BUSA 4000 CHALLENGE 4 QUESTIONS AND ANSWERS
Indirect exporting - CORRECT ANSWER✅✅Contracting with an intermediary in the firm's home country
to perform all export functions, often an Export Management Company or a Trading Company. Common
among firms new to exporting.
Direct exporting - CORRECT ANSWER✅✅Contracting with intermediaries in the foreign market to
perform export functions, such as distributors or agents. They perform downstream value-chain
activities in the target market.
Company-owned foreign subsidiary - CORRECT ANSWER✅✅Similar to direct exporting, except the
exporter owns the foreign intermediation operation; the most advanced option.
Quotation or pro forma invoice - CORRECT ANSWER✅✅Issued on request to advise a potential buyer
about the price and description of the exporter's product or service.
Commercial invoice - CORRECT ANSWER✅✅Actual demand for payment issued by the exporter when a
sale is concluded.
Bill of lading - CORRECT ANSWER✅✅Basic contract between exporter and shipper. Authorizes the
shipping company to transport the goods to the buyer's destination.
Shipper's export declaration - CORRECT ANSWER✅✅Lists the contact information of the exporter and
buyer, full description, declared value, and destination of the products being shipped. Used by
governments to collect statistics.
Certificate of origin - CORRECT ANSWER✅✅The "birth certificate" of the goods, showing country where
the product originated.
Insurance certificate - CORRECT ANSWER✅✅Protects the exported goods against damage, loss,
pilferage and, sometimes, delay.
, Countertrade - CORRECT ANSWER✅✅An international business transaction in which all or partial
payments are made in kind rather than cash. Similar to barter.
Barter - CORRECT ANSWER✅✅Goods are directly exchanged, without the transfer of any money.
Compensation deal - CORRECT ANSWER✅✅Payment in goods and cash.
Counterpurchase - CORRECT ANSWER✅✅Entails two distinct contracts. In the first, the seller agrees to
a set price for goods and receives cash from the buyer, contingent on a second contract in which the
seller agrees to purchase goods from the buyer.
Buy-back agreement - CORRECT ANSWER✅✅Seller agrees to supply technology or equipment to
construct a facility and receives payment in the form of goods produced by it.
Foreign distributor - CORRECT ANSWER✅✅Based in the foreign market. Works under contract for the
exporter, takes title to, and distributes the exporter's products in a national market or territory, often
performing marketing functions such as sales, promotion, and after-sales service.
Manufacturer's representative - CORRECT ANSWER✅✅Contracted by the exporter to represent and sell
its merchandise or services in a designated country or territory.
Trading company - CORRECT ANSWER✅✅Engages in import and export of a variety of commodities,
products, and services.
Export management company (E M C) - CORRECT ANSWER✅✅Based in the home market. Acts as an
export agent on behalf of a client firm.
Global Sourcing - CORRECT ANSWER✅✅Procurement of products or services from suppliers located
abroad for consumption in the home country or a third country
Business Process Outsourcing - CORRECT ANSWER✅✅Outsourcing of business functions to
independent suppliers such as accounting, human resource functions, IT services, and customer service.
Indirect exporting - CORRECT ANSWER✅✅Contracting with an intermediary in the firm's home country
to perform all export functions, often an Export Management Company or a Trading Company. Common
among firms new to exporting.
Direct exporting - CORRECT ANSWER✅✅Contracting with intermediaries in the foreign market to
perform export functions, such as distributors or agents. They perform downstream value-chain
activities in the target market.
Company-owned foreign subsidiary - CORRECT ANSWER✅✅Similar to direct exporting, except the
exporter owns the foreign intermediation operation; the most advanced option.
Quotation or pro forma invoice - CORRECT ANSWER✅✅Issued on request to advise a potential buyer
about the price and description of the exporter's product or service.
Commercial invoice - CORRECT ANSWER✅✅Actual demand for payment issued by the exporter when a
sale is concluded.
Bill of lading - CORRECT ANSWER✅✅Basic contract between exporter and shipper. Authorizes the
shipping company to transport the goods to the buyer's destination.
Shipper's export declaration - CORRECT ANSWER✅✅Lists the contact information of the exporter and
buyer, full description, declared value, and destination of the products being shipped. Used by
governments to collect statistics.
Certificate of origin - CORRECT ANSWER✅✅The "birth certificate" of the goods, showing country where
the product originated.
Insurance certificate - CORRECT ANSWER✅✅Protects the exported goods against damage, loss,
pilferage and, sometimes, delay.
, Countertrade - CORRECT ANSWER✅✅An international business transaction in which all or partial
payments are made in kind rather than cash. Similar to barter.
Barter - CORRECT ANSWER✅✅Goods are directly exchanged, without the transfer of any money.
Compensation deal - CORRECT ANSWER✅✅Payment in goods and cash.
Counterpurchase - CORRECT ANSWER✅✅Entails two distinct contracts. In the first, the seller agrees to
a set price for goods and receives cash from the buyer, contingent on a second contract in which the
seller agrees to purchase goods from the buyer.
Buy-back agreement - CORRECT ANSWER✅✅Seller agrees to supply technology or equipment to
construct a facility and receives payment in the form of goods produced by it.
Foreign distributor - CORRECT ANSWER✅✅Based in the foreign market. Works under contract for the
exporter, takes title to, and distributes the exporter's products in a national market or territory, often
performing marketing functions such as sales, promotion, and after-sales service.
Manufacturer's representative - CORRECT ANSWER✅✅Contracted by the exporter to represent and sell
its merchandise or services in a designated country or territory.
Trading company - CORRECT ANSWER✅✅Engages in import and export of a variety of commodities,
products, and services.
Export management company (E M C) - CORRECT ANSWER✅✅Based in the home market. Acts as an
export agent on behalf of a client firm.
Global Sourcing - CORRECT ANSWER✅✅Procurement of products or services from suppliers located
abroad for consumption in the home country or a third country
Business Process Outsourcing - CORRECT ANSWER✅✅Outsourcing of business functions to
independent suppliers such as accounting, human resource functions, IT services, and customer service.
