BM1917

QUIZ ON EXPORTING, IMPORTING, AND COUNTERTRADE

NAME: SECTION: DATE: SCORE:

Salazar, Richelldee M. BSBA OM-3A 12/10/22

Questions (3 items x 5 points):

1. A firm based in California wants to export a shipload of finished lumber to the Philippines. The would-be
importer cannot get sufficient credit from domestic sources to pay for the shipment but insists that the
finished lumber can quickly be resold in the Philippines for a profit. Outline the steps the exporter should
take to export to the Philippines effectively.

 The Filipino importer places an order with the Californian exporter and asks if he would
be willing to ship under a letter of credit. Californian exporter stipulates pertinent details
like prices and delivery items and agrees to ship under a letter of credit. A letter of credit
is requested by a Filipino importer from Bank of Philippines to purchase goods from a
Californian exporter. A letter of credit is issued by Bank of Philippines in favor of Filipino
importers, who then send it to Bank of California, the exporter bank in California. In that
moment the bank of California advises the exporter of opening the letter of its favor
furthermore California presented a nine tee (90) daytime to draft drawn on the bank of
the Philippines in Accordance with its letter of credit and the bill of landing to the Bank of
California. The export market condones the bill of lading so title to the goods is transfer
to bank of California. And the bank of California sends the draft and bill of lading to the
bank of Philippines, the bank of Philippines accepts the draft, taking ownership of the
document and guaranteeing to pay the newly accepted draft in 90 days. So, then the
Philippine bank return the accepted draft to the bank of California.

2. How do you explain the use of countertrade? Under what scenarios might its use increase further by
2020? Under what scenarios might its use decline?

 When trading goods and services for other products and services without exchanging
money, countertrade is a set of barter-like agreements. In 2020, countertrade will be more
advantageous if the global market keeps expanding and more nations globalize. Small
businesses will then grow into large multinational corporations. Due to the pandemic's
impact on the countertrade and potential customers, many businesses have closed.

3. How might a company make strategic use of countertrade schemes as a marketing weapon to generate
export revenues? What are the risks associated with pursuing such a strategy?

 Countertrades provides enterprises with quite a simple way of entering a competitive

market with high resource productivity and improves revenues. The use of countertrade
carries risks because it is typically preferred by large multinational corporations with solid
financial histories. It is possible small to medium sized companies that lack global network
or connections would use their capital inefficiently and earn fewer income.