Global Sourcing and International Procurement Flashcards

When negotiating with suppliers from high-context cultures (such as Japan or China), a purchasing manager should recognize that:

Answer: Written contracts are less important and relationships drive business decisions

In high-context cultures, business relationships, trust, and implicit communication are paramount; decisions often involve group consensus and long-term relationship building takes precedence over immediate transactional outcomes.

Which of the following best describes 'nearshoring' as a global sourcing strategy?

Answer: Relocating procurement to geographically close countries to reduce lead times and risks

Nearshoring involves sourcing from suppliers in nearby countries rather than distant ones, offering a balance between cost savings and reduced supply chain risk, shorter lead times, and cultural/time zone compatibility.

A Free Trade Zone (FTZ) in international procurement primarily offers which advantage to importers?

Answer: The ability to defer, reduce, or eliminate customs duties on goods stored, manipulated, or manufactured there

Foreign Trade Zones allow businesses to defer, reduce, or in some cases eliminate customs duties on imported goods by performing value-added activities within the zone before goods enter U.S. commerce.

Under the Foreign Corrupt Practices Act (FCPA), a U.S. company's purchasing department must ensure that:

Answer: No payments are made to foreign government officials to obtain or retain business

The FCPA prohibits U.S. companies from bribing foreign government officials to obtain or retain business, and this obligation extends to purchasing activities and third-party intermediaries acting on behalf of the company.

When selecting an international freight forwarder, a purchasing manager should primarily consider the forwarder's ability to:

Answer: Manage documentation, customs compliance, and carrier negotiations for international shipments

Freight forwarders specialize in managing the logistics of international shipments, including export/import documentation, customs brokerage, cargo insurance, and negotiating rates with carriers.

Global sourcing can expose a company to supply chain disruptions not typically found in domestic sourcing. Which risk mitigation strategy specifically addresses geographic concentration risk?

Answer: Diversifying the supplier base across multiple countries or regions

Diversifying suppliers across multiple countries or regions reduces geographic concentration risk by ensuring that a disruption in one area (natural disaster, political instability, trade dispute) does not halt the entire supply chain.

Which document in international trade describes the goods being shipped, including quantity, weight, description, and value, and serves as the basis for customs valuation?

Answer: Commercial Invoice

The Commercial Invoice provides the official record of the transaction between buyer and seller, detailing the goods' description, quantity, value, and terms of sale, which customs authorities use to assess duties.