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🌐 Unit 1: International Trade 🌐
Sep 22, 2023
Questions
1. Why do most governments impose import tariffs and/or quotas?
💡 Answers:
● Protect their strategic industries; ● Make imports more expensive than home-produced substitutes → reduce balance of payments deficit; ● Protect against dumping; ● Retaliate against restrictions imposed by other countries; ● Protect their “infant industries”; ● Know the quantity that will be imported.
2. One of the reasons for governments to impose tariffs as well as tariff quotas is to protect
(1)......, defend (2)......., and set a limit for (3)........
Phrases (cho sẵn): protectionism, mercantilism, imports, exports, free trade, infant industries, dumping, anti- dumping, investment
💡 Answers: (1): infant industries (2): dumping (3): imports
3. True/false
a. Import quotas always result in positive economic outcomes for a country. (False) b. Free trade agreements aim to reduce or eliminate tariffs and quotas between participating countries. (True) c. Tariffs are more effective at restricting trade than quotas. (False) d. Tariffs and quotas can have negative consequences for the overall economy. (True) e. Tariffs and quotas are both examples of non-tariff barriers to trade. (False)
4. Fill in the blanks:
………….(1)………., an economic theory that prevailed in the past, promoted …………(2)……….. through the use of tariffs and quotas. ………(3).......... were imposed on imported goods to discourage foreign competition and protect domestic industries, while ……….(4)........... limited the quantity of foreign goods that could enter a country. These protectionist measures were believed to be essential for a nation's economic growth and self-sufficiency, but in today's globalized world, many argue that ……….(5).......... and open markets provide more opportunities for prosperity and cooperation among nations. 💡 Answers: (1) Mercantilism (2) protectionism
(3) Tariffs (4) quotas (5) free trade
5. Why do Third World governments tend to liberalize their economy and reduce barrier
trade?
💡 Answers: ● They are aware of the export success of the East Asian “Tiger" economies and the collapse of the Soviet Union ● Afraid of being excluded from the trading system due to the development of trading blocks like the EU,... ● Maastricht Treaty and the North American Free Trade Agreement both signed in the 1990s.
6. Give three examples of the current reliance of LDCs on primary products for export?
💡 (^) Answers: Oil: The top three LDC exporters of oil in 2022 were Angola, Chad, and Yemen. Oil exports accounted for over 90% of total exports for each of these countries. Minerals: The top three LDC exporters of minerals in 2022 were Guinea, the Democratic Republic of the Congo, and Zambia. Minerals accounted for over 80% of total exports for each of these countries. Agriculture: The top three LDC exporters of agricultural products in 2022 were Bangladesh, Ethiopia, and Cambodia. Agricultural products accounted for over 60% of total exports for each of these countries.
UNIT 2
1. Name two ways of going global?
💡 Answers: Exporting and FDI
2. In both franchising and licensing, name 3 elements that people focus on?
💡 Answers: Trademark, patent, copyright, trade secret, royalty
3. Name 2 kinds of legislation that a foreign investors study closely prior to making an
investment?
💡 Answers: Antitrust legislation and labor laws
4. Give an example of platform FDI?
💡 Answers: The French perfume brand Chanel set up a manufacturing plant in the USA
and export products to other countries in America, Asia, and other parts of Europe
5. In transnational strategy, how to maintain high standardization and localization? Give
an example?
💡 Answers: Keep core product and customize additional products
EX: Coca has a similar taste around the world but the flavor is strong in the U.S with
higher level of sugar while it is milder in Asian countries
6. What is the difference between Merger and Acquisition?
💡 Answers: Merger : The combination of 2 companies into 1
Acquisition : An acquisition is when a company buys more than 50% ownership in its
target
EX of Merger: Heinz and Kraft merger (2015) - $100B → Kraft Heinz Company
EX of Acquisition:The acquisition to extend the product line - Coca-Cola and Monster
acquisition (2015)
7. Give (at least) 2 examples of Investment Incentives
💡 Answers: Cash grant, tax credit, accelerated depreciation
8. What is the difference between franchising and licensing?
💡 Answers:
A franchising agreement pertains to a business's entire brand and operations, while a
licensing agreement only applies to registered trademarks, patents, copyrights, etc.
FRANCHISING LICENSING
Business model Only deals with the
provision of a service
Both services and products
Control and influence Franchisee has little room
in decision-making
Licensee can make
decisions on what to do
with his own products or
services, without the need
for approval from the
licensor
Support The franchisor provides the
franchisee with the
assistance of setting up the
required systems
Do not typically come with
such technical support
Ownership The business belongs to
the franchisee
The licensee only pays the
licensor for a specific
product. The rest of the
business may continue
running independently
9. What is the name of the strategy with low level of localization and high level of
standardization?
💡 Answers: Global standardization strategy
EX: Dunkin Donuts and McDonald's try to standardize their menus by serving cultural or
regional food items that are in line with the brand
10. Which international business strategy do Vietnamese exported lychees belong to?
💡 Answers: International strategy
Unit 3: FOREIGN EXCHANGE TRADING
1. Who are the major players in foreign exchange market
💡 Answers: governments (usually through their central banks) and commercial
banks.\
2. What is meant by foreign exchange rate
💡 Answers: The rate of domestic currency which can be exchanged for foreign
currency
3. Why does the central bank intervene in the market?
Unit 4
1. What is the key difference between revocable and irrevocable L/C in international
payment methods?
- Revocable L/C that may be canceled at any moment without prior notice to the
beneficiary
- Irrevocable L/C that cannot be canceled nor amended without agreement of all
parties
2. List four international payment methods in correct positions according to their risks
for the exporters (from least secure to most secure).
- The order is: (1) open account - > (2) bill for collection - > (3) documentary credit -
> (4) advanced payment.
3. What do you understand about the payment method named “cash in advance”?
Analyze the risk that the buyer may face with this payment method.
Cash in advance is a payment method where the buyer pays for the goods or services before they are shipped or delivered. This payment method is considered to be the most secure for the exporter because they receive payment before shipping the goods. The buyer can pay via wire transfer, credit card, or escrow service. The risk that the buyer may face with this payment method is that they may pay for goods that are never delivered3. This can happen if the exporter fails to deliver the goods after receiving payment. Therefore, it is important for buyers to ensure that they are dealing with a reputable exporter before making a cash-in-advance payment
4. In which circumstances may the method named “open account” be used?
An open account is commonly used in business to establish a credit relationship between a buyer and a seller. It allows the buyer to make purchases on credit, with payment usually due within a specified period, such as 30 days. Open accounts are often used when there is an ongoing business relationship between the two parties, and it provides convenience and flexibility for both the buyer and the seller. However, it is important to establish clear terms and conditions to ensure timely payment and avoid any potential issues.
5. What are the key characteristics of confirmed L/C in international payment methods?
The term confirmed letter of credit refers to an additional guarantee to an original letter of credit obtained by a borrower from a second bank. It guarantees that the second bank will pay the seller in a transaction if the first bank fails to do so. Borrowers may be required to get a confirmed letter of credit if the seller has doubts about the creditworthiness of the bank that issued the initial letter. Requiring a confirmed letter of credit decreases the risk of default for the seller.
6. What should the seller/beneficiary do if the terms of the letter of credit are not in accordance with those of the contract? 1. The first step is to carefully review the letter of credit to identify the specific discrepancies between its terms and the terms of the contract. 2. Communicate with the issuing bank. Provide them with contract details, explain the inconsistencies and request an amendment to the L/C that aligns with the contract terms. 3. Negotiate with the buyer if the issuing bank is uncooperative or if the discrepancies cannot be easily corrected through an amendment. In case the terms of the L/C deviate from the contract and the seller is not willing to accept those changes, they may refuse to proceed with the transaction and cancel the contract.
7. Discuss advantages and disadvantages of documentary credit upon an exporter’s
perspective?
Advantages:
Reduced Risk of Non-Payment: The exporter enjoys a reduced risk of non-payment since the LC is a legally binding contract between the bank and the buyer, ensuring payment upon meeting the LC terms. Improved Cash Flow: LCs can enhance cash flow by ensuring prompt payment upon shipment once the necessary documentation is presented, allowing exporters to plan their finances more effectively. Increased Sales Opportunities: Exporters can attract new business by offering LCs as a payment method, as it instills confidence in buyers, especially in high-risk markets where non-payment is a concern. Disadvantages: Cost: LCs can be expensive due to various fees associated with their issuance and confirmation. The overall cost can vary based on transaction size and complexity. Complexity: Setting up and managing LCs can be complex and time-consuming. Exporters must thoroughly understand the terms and conditions to avoid potential payment issues.
- Promotion: Free sample, Market coverage
- Place: Point of sales, Distribution channels 2/ What are the kind of channels that deliver and receive messages from target buyers and include newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs? 💡 (^) Answers: : Communication channels 3/ How does a “marketplace” differ from a “market” in terms of marketing? 💡 Answers:
- A marketplace is a specific location or channel where exchange between buyers and sellers occurs.
- A market, however, refers to a broader concept which includes all potential customers who share a particular need or want and may be willing to engage in an exchange to satisfy that need or want. 4/ How are service channels different from distribution channels (Give examples)? 💡 (^) Answers:
- Service channels are methods through which a company provides services to customers, such as customer service hotlines, email support, or in-person service at stores.
- Distribution channels, conversely, focus on the logistics of getting a product from the manufacturer to the consumer, such as retail stores, online marketplaces, direct sales, and partnerships with other businesses. These channels allow products or services to reach customers through various touchpoints, such as stores, websites, social media, and events. 5/ Explain the differences between communication channels and distribution channels in marketing? 💡 Answers: Communication channels in marketing are the mediums used to deliver messages to consumers (like television, radio, social media). Distribution channels are the pathways through which goods or services get from the producer to the consumer (like wholesalers, retailers, or direct sales). 6/ What is the difference between a brand and a trademark? 💡 (^) Answers:
- A brand is a name, symbol, design, awareness,... to identify specific products or services and to differentiate them from competitors.
- A trademark is a legal term indicating a registered brand which protects it from being used by others. 7/ Define "Unique Selling Proposition" (USP) and explain its role in marketing.
💡 Answers: A Unique Selling Proposition (USP) is a factor that differentiates a product from its competitors, such as the lowest cost, the highest quality, or the first-ever product of its kind. In marketing, a USP is crucial as it provides a unique reason for the customers to purchase the product, highlighting the unique value it offers compared to competing products. 8/ What is "SWOT Analysis," and what does each letter represent? 💡 Answers: SWOT Analysis is a strategic planning tool used to identify and analyze the Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning. Strengths and Weaknesses are internal factors, while Opportunities and Threats are external factors. 9/ When do we need stimulational marketing 💡 Answers: Stimulational marketing is necessary where there's no demand, which often happens with new products and services. 10/ What is the objective of demarketing? 💡 (^) Answers: To reduce overfull demand, permanently or temporarily, for some roads and bridges during rush hours. 11/ What does the ‘qsp’ framework represent, and why is it important for businesses? 💡 (^) Answers: The ‘qsp’ framework represents the three critical factors or ‘customer value triad’ that businesses consider when making decisions about products or services: Quality, Service, and Price. It's important because it helps companies find the right balance between these factors to meet customer needs, stay competitive, and achieve long-term success. 12/ Provide an example illustrating the difference between needs, wants, and demands? 💡 Answers: Consider the scenario of a person requiring transportation. Their basic need is to get from one place to another, which can be fulfilled by walking or using public transportation. However, their want may be to have a comfortable and convenient mode of transport, such as a car, which goes beyond the basic need. If they have the financial means to purchase a car and actively seek one, their demand for a specific car model represents the willingness and ability to convert their want into a purchase. 13/ What is the difference between selling and marketing? 💡 Answers:
5. What types do the liability transfer when goods are on board the vessel? FOB CFR CIF 6. Differentiate between these 2 factors when choosing transport mode: perishability and pilferability Perishability: goods that spoil quickly and therefore have a short shelf life, such as milk, bread, fruit, and vegetables. Pilferability: an act of stealing items or things of little value 7. What types does the liability transfer when goods are handed over to the first carrier (origin destination)? CPT, CIP, fca 8. What type only applies for sea and inland waterway? CFR, CIF, FOB, FAS 9. According to EXW, when does the seller’s responsibility end? When the goods are delivered at the seller’s premise. 10. What are the types of sea freight rates? Liner rates (Scheduled services) & Charter rates (Usually negotiated) Liner rates (Scheduled services): They are used for regular, pre-scheduled shipping services that operate on established routes and schedules. & Charter rates (Usually negotiated): Instead of using pre-scheduled services, charter rates involve the hire of an entire vessel (or a significant portion of it) for a specific voyage or period.
Unit 7: MARINE CARGO INSURANCE
- Compare partial loss and total loss and give examples? 💡 Answers: The partial loss is a damage that neither destroys the insured good nor renders it useless for its designed purpose. Total loss means the destruction of the insured goods to the extent that nothing of value is left, and the item cannot be repaired or rebuilt to its pre- destruction state. Example: ● Total loss : the carrying vessel goes missing or completely sinks and the goods cannot be retrieved, or the goods were completely destroyed due to fire, etc. ● Partial loss: the carrying vessel throws part of the cargo overboard to prevent sinking, or part of the goods are destroyed due to fire, etc.
- Which risks are covered by Condition B but not Condition C? 💡 (^) Answers: Total loss of any package lost overboard or dropped whilst loading onto or unloading from the vessel.
- In which conditions are theft, war and non-delivery covered by? 💡 Answers: Theft and non-delivery is covered by Condition A, while Conditions B and C can cover them at an additional premium. However, war is excluded from all conditions.
- After the goods have been discharged overside for 51 days but haven’t yet been moved to the Consignee, when will the contract terminate? 💡 Answers: Either 9 more days (60 days after completion of discharge overside of the goods), or upon delivery to another place of storage outside the ordinary course of transit.
- Under which Incoterms is the Seller required to purchase Insurance and for which duration? 💡 (^) Answers: CIP, from the place of delivery to the place of destination; and CIF, from the port of shipment to the port of destination.
- In the case that the vessel going between India and Africa has to deviate from the ordinary course of transit to avoid pirates, is the insurance still in effect? 💡 (^) Answers: Yes. The insurance shall remain in force (though subject to termination) in cases of variations in the adventure due to exercise of liberty by the shipowner or charterer.
- In case the goods have to be thrown overboard to save a sinking ship, who will bear the general average expenses? 💡 Answers: The Insurer shall be responsible for the general average expenses.
- What shall the Insurer do when the extent of the risks covered is increased due to new occurrences after concluding the contract? 💡 Answers: Upon receiving notice of the new changes, the Insurer shall issue an Endorsement and may charge an additional premium.
