After this success, the firm pursues country- or region-focused marketing based on selected
criteria.
7. The firm evaluates global market potential before screening for the "best" target markets
to include in its marketing strategy and plan.
The probability that a firm will advance from one stage to the next depends on different factors.
Moving from stage 2 to stage 3 depends on management's attitude toward the attractiveness of
exporting and confidence in the firm's ability to compete internationally. However, commitment
is the most important aspect of a company's international orientation. Before a firm can reach
stage 4, it must receive and respond to unsolicited export orders. The quality and dynamism of
management are important factors that can lead to such orders. Success in stage 4 can lead a firm
to stages 5 and 6. A company that reaches stage 7 is a mature, geocentric enterprise that is
relating global resources to global opportunity. To reach this stage requires management with
vision and commitment.
24) The top ranked country among those exporting to the United States is:
A) Taiwan.
B) China.
C) Mexico.
D) India.
E) Honduras.
Answer: B
Difficulty: 1: Easy
Chapter LO: 8.3: Describe the various national policies that pertain to exports and imports.
25) Representatives of the apparel, footwear, furniture, and textile industries in many countries
are deeply concerned about the impact that increased trade with will have on these
sectors.
A) Hong Kong
B) China
C) Italy
D) India
E) Bangladesh
Answer: B
Difficulty: 1: Easy
26) The so-called "China Triangle" includes:

A) Hong Kong, Republic of China, and Singapore
B) Republic of China, Taiwan, and Hong Kong
C) Republic of China, Taiwan, and South Korea
D) Taiwan, Hong Kong, and Republic of China
E) Singapore, China, and Republic of China
Answer: B
Difficulty: 1: Easy
27) Governments commonly use activities to support and encourage firms that engage
in exporting. Such activities include all of the following except:
A) tax incentives.
B) subsidies.
C) export assistance.
D) free trade zones.
E) voting rights.
Answer: E
28) Agricultural subsidies are particularly controversial because, although they protect the
interests of farmers in some countries, they work to the detriment of farmers in countries such
as:
A) Singapore.
B) the United States.
C) India.
D) Switzerland.
E) Japan.
Answer: C
29) The Ministry of International Trade and Industry (MITI) has helped devise export
strategies for companies in:
A) Singapore.
B) South Korea.
C) Taiwan.
D) Hong Kong.
E) Japan.
Answer: E
30) The four tigers–Singapore, South Korea, Taiwan, and Hong Kong–learned from the
experience and built strong export-based economies of their own.
A) Chinese
B) Indian
C) German
D) American
E) Japanese
Answer: E
31) Which of the following was a major U.S. tax incentive for exporters that the WTO
recently ruled was an illegal subsidy?
A) NTR
B) CVD
C) FSC
D) NTB
E) HTS
Answer: C
32) The export and import process can entail red tape and bureaucratic delays. In an effort
to facilitate exports, countries are designating certain areas as:
A) import control zones.
B) special tariff zones.
C) global business zones.
D) free trade zones.
E) duty free zones.
Answer: D
33) Developed under the auspices of the Custom Cooperation Council (now the World Customs
Organization) the system which took effect is referred to as:
A) preferential tariffs.
B) harmonized tariff.
C) BTN duty.
D) specialized tariff.
E) antidumping duty.
Answer: B
34) After the aftermath of the tragedy involving fire in garment factories in Bangladesh, it
was found that the buildings were inspected by:
A) Dhaka's building-safety authority.
B) Business Social Compliance Initiative (BSCI).
C) Walmart's approved contractors.
D) Worker Rights Consortium.
E) Interfaith Center for Corporate
Responsibility. Answer: B
35) After the aftermath of the tragedy involving fire in garment factories in Bangladesh, Walmart
implemented a "zero-tolerance policy." The Workers Rights Consortium, the International Labor
Organization and other groups monitoring labor issues are stepping up pressure on companies
that participate in the global garment supply chain due to the following reasons, except:
A) retailers pay lip service to concerns about factory safety.
B) retailers continue to focus on low prices.
C) those auditing facilities are audited by BSCI's qualified engineers.
D) the buyers and consumer are willing to pay more for garments.
E) retailers do not provide funds for fire safety training.
Answer: C
36) A nontariff barrier (NTB) includes all of the following except:

A) quotas.
B) discriminatory procurement policies.
C) restrictive administrative policies.
D) restrictive technical regulations.
E) ad valorem duty.
Answer: E
37) Representatives of the apparel, footwear, and textile industries in many countries are deeply
concerned about the impact that increased trade with China will have on these sectors.
Answer: TRUE
38) The four tigers—Singapore, South Korea, Taiwan, and Hong Kong—learned from
the Japanese experience and built strong export-based economies of their own.
Answer: TRUE
39) Potential export problems include packaging, government red tape, warehousing,
advertising, and trade restrictions.
Answer: TRUE
40) Tax incentives, subsidies, export assistance, and free trade zones are common support
provided by governments to firms that engage in exporting.
Answer: TRUE
Difficulty: 1: Easy
41) The Common Agricultural Policy (CAP) determines the level of subsidies granted to farmers
in Latin America.
Answer: FALSE
42) Governmental actions at times are designed to discourage imports and block market
access. Why do governments want to curtail imports? Explain some of the barriers that are
placed to discourage imports.
Answer: In order to promote domestic industries and agriculture and restrict the inflow of
materials from unfavored nations, some governments impose certain barriers. The tariffs, which
can be regarded as the three R's of global business: rules, rate schedules, and regulations, are
imposed by countries. Duties can be imposed on goods and services, thereby making it difficult
for importers to import as well as for consumers to buy. A Harmonized Tariff System (HTS) has
been adopted by the majority of trading nations, under which importers and exporters have to
determine the correct classification number for a given product or service that will cross borders.
This classification helps in the identifying of the product and applicable tariff. A nontariff (NTB)
can also be imposed which is any measure other than a tariff that is a deterrent or obstacle to the
sale of products in a foreign market. This includes quotas, discriminatory procurement policies,
restrictive customs procedures, arbitrary monetary policies, and restrictive regulations. A quota is
a government-imposed limit or restriction on the number of units or the total value of a particular
product or product category that can be imported. In addition, discriminatory procurement
policies can take the form of government rules and administrative regulations specifying that
local vendors or suppliers receive priority consideration. Customs procedures are also considered
restrictive if they are administered in a way that makes compliance difficult and expensive.
Discriminatory exchange rate policies are imposed to distort trade in much the same way as
selective import duties and export subsidies. Finally, restrictive administrative and technical
regulations can create barriers to trade. These may take the form of antidumping regulations,
product size regulations, and safety and health regulations. Some of these regulations are
intended to keep out foreign goods; others are directed toward legitimate domestic objectives.
43) Why does the tariff system vary from country to country? Explain, giving examples of
tariffs imposed by the United States with particular emphasis on preferential tariffs. What are the
conditions under which GATT allows the use of preferential tariffs?
Answer: Tariff systems provide either a single rate of duty for each item applicable to all
countries or two or more rates, applicable to different countries or groups of countries. The
single-column tariff is the simplest type of tariff. It includes a schedule of duties in which the
rate applies to imports from all countries on the same basis. Under the two-column tariff the first
column includes "general" duties plus "special" duties indicating reduced rates determined by
tariff negotiations with other countries. Rates agreed upon by "convention" are extended to all
countries that qualify for normal trade relation (NTR). The United States have given NTR status
to some 180 countries around the world. A preferential tariff is a reduced tariff rate applied to
imports from certain countries. GATT prohibits the use of preferential tariffs, with three major
exceptions. First are historical preference arrangements such as the British Commonwealth
preferences and similar arrangements that existed before GATT. Second, preference schemes
that are part of a formal economic integration treaty, such as free trade areas or common
markets, are excluded. Third, industrial countries are permitted to grant preferential market
access to companies based in less-developed countries.
44) In 2010, dozens of Bangladeshis were killed in two separate fires in factories that made
clothing for western clients such as JCPenney and Gap. In November 2012, 112 garment workers
were killed when a fire broke out at Tazreen Fashions, a clothing manufacturer in Dhaka,
Bangladesh. What are the implications of these tragic incidences on the export by a country
dependent on exports?
Answer: Bangladesh is number 3 clothing exporter. About 80 percent of its export
earnings come from its network of more than 5,000 garment manufacturing operations.
However, the garment industry has been roiled by a series of tragedies that have highlighted
the
often-dangerous conditions facing workers. Tazreen's clients included Walmart and other
well-known global retail brands. The tragedy highlighted the Bangladesh Fire and Building
safety Agreement, a contract that increasing numbers of workers, unions, and marketers have
signed. More than 500 people, most of them women, were killed. This time, however, fire was
not the cause. Rather, the eight-storey Rana Plaza building in Dhaka collapsed. The building
housed garment factories that employed about 5,000 garment workers making clothing for world
renowned garment retailers.
In the aftermath of the tragedy, it was revealed that the building's owner was a local politician,
who had not obtained the necessary permits from Dhaka's building-safety authority. Certified
audits conducted by the Business Social Compliance Initiative, launched by the Foreign Trade
Association, an agency the represents hundreds of European retailers, were conducted. As it
turns out, however, the auditors were not engineers and had not made recommendations
regarding building safety and stability. Despite the efforts by manufacturers, such as Walmart
donating $1.6 million to provide fire-safety training to garment workers, many of the agencies
such as the Workers Rights Consortium, the International Labor Organization, and other groups
are stepping up pressure on the companies. Too often, the activists charge, Western retailers pay
lip service to concerns about factory safety. They continue to focus on low prices rather than the
welfare of workers.
45) A duty that represents a certain percentage of the value of a particular product is a(n):
A) specific duty.
B) ad valorem duty.
C) BTN duty.
D) "schedule B" duty.
E) antidumping duty.
Answer: B
Chapter LO: 8.4: Explain the structure of the Harmonized Tariff System.
46) The sale of merchandise in export markets at unfair prices is known as:
A) dumping.
B) countervailing.
C) tariff.
D) ad valorem.
E) transaction.
Answer: A
47) Which of the following types of duties would be imposed on a company

whose home-country government provides export subsidies?
A) ad valorem duty
B) countervailing duty
C) antidumping duty
D) specific duty
E) customs duty
Answer: B
48) Which of the following is described as the three R's of global business: rules, rate
schedules, and regulations?
A) quotas
B) tariffs
C) NTBs
D) NTR
E) duties
Answer: B
49) Sweden applies a system to certain categories of imported agricultural products referred
to as:
A) temporary surcharges.
B) ad valorem duty.
C) variable import levies.
D) specific duty.
E) countervailing duty.
Answer: C
50) The United States has given Normal Trade Relations (NTR) status to some 180 countries.
In actuality only four countries are excluded from this status which includes all of the following
countries except:
A) North Korea.
B) Iraq.
C) Iran.
D) Cuba.
E) Libya.
Answer: B
51) In an effort to facilitate exports, countries are designating certain areas as "free trade zones"
(FTZ) or "special economic zones" (SEZ).
Answer: TRUE
52) Tariffs can be thought of as the "three R's" of global business: rules, rigor, and regulations
of individual countries.
Answer: FALSE
53) China has imposed tariffs as high as 28% on foreign-made auto parts.
Answer: TRUE
Difficulty: 1: Easy
54) The Harmonized Tariff System (HTS) is currently the dominant system for determining the
correct classification number.
Answer: TRUE
55) The Harmonized Tariff System (HTS) has eliminated virtually all problems associated with
assigning tariff classifications to new products.
Answer: FALSE
56) According to the recent import regulations in the United States, action figures that represent
non-human creatures such as monsters or robots are categorized as toys and qualify for lower
duties than human figures that are classified as dolls.
Answer: TRUE
57) A nontariff barrier (NTB) is a hidden trade barrier that is a deterrent or obstacle to the sale
of products in a foreign market.
Answer: TRUE
58) Overall, Italy's retail sector has pursued very little international expansion; by contrast,
other European supermarket chains such as Tesco (UK), Metro (Germany), and Carrefour
(France) took local products and brands with them as they expanded around the globe.
Answer: TRUE
59) The Buy American Act of 1933, which stipulates that U.S. federal agencies must buy
articles produced in the United States unless domestically produced goods are not available, is
an example of discriminatory procurement policies.
Answer: TRUE
60) The Fly American Act is an example of a nontariff

barrier. Answer: TRUE
Difficulty: 1: Easy
61) When Honda's U.S. manufacturing subsidiaries purchase parts from Japan, customs
authorities in the United States have the right to scrutinize the transfer price to make sure it is a
fair reflection of market value.
Answer: TRUE
62) An ad valorem duty is expressed as a percentage of the value of goods.
Answer: TRUE
Difficulty: 1: Easy
63) CVDs are additional duties levied by exporting countries on imported videodiscs.
Answer: FALSE
Difficulty: 1: Easy
64) What are customs duties? How do they work in controlling imported goods?
Answer: There are two main categories of customs duties. Their calculation method is the
differentiating factor. They may be calculated either as a percentage of the value of the goods
(ad valorem duty), as a specific amount per unit (specific duty), or as a combination of both of
these methods. An ad valorem duty is expressed as a percentage of the value of goods. The
definition of customs value varies from country to country. An exporter has to determine the
duty applicable and the method used for calculations. For countries under GATT conventions the
customs value is landed cost, insurance, and freight amount at the port of importation. On the
other hand, a specific duty is expressed as a specific amount of currency per unit of weight,
volume, length, or other unit of measurement. Specific duties are usually expressed in the
currency of the importing country, but there are exceptions, particularly in countries that have
experienced sustained inflation. Both ad valorem and specific duties are occasionally set out in
the custom tariff for a given product. Compound or mixed duties provide for specific, plus ad
valorem, rates to be levied on the same articles.
65) What are the differences between antidumping and countervailing duties? Under
what conditions are these duties imposed?
Answer: Dumping essentially refers to the sale of merchandise in export markets at unfair
prices. In order to offset the impact of dumping and to penalize guilty companies, most countries
have introduced legislation providing for the imposition of antidumping duties. These duties are
levied if injury is caused to domestic producers. Such duties are normally imposed as special
additional import charges equal to the dumping margin. They are almost invariably applied to
products that are also manufactured or grown in the importing country. In the United States,
antidumping duties are assessed after the commerce department finds a foreign company guilty
of dumping and the International Trade Commission rules if the dumped products injured
American companies. Countervailing duties, on the other hand, are additional duties levied to
offset subsidies granted in the exporting country. In the United States, countervailing duty
legislation and procedures are very similar to those pertaining to dumping. The U.S. Commerce
Department and the International Trade Commission jointly administer both the countervailing
duty and antidumping laws.
66) are variously referred to as buyer for export, export commission house, or export
confirming house.
A) Export brokers
B) Export merchants
C) Foreign purchasing agents
D) Export managers
E) Manufacturer's agents
Answer: C
Chapter LO: 8.5: Describe the various organizations that participate in the export process.
67) is sometimes called a mother hen, a piggyback exporter, or an export vendor

A) Export broker
B) Export merchant
C) Cooperative exporter
D) Export manager
E) Manufacturer's agent
Answer: C
68) Which of the following can be referred to as a "buyer for export" or an "export
commission house" and operates on behalf of a buyer from a foreign country?
A) foreign purchasing agent
B) export broker
C) export merchant
D) export management company
E) freight forwarder
Answer: A
69) Which of the following receives a fee for bringing together an exporter and a buyer
in another country?
A) foreign purchasing agent
B) export broker
C) export merchant
D) export management company
E) freight forwarder
Answer: B
70) is an independent marketing intermediary that acts as the export department for
two or more manufacturers whose product lines do not compete with each other.
A) Manufacturer's export agent
B) Export commission representative
C) Export merchant
D) Export management company
E) Cooperative exporter
Answer: D
71) are licensed specialists in traffic operations, customs clearance, and shipping
tariffs and schedules. They can be considered as the travel agents for handling export
goods.
A) Foreign purchasing agents
B) Export brokers
C) Export merchants
D) Freight forwarders
E) Cooperative exporters
Answer: D
72) Foreign purchasing agents are also referred to as jobbers.
Answer: FALSE
Difficulty: 1: Easy
73) "Piggyback exporter," "cooperative exporter," and "export vendor" are all terms used
to describe an export broker.
Answer: FALSE
Difficulty: 1: Easy
74) Export management company (EMC) is an independent marketing intermediary that acts as
the export department for two or more manufacturers (principals) whose product lines compete
with each other.
Answer: FALSE
75) The MEA can act as an export distributor or as an export commission representative.
However, the MEA does not perform the functions of an export department, and the scope
of market activities is usually limited to a few countries.
Answer: TRUE
76) What are some of the entities that an exporter should be familiar with? Describe and explain
the role played by each of these entities, separating those that have responsibilities from
exporters from those that have no responsibilities from the exporters.
Answer: Key export entities include purchasing agents, export brokers, and export merchants.
They have no responsibility from the client. Others are export management companies,
manufacturer's export representatives, export distributors, and freight forwarders. They are
assigned responsibilities by the exporter. Foreign purchasing agents operate on behalf of, and are
compensated by, an overseas customer known as a "principal." They generally seek out the
manufacturer whose price and quality match the specifications of their principal. They often
represent governments, utilities, railroads, and other large users of materials. Purchases may be
completed as domestic transactions with the purchasing agent handling all export packing and
shipping details, or the agent may rely on the manufacturers to handle the shipping
arrangements. The export broker receives a fee for bringing together the seller and the overseas
buyer. This fee is usually paid by the seller. The broker takes no title to the goods and assumes
no financial responsibility. A broker usually specializes in a specific commodity, such as grain or
cotton, and is less frequently involved in the export of manufactured goods. Export merchants
are sometimes referred to as "jobbers" and they identify market opportunities in one country or
region and make purchases in other countries to fill these needs. They typically buy unbranded
products directly from the producer or manufacturer. The export merchant then brands the goods
and performs all other marketing activities, including distribution. "Export management
company" is the term used to designate an independent marketing intermediary that acts as the
export department for two or more manufacturers whose product lines do not compete with each
other. It may act as an independent distributor, purchasing and reselling goods at an established
price or profit margin. It may also act as a commission representative taking no title or financial
risk. Manufacturer's export agent acts as an export distributor or as an export commission
representative. On the other hand, an export distributor assumes financial risk, whereas the
export commission representative assumes no financial risk. The cooperative exporter is an
export organization of a manufacturing company retained by other independent manufacturers to
sell their products to foreign markets.
Freight forwarders are licensed specialists in traffic operations, customs clearance, and shipping
tariffs and schedules. A licensed forwarder receives brokerage fees or rebates from shipping
companies for booked space.
77) The possible arrangements for handling exports include all of the following except:
A) as a part-time activity performed by domestic employees.
B) through an export partner affiliated with the domestic marketing structure that takes
possession of the goods before they leave the country.
C) as a low-cost arrangement requiring no additional personnel.
D) through an export department within an international division.
E) for multidivisional companies, each of the preceding options is
available. Answer: C
Chapter LO: 8.6: Identify home-country export organization considerations.
78) A company that assigns a sufficiently high priority to its export business will establish an
in-house organization. It then faces the question of how to organize it effectively.
Answer: TRUE
Difficulty: 1: Easy
Chapter LO: 8.6: Identify home-country export organization considerations.
79) Direct representation, as opposed to representation by independent intermediaries, for

exporting by the market country, has several advantages which do not include:
A) facilitates control and communications.
B) allows decisions concerning program development and resource allocation.
C) benefits when a product is not yet established in a market.
D) ensures marketer's interest and special efforts.
E) helps selling products directly to the consumer in the market
country. Answer: E
Chapter LO: 8.7: Identify market-country export organization considerations.
80) Direct representation identifies that the exporter is selling directly to the consumer or
customer.
Answer: FALSE
Difficulty: 1: Easy
81) An executive is undecided whether to rely on in-house or external export

specialists/intermediaries in the home country. He is leaning towards direct representation in
a market. What are the benefits of going forth with direct representation?
Answer: It is a common problem faced by many executives planning on exporting goods and
services to foreign countries. There are two specific advantages to direct representation in a
market. It allows decisions concerning program development, resource allocation, or price
changes to be implemented unilaterally. Thus, control and communication aspects are major
benefits. This is very significant when a product is not yet established in a market. It will require
special marketing efforts for which direct efforts will be necessary rather than relying on
intermediaries. Also, the marketer's investment ensures special efforts that are undertaken to
achieve sales. With indirect or independent representation, such efforts and investment may not
be that effective due to lack of incentives. It is also advantageous to get feedback and firsthand
information related to the market. This information can greatly improve export marketing
decisions concerning product, price, communications, and distribution. In essence, all
operational parameters are under control. However, it should be noted that direct representation
will depend on the size of the market. It may not be possible to have it when market size is small.
82) Which of the following offers a company the best assurance of being paid for
exported goods?
A) a letter of credit
B) a "piggyback" arrangement
C) a swap
D) an in-house export organization
E) a certified check
Answer: A
Difficulty: 1: Easy
Chapter LO: 8.8: Discuss the various payment methods that are typically used in trade
financing.
83) The international standard by which letters of credit (L/Cs) are interpreted is known as the
500.
A) UCP
B) NTR
C) FSC
D) NTB
E) HTS
Answer: A
financing.
84) Which of the following documents represents title to goods in an export transaction?
A) bill of lading
B) invoice
C) packing list
D) certificate of origin
E) insurance certificates
Answer: A
financing.
85) An irrevocable letter of credit transfers the payment obligation for an export deal from
the buyer to the buyer's:
A) in-house export organization.
B) bank.
C) freight forwarder.
D) credit union.
E) checking account.
Answer: B
financing.
86) Which set of documents generally represents the minimum documentation required to clear
a shipment through customs?
A) packing list, commercial invoice
B) bill of exchange, commercial invoice
C) certificate of origin, bill of exchange
D) packing list, insurance certificate
E) letter of credit, commercial invoice
Answer: B
financing.
87) Which of the following completely eliminates the risk of nonpayment by an importer or a
bank in an international transaction?
A) documentary credit (letter of credit)
B) documentary collection
C) cash in advance
D) sales on open account
E) draft
Answer: C
financing.
88) Which of the following correctly states the role of banks in import/export
transactions involving a letter of credit (L/C)?
A) The importer's bank is the advising and/or confirming bank; the exporter's bank is the issuing
bank.
B) The exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing
bank.
C) The exporter's bank is the advising, confirming, and issuing bank.
D) The importer's bank is the advising, confirming, and issuing bank.
E) none of the above
Answer: B
financing.
89) In which of the following forms of export financing does a bank assume a
financial obligation?
A) with an L/C but not a documentary collection
B) with a documentary collection but not an L/C
C) neither an L/C nor a documentary collection requires a bank to assume financial obligation
D) with either an L/C or a collection letter
E) with both an L/C and a documentary collection
Answer: B
financing.
90) Which of the following incorrectly states the role of banks in import/export transactions
involving a letter of credit (L/C)?
A) The exporter's bank is the advising and/or confirming bank.
B) The importer's bank is the advising and/or confirming bank.
C) The importer's bank is the advising, confirming, and issuing bank.
D) The exporter's bank is the advising, confirming, and issuing bank.
E) The importer's bank is neither advising nor confirming
bank. Answer: B
financing.
91) Which of the following arranges export financing payment methods in descending
order starting with the most secure/reliable and ending with the least secure/reliable?
A) sales on open account→cash in advance→documentary credit (L/C)→documentary
collection (draft)
B) documentary credit (L/C)→sales on open account→documentary collection (draft)→cash in
advance
C) documentary collection (draft)→documentary credit (L/C)→cash in advance→sales on
open account
D) cash in advance→documentary credit (L/C)→documentary collection (draft)→sales on
open account
E) none of the above
Answer: D
financing.
92) Which of the following financing methods would be used by an exporter that enjoys
good relations with a buyer in a well-established market?
A) letter of credit
B) cash in advance
C) sales on open account
D) barter
E) arrival draft
Answer: C
financing.
93) Which of the following methods of financing would be used if the exporting and
importing parties had a strong, long-standing relationship?
A) documentary credit (letter of credit)
B) documentary collection
C) cash in advance
D) sales on open account
E) bank draft
Answer: D
Difficulty: 1: Easy
financing.
94) In the post-September 11 business environment in the United States, imports have
come under increased security. One of the initiatives taken in the interest of national
security is:
A) NAFTA.
B) C-TPAT.
C) WTO.
D) NTB.
E) FSC.
Answer: B
financing.
95) In an export/import transaction requiring a letter of credit (L/C), the exporter's (seller's)
bank can be known as the "advising" bank, the "confirming" bank, or both.
Answer: TRUE
financing.
96) The Customs Trade Partnership Against Terrorism (C-TPAT) recognizes that U.S. Customs
and Border Protection (CBP) is responsible for screening import cargo transactions.
Answer: TRUE
financing.
97) Duty drawback refers to refunds of duties paid on imports that are processed or
incorporated into other goods and then re-exported.
Answer: TRUE
financing.
98) The organizational decision to purchase production inputs, components, or finished
goods from domestic or foreign producers is known as the decision.
A) import/export
B) NTB
C) preferential
D) sourcing
E) security
Answer: D
Chapter LO: 8.9: Identify the factors that global marketers consider when making sourcing
decisions.
99) Which of the following refers to a system of farm subsidies in Europe?

A) CVD
B) FSC
C) CAP
D) HTS
E) NTR
Answer: C
decisions.
100) is an independent marketing intermediary that acts as the export department for
two or more manufacturers whose product lines do not compete with each other.
A) Export commission
B) Manufacturer's export agent
C) Cooperative exporter
D) Freight forwarders
E) Export Management Company
Answer: E
decisions.
101) Which of the following establishes classification numbers that must be used by importers
and exporters?
A) NTR
B) CVD
C) FSC
D) NTB
E) HTS
Answer: E
decisions.
102) Governmental actions that discourage imports and block markets include all of the
following except:
A) tariffs.
B) free trade zones
C) subsidies.
D) tax incentives.
E) duties.
Answer: B
decisions.
103) Restrictive administrative and technical regulations can create barriers to trade which may
take all of the following forms except:
A) antidumping regulations.
B) product size regulations.
C) safety and health regulations.
D) common agricultural policies.
E) safety and pollution regulations.
Answer: D
decisions.
104) In an effort to attract assembly operations, Brazil allows certain product components to
be imported at reduced tariff rates. This is an example of:
A) offsets.
B) preferential tariffs.
C) the effect of the Customs Valuation Code.
D) an EMC.
E) discriminatory procurement.
Answer: B
decisions.
105) The chief executives of Swiss Swatch Group and Japanese Canon would like to:
A) outsource all of the manufacturing units overseas in order to save money.
B) outsource a majority of the manufacturing functions overseas.
C) retain a majority, if not all, of the manufacturing in their home country.
D) establish "call centers" in developing countries in order to save labor costs.
E) outsource a full line of new products only.
Answer: C
decisions.
106) If the dollar, the yen, or the euro becomes seriously overvalued, a company with
a production capacity in other locations can achieve competitive advantage by:
A) buying different currencies before major fluctuations take place.
B) conducting transactions in different currencies of the world.
C) shifting production among different sites.
D) cutting down production and waiting until the currency rate is reasonable.
E) reducing production and labor force simultaneously.
Answer: C
decisions.
107) A number of explanations have been offered for the low level of U.S. exports relative to
other countries. All of the following can be considered as reasons for low level of exports
except:
A) limited ambition by many American business owners.
B) lack of knowledge of market opportunities abroad.
C) perceived lack of necessary resources.
D) marketing to home-country users is easier than exporting.
E) a strong U.S. dollar translates into less affordable prices in export markets.
Answer: E
decisions.
108) Officially, the EU tariffs on Chinese and Vietnamese shoe imports are known as:
A) countervailing duties.
B) antidumping duties.
C) specific duties.
D) ad valorem duties.
E) temporary surcharges.
Answer: B
Difficulty: 1: Easy
decisions.
109) The furniture industry has become one of the fastest-growing sectors of China's economy.
Furniture imports are flooding into the United States from China. This can be attributed to:
A) the quality of furniture is better than that made in Europe.
B) American tastes in décor have changed.
C) China's low labor rates translate into reasonable prices for consumers.
D) China can survive tough competition.
E) replacement parts are readily available from China.
Answer: C
decisions.
110) Outsourcing means shifting undesirable jobs or work assignments to another company to
cut costs. When the outsourced work moves to another country, the terms "global outsourcing"
or "offshoring" are used.
Answer: FALSE
decisions.
111) Volkswagen's business environment includes a significant wage differential
between Mexico and Germany.
Answer: TRUE
decisions.
112) In general, the greater the distance between the product source and the target market,
the greater the time delay for delivery and the lower the transportation cost.
Answer: FALSE
decisions.
113) For every one yen increase relative to the American dollar, Canon's operating
income declines by 6 billion yen.
Answer: TRUE
decisions.
114) Recently "Call Centers" have mushroomed in countries like India, China, and Philippines
due to the outsourcing by many Western countries. What are the benefits and disadvantages to
this method to the company that is outsourcing? What factors should be taken into account
when deciding to outsource?
Answer: Outsourcing refers to shifting production jobs or work assignments to another
company in order to cut costs. When the outsourced work moves to another country it becomes
"global outsourcing" or "offshoring." Due to intense competition in the marketplace, more and
more companies are under pressure to lower costs. One way to do this is to locate manufacturing
or consumer relation activities in China, India, Philippines, or other low-wage countries. In
theory, this situation bestows great flexibility on companies and in reality, the consumer is
unaware of the country where a product is manufactured or service is delivered. However, in the
case of call centers, consumers get in direct contact with the service provider or its representative.
Call centers also perform outbound services such as telemarketing. A variety of tasks such as
airline reservation, completing tax returns, reading medical charts, and drawing up
manufacturing blueprints are done by persons who do the job at a fraction of the cost compared
to what it will cost in the home country. The decision to use outsourcing requires careful analysis
since saving cost may not be the only factor for success of many products or services. This
requires careful consideration of management's vision, costs and conditions, customer needs,
logistics, country infrastructure, political factors, and foreign exchange rates. In formulating a
sourcing strategy, company managers and executives should also recognize the declining
importance of direct manufacturing labor as a percentage of total product cost. For example,
Compaq found that the human labor portion in manufacturing a PC is only about 15 minutes.
Thus, the cost involved in saving human labor is not as high as one would imagine and
outsourcing may not be the best choice for all products or services. Also, the company image and
customer loyalty can be adversely affected if outsourced services are not quality conscious.
decisions.

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Global Marketing, 9e, GE (Keegan)

Chapter 8 Importing, Exporting, and Sourcing

3) Export marketing requires all of the following except:

11) The terms "export selling" and "export marketing" are

20) is the most important aspect of a company's international orientation.

26) The so-called "China Triangle" includes:

36) A nontariff barrier (NTB) includes all of the following except:

47) Which of the following types of duties would be imposed on a company

60) The Fly American Act is an example of a nontariff

67) is sometimes called a mother hen, a piggyback exporter, or an export vendor

79) Direct representation, as opposed to representation by independent intermediaries, for

81) An executive is undecided whether to rely on in-house or external export

99) Which of the following refers to a system of farm subsidies in Europe?

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