Chapter 14

Question 1

Ownership advantages

Answer 1

the firm’s core competencies

Question 2

Location advantages

Answer 2

the combination of sales opportunity and investment risk that creates favourable locations in foreign markets

Question 3

Internalization advantages

Answer 3

reflect companies’ response to market imperfections that often create uncertainties

Question 4

Direct exporting

Answer 4

involves independent representatives, distributors, or retailers outside of the exporter’s home country

Question 5

Indirect exporting

Answer 5

products are sold to intermediory in the domestic market, which then exports them

Question 6

Service exports (invisibles)

Answer 6

are intangible products

Question 7

Types of exporters include:

Answer 7

• sporadic exporter
• regular exporter

Question 8

Ownership advantages of the company

Answer 8

location advantages of the market, and internalization advantages from controlling transactions shape how firms enter foreign markets

Question 9

Resource-constrained or risk-averse companies

Answer 9

that have strong ownership advantages often foreign markets through export

Question 10

A firm’s characteristics moderate its export activity

Answer 10

Size matters, but often management commitment, productivity, innovativeness, and cost structure matter more

Question 11

Reasons to import

Answer 11

• Specialization of labour
• Global rivalry
• Local unavailability
• Diversification
• Top management’s outlook

Question 12

Exporting helps all types of companies

Answer 12

• increase profitability
• improve productivity
• diversify risk

Question 13

Importing and Exporting: Problems and Pitfalls

Answer 13

• Financial risks
• customer management
• Lack of international business experience
• Marketing challenges
• Top management commitment
• Government regulation
• Trade documentation

Question 14

Incremental internationalization

Answer 14

The view that as a company gains experience, resources, and confidence, it progressively exports to increasingly distant and dissimilar countries

Question 15

Two view of export shape interpretation:

Answer 15

the deliberate, sequential dynamic of incremental internationalization and the instant-internationalization of the born-global

Question 16

Progressively gaining experience in successfully dealing with increasingly dissimilar markets

Answer 16

encourages managers to expand their international horizon

Question 17

Born-globals, owing to their executives’ international orientation and improving technological options

Answer 17

begin trading internationally at inception

Question 18

An Export Plan

Answer 18

1. Executive Summary
2. Company Description
3. Product/Service Description
4. Foreign Marketplace Analysis
5. Market Entry Strategies
6. International Law
7. Financial Analysis
8. Risk Management
9. External Assistance
10. Implementation Schedule

Question 18

Countertrade

Answer 18

different arrangement that parties use to trade products via transactions that use limited or no currency or credit

Question 19

Trends indicate increasing interaction between

Answer 19

the incremental-international and born-global perspectives

Question 19

Exporters are often proactive decision-makers

Answer 19

Sometimes, however, serendipity-marking fortunate discoveries by accident-initates export activity

Question 20

Exporting directly involves

Answer 20

independent representatives, distributors, or retailers outside of the exporter’s home country

Question 21

Indirect exports

Answer 21

are products sold to an intermediary in the home market, which then exports those products to end users in other countries

Question 22

Several factors shape an SME’s preferred approach to export

Answer 22

notably its mix of ownership, location, and internalization advantages

Question 23

Imports and exports

Answer 23

are the foundation of international trade

Question 24

A service import is

Answer 24

a service transaction that does not result in ownership and is rendered by nonresidents to residents

Question 25

The specialization of labour

Answer 25

is a powerful tool to improve productivity. It benefits the import potential and performance of SMEs and large firms

Question 26

There are 3 general types of importers:

Answer 26

- Optimizers - Opportunism - Arbitrageurs

Question 27

In principle, arbitrage is the simultaneous

Answer 27

buying and selling of the same product in different markets to exploit differences in price

Question 28

Common barriers to trade

Answer 28

- Operations - Strategic - Financial - Governmental - Documentation

Question 29

SMEs regularly rate financial constraints

Answer 29

as the most daunting barrier to trading internationally

Question 30

Governments require international traders to

Answer 30

thoroughly document trade transactions

Question 31

Firms often find themselves in situations where 3rd party assistance

Answer 31

influences the productivity and profitability of their international activities. They can enlist aid from various public or private agents

Question 32

In the US, as in most countries, public agencies

Answer 32

help firms initiate and develop exports and imports

Question 33

Trade intermediaries are

Answer 33

third parties that provide exporters a variety of services

Question 34

Many EMCs are entrepreneurial ventures that

Answer 34

specialize by product, function, or market area

Question 35

The US exempts ETCs from antitrust provisions

Answer 35

thereby permitting competitors to combine forces in foreign markets

Question 36

Freight forwarders

Answer 36

the largest export/import intermediary in terms of value and weight of products shipped internationally

Question 37

ETCs operate based on

Answer 37

demand rather than supply. They identify suppliers who can fill orders in overseas market

Question 38

A freight forwarder specializes

Answer 38

in moving goods from sellers to buyers

Question 39

A 3PL is a trade intermediary that

Answer 39

applies sophisticated technologies and systems to supervise trade logistics

Question 40

A customs broker helps an importer navigate the regulations imposed by customs agencies. It helps importers in matters of

Answer 40

- valuation - qualification - deferment - liability

Question 41

Enlisting the support of a trade intermediary requires

Answer 41

the trader surrender some degree of operational control

Question 42

Going international imposes many demands that, collectively, influence

Answer 42

- resource allocation - executive effectiveness - operational flexibility - financial stability - decision-making

Question 43

Countertrade is an umbrella term for several sorts of trade transactions

Answer 43

such as bater or offset, in which the seller accepts goods or services, rather than currency or credit, as payment