QN1: Williamson states that assets specificity, uncertainty, and frequency determine the efficient transaction governance form.
QN2: Export firms can be involved in two principal channels of distribution when marketing abroad: indirect channels and independent local middlemen.
Answer
Answer: False. They can be involved in indirect channels and direct channels. An independent local middleman is one form of an indirect channel.
QN3: A firm’s channel structure is defined in terms of the percentage of equity held in the distribution organization whereby majority ownership (greater than 60 percent) is treated as an indirect or integrated channel, whereas less than majority ownership is considered a direct channel.
Answer
Answer: False. A firm’s channel structure is defined in terms of the percentage of equity held in the distribution organization whereby majority ownership (greater than 50 percent) is treated as a direct or integrated channel, whereas less than majority ownership is considered as an indirect channel.
QN4: The export commission agent represents foreign buyers such as export firms and large industrial users.
Answer
Answer: False. The export commission agent represents foreign buyers such as import firms and large industrial users.
QN5: Export cartels are organizations of firms in the same industry for the sole purpose of marketing their products overseas.
QN6: One of the advantages of an indirect channel structure is that it is a good way to test-market products, develop goodwill, and allow clients to be familiar with a firm’s trade name or trademark before making substantial commitment.
QN7: Sellers reserve the right to change prices at any time usually upon 60 to 90 days.
Answer
Answer: False. Usually upon 30 to 60 days.
QN8: Termination of a contract is allowed by either party with a defined prerequisite of action or omission by the other party upon giving advance notice.
Answer
Answer: False. The termination of a contract does not need a defined prerequisite of action or omission by the other party.
QN9: Bankruptcy, liquidation, and litigation are factors that may cause contracts to be terminated by either party.
QN10: All contracts must state the applicable law of the manufacturer’s home state, should a dispute occur.
Answer
Answer: False. Most contracts state the applicable law for a dispute settlement, but it is not required.
QN11: The two categories of business logistics are materials management and physical distribution.
QN12: The interdependence of functional activities has been articulated through various new approaches or concepts, including the systems approach, total cost approach, and the trade approach.
Answer
Answer: False. It has not been articulated through the total cost approach, but instead through the opportunity cost approach.
QN13: A major political risk in foreign trade includes nonpayment or delays in payment for imports.
Answer
Answer: False. Nonpayment and delays are not political risks but are foreign credit risks.
QN14: A letter of credit transaction avoids risks arising from late payments or bad debts because it ensures that payments are made before the goods are shipped to the importer.
Answer
Answer: False. A confirmed letter of credit does this.
QN15: Many export firms do insure trade receivables, including fire or car insurance.
Answer
Answer: False. Many export firms do not insure trade receivables.
QN16: The primary purpose of insurance in the context of foreign trade is to reduce the financial burden of losses arising from the movement of goods over long distances.
QN17: An all-risks policy covers total loss and partial loss from certain specified risks insured against.
Answer
Answer: False. FPA (free of particular average)
QN18: The Inchmaree clause relieves the insurer of liability for partial cargo losses, except for those caused by the stranding, sinking, burning, or collision of the vessel with another.
Answer
Answer: False. The free of particular average clause protects against these events.
QN19: The typical steps in claim procedures include the preliminary notice of claim, formal notice of claim, and the settlement of claim.
QN20: Most developing countries provide insurance programs for their import firms to cover losses due to political upheaval in their countries.
Answer
Answer: False. Most industrialized nations provide insurance programs for their export firms to cover losses due to political risk.
QN21: Export prices should be low enough to remain competitive in the market, yet high enough to make reasonable profit.
QN22: Parallel or gray markets are created when the product is purchased at a high price in one market and sold in markets that enjoy higher prices.
Answer
Answer: False. Parallel or gray markets are created when the product is purchased at a low price in one market and sold in markets that enjoy higher prices.
QN23: One of the external forces that influences export pricing is location and environment of the foreign market.
QN24: FCA, Ex-Works, DAF, and Ex-Store are all terms that are part of Group E terms.
QN25: Under a CIF contract, when goods are lost or destroyed during transit the buyer is entitled to claim the purchase price against presentation of proper shipping documents to the seller.
Answer
Answer: False. Under a CIF contract, when goods are lost or destroyed during transit the seller is entitled to claim the purchase price against presentation of proper shipping documents to the buyer.
QN26: Common features shared by D terms include the arrival/destination terms, seller’s requirement to arrange for transportation, and that Incoterms do not require insurance during transportation.
QN27: In arrival contracts, the buyer is under no obligation to pay the purchase price if the goods are lost in transit. However, in CIF the buyer is required to pay against documents.
QN28: The UCC states that where a second-party carrier is not involved, risk of loss passes not upon mere tender of delivery but when the seller ships the goods.
Answer
Answer: False. The UCC states that where a third party carrier is not involved, risk of loss passes not upon mere tender of delivery but when the buyer receives the goods.
QN29: In cost-based pricing, the export price is based on the variable cost of producing the product.
Answer
Answer: False. Not in cost-based pricing but in marginal pricing.
QN30: Export sales contracts are central to international commercial transactions, and around them revolve a series of connected relationships, including cargo insurance, transportation, and payment arrangements.
QN31: A motive behind the move toward harmonization of international contract law is the decrease of trade and other political relations between nations.
Answer
Answer: False. A motive behind the move toward harmonization of international contract law is the increase of trade and other economic relations between nations.
QN32: Parties can be held liable for verbal contracts under the SICG, if they either verbally accept an offer or their verbal offer is accepted by the other party.
Answer
Answer: False. Not SICG, but CISG.
QN33: Under the UCC, an oral testimony is an oral sales contract between the parties that can be modified only by prior or contemporaneous oral agreement.
Answer
Answer: False. Under the UCC, an oral testimony is a written sales contract between the parties that cannot be modified by prior or contemporaneous written or oral agreement.
QN34: The tendering process begins with a buyer of goods and services inviting potential suppliers for submission of tender (bids).
QN35: A contract provision that would be of service for an exporter includes shifting the risk to the overseas seller by requiring payment in exporter’s currency.
Answer
Answer: False. A contract provision that would be of service for an exporter includes shifting the risk to the overseas customer by requiring payment in exporter’s currency.
QN36: In the United States, Canada, and other developed countries, an exporter (to these countries) will not be subject to any taxes if such sales are not performed through an agent, a branch, or a subsidiary.
QN37: Some of the major clauses in export contracts include scope of work, price and delivery of terms, taxes, and duties.
QN38: An export contract also includes distributor contracts for the manufacture of a product within a given period.
Answer
Answer: False. An export contract also includes supply contracts for the manufacture of a product within a given period.
QN39: The decline of the international customary law and the adaptation of international conventions and rules are factors behind the move toward harmonization of international contract and commercial law.
Answer
Answer: False. The increases of the international customary law and the adaptation of international conventions and rules are factors behind the move toward harmonization of international contract and commercial law.
QN40: The air waybill is a contract of carriage between the shipper and air carrier. It is issued by the shipper and serves as a receipt for the air carrier.
Answer
Answer: False. It is issued by the air carrier and serves as a receipt for the shipper.
DistPub Team
Distance Publisher (DistPub.com) provide project writing help from year 2007 and provide writing and editing help to hundreds student every year.
