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Business Practices in International Trade

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Business Practices in International Trade

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Questions and Answers

How does distance affect international trade transactions?

It accelerates the decision-making process.

It reduces the shipping costs for the seller.

It can extend the payment period for buyers. (correct)

It eliminates the need for discounts.

What concession might a seller make to accommodate a distant buyer?

Allowing a longer discount period. (correct)

Providing an additional product at no cost.

Offering a flat shipping fee regardless of distance.

Reducing the overall price of the goods.

Why might a seller recognize a need to extend a payment period?

To comply with international trade regulations.

To accommodate longer shipping times. (correct)

To reduce the price of goods sold.

To encourage buyers to purchase more items.

What is a possible implication of allowing an extra 30 days in payment terms?

The buyer may take the discount offered later. Signup and view all the answers

Which of the following best describes the impact of geographic considerations on sales?

They can dictate terms and timelines of transactions. Signup and view all the answers

What does 'Net 30' mean in terms of payment terms?

Payments are due 30 days from the date of the invoice. Signup and view all the answers

What does 'Net 60, R.O.G.' signify?

Payment is due 60 days from the receipt of goods. Signup and view all the answers

How does seasonal dating benefit manufacturers or importers?

It allows for better cash flow management by aligning payment schedules with seasonal income. Signup and view all the answers

What is the primary purpose of advance orders in seasonal dating?

To allow manufacturers time to prepare merchandise for delivery. Signup and view all the answers

What is likely to be a characteristic of regular terms of trade?

They usually apply to immediate shipments. Signup and view all the answers

Which of the following is NOT a benefit of seasonal dating?

Ensures faster payments for seasonal merchandise. Signup and view all the answers

What might be an example of seasonal dating in practice?

Ordering swimsuits in winter with a payment period extending to the start of summer. Signup and view all the answers

What challenge does seasonal dating address for businesses?

It ensures cash flow aligns with fluctuating seasonal demands. Signup and view all the answers

Study Notes

Geographic Considerations

Business transactions, especially international trade, are affected by distance.
Longer shipping times can impact timelines.
Sellers may offer extended payment periods or longer discount periods.

Seasonal Dating

A business practice where extended payment terms are granted to customers buying out-of-season merchandise.
"Regular terms" often apply to immediate delivery orders.
"Advance" orders are placed for later delivery to align with market demand.
This allows manufacturers to plan for production and optimize economic operations.

Example

A swimsuit retailer may order stock in winter, receiving terms of "Net 90, Seasonal Dating".
This means the retailer has 90 days to pay the invoice from the beginning of the summer season.
This approach manages cash flow effectively, aligning it with seasonal income.

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Description

Explore the impact of geographic considerations and seasonal dating on business practices in international trade. This quiz covers how distance affects transaction timelines and the strategies businesses use to manage cash flow effectively with extended payment terms. Test your knowledge on these crucial concepts and their applications in the retail sector.