Answer to Question 1
Beyond initial entry, most firms, large and small, use exporting as part of their internationalizatio n portfolio. Large manufacturing firms typically account for the largest overall value of exports and make up about three-quarters of the total value of exports from the United States. However, the vast majority of exporting firmsmore than 90 percent in most countriesare SMEs with fewer than 500 employees.
As an entry strategy, exporting is very flexible. The exporter can both enter and withdraw from markets fairly easily, with minimal risk and expense. Experienced international firms usually export in combination with other strategies, such as joint ventures and FDI. Toyota has used FDI to build factories in key locations in Asia, Europe, and North America from which it exports cars to neighboring countries and regions.
Incoterms have mitigated problems with logistics for international firms. In the past, disputes sometimes arose over who should pay the cost of freight and insurance in international transactions: the seller (that is, the exporter) or the foreign buyer. To eliminate such disputes, a system of universal, standard terms of sale and delivery, known as Incoterms (short for International Commerce Terms), was developed by the International Chamber of Commerce. Commonly used in international sales contracts, Incoterms specify how the buyer and the seller share the cost of freight and insurance, and at which point the buyer takes title to the goods.
Answer to Question 2
Answer: FALSE
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