This summary covers chapters 16-20 of the textbook. I have summarized a test bank into an 8-page summary which saves you time to study for your other exam. Therefore, I got only 2 wrong by memorizing the summary that I made as the exam was based on the test bank.
Endterm: Chapters 16,17,18,19,20
How to read the summary:
● I have summarized the whole test bank into a 8 page summary that got me
93.7%/100 = only 2 wrong
● Ex: Sight draft: payable on presentation to the drawee
○ Originally it was written in the test bank as the following: ____ is payable on
presentation to the drawee
■ Answer in the blank (bold) = Sight draft
Chapter 16 Exporting, importing, countertrade
1. SBA (small business administration): employs trade officers throughout the US
3. ELAN (attorneys providing free consultations)
4. SCORE (1v1 consulting to active and new to export business)
5. Letter of credit; Importer secures before product shipment
—> importer gives a letter of credit to the exporter before shipping items
- pay a specified sum of money to a beneficiary
- bank charges on the letter of credit opened on the size of the transaction
- need to pay a bank fee
- importer obtains it from a local bank
6. Bill of lading: exporter endorses BoL so the title of the good is transferred to the bank
- serves as a receipt, contract, document of title
- issued to the exporter by the common carrier transporting merchandise
- receipt: obtained merchandise
6a. as a Document of title: a bill of lading obtain payments /promise before merchandise to
the importer
7. Draft (bill of exchange): requesting payment / International commerce to effect payment
- maker: initiating the draft
- order was written by the exporter instructing the → importer (or agent) to pay a specified
amount of money at a specific time
8. Sight draft: payable on presentation to the drawee
9. Time draft: allows for a payment delay
- bank’s acceptance: time draft is drawn on accepted by a bank
1
, 10. Typical international trade transaction: importer and exporter maintain an account
with the same bank
11. Firms employ reputable banks as a third party in international transactions
12. Export-import bank: provides finance to facilitate cross-border trade between the US
and other countries
13. Export credit insurance: foreign credit insurance association provides coverage
against commercial + political risks
14. Barter; most restrictive + one-time-only deals in transactions with trading partners not
creditworthy or trustworthy + direct exchange of goods/services
15. Counter purchase: firm agrees to purchase a certain amount of materials back from a
country in which a sale is made *reciprocal
16. Buyback: suppliers tech, equipment, training —> take a certain percentage of the
output as partial payment
17. Countertrade: no currency involved. give a firm way to finance an export deal when no
means are available
- the alternative of structuring international sales when payments are difficult, costly, or
nonexistent
- cannot be traded by money (barter-like agreements)
- effective for developing nations
- most attractive to large, diverse multinational enterprises
- used when gov restricts the convertibility of its currency to preserve its foreign exchange
reserves
18. Switch trading: specialized 3rd party trading house
- buys the firm’s counter purchase credits + sells them to another firm that can be
better use them
Chapter 17 Global production and supply chain management
1. Logistics: information flows between a business and its customer
2. Deming argued that to keep pace with changes in the workplace: management
should train employees in new skills
3. Appreciation of local currency: transforms low-cost locations → into high-costs
4. Manufacturing technology: 1) fixed costs 2) minimum efficient scale, 3) flexibility of
technology
5. Being dependent on-location risky: floating exchange rates
6. Economies of scale: plant output expands → unit cost decrease
7. Low minimum efficient scale: allows the firm to accommodate the demand for local
responsiveness + hedge against current risk
8. Flexible manufacturing technology = lean production: produce a wider variety of
end products at a unit cost that at one time could be achieved only through mass
production of a standardized output
a. Reducing setup times for complex equipment
b. Increasing utilization of individual machines
c. Improve quality control
9. High value-to-weight ratios: (electronic components): expensive + light →
transportation only small percentage of total costs
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