IBA 460 PRACTICE TEST 2 QUESTIONS
WITH 100% ACCURATE SOLUTIONS.
export management - Answer type of indirect exporting, normally located in exporting country, acts as
representative for the exporter abroad, but never takes title to the goods. Acts as a facilitator by helping
exporter find buyers and earns commission on sale. Requires more involvement by exporter
export trading companies - Answer firm with offices in multiple countries that purchases goods in one
country and resells them in another. Domestic transactions
contract manufacturing - Answer company enters into an agreement with a foreign company to
manufacture its goods abroad EX. American publisher may hire a British publisher to print books in
Britain, instead of shipping them from the US, way for firms to get its products in a foreign country,
either when there are barriers to entry or high transportation costs
indirect exporting - Answer exporter does not seek sales, allows manufacturer to concentrate on
domestic market and leave exporting to experts, EX: EMC, Export trading company, piggyback exporting,
domestic distributors and gray markets
direct (active) exporting - Answer exporter actively participates in finding potential markets abroad
best option for large firms or firms with international experience, progression of direct entry modes,
greater investment required than indirect exporting, time to market may be higher, higher risk
indirect benefits - Answer no int'l experience required, management not distracted, faster to int'l
market, little to no increased financial commitment, low risk
indirect disadvantages - Answer poor control wrong market, wrong distributor, inadequate market
feedback, potentially lower sales, high risk
benefits of direct - Answer direct control, excellent feedback, greater sales
direct disadvantages - Answer greater investment required than indirect exporting, time to market may
be higher, higher risk
, piggyback exporting - Answer refers to the possibility of a small firm riding on another firm's efforts to
enter a foreign market. EX: a firm utilizes another company's distribution channels abroad to sell its
products. Uses another company's experience to sell it's products abroad
foreign agent - Answer small firm or individual located in the importing country. Will act as a
representative of the exporter. He/She will not take title of the goods and will earn a commission from
the exporter. Will represent multiple companies manufacturing products that complement the exporter's
products
distributor - Answer located in importing country, will purchase goods from the exporter and therefore
take title of them. It will then resell the goods for a profit
parallel imports - Answer buying goods in the country with the lowest price, and then sell them in the
country with the highest price. They buy from the normal distribution channel, but sell through
alternative channels of distribution that are not ones exporters would normally use, difficult for
countries to fight because they are due to market characteristics rather than strategic choices
FCL & LCL - Answer shipping term for volume not weight
TEU - Answer twenty foot equivalent unit, intermodal transportation, containerization- dry, reefer, high
cube, flat rock
breakbulk cargo - Answer cargo that is packaged (bales, boxes, drums, crates) but not containerized,
vehicles are also considered this type of cargo, cheaper to move
container cargo - Answer cargo that's placed in containers before it's loaded onto a ship, metallic
boxes, 20ft. and 40ft.
panamax - Answer ship of the max. size that can enter the locks of the panama canal
post-panamax - Answer ship that's too large to enter the locks of the panama canal
