Part Two Questions 8-14. (21 points)

　　Read the following passage and choose the best sentence (A-H) to fill each of the gaps. There is one extra sentence.

　　Types of International Business

　　Merchandise Exports and Imports

　　Merchandise exports are goods sent out of a country, whereas merchandise imports are goods brought in. Since these are tangible goods that visibly leave and enter countries, they are sometimes referred to as visible exports and imports. (8)……….

　　Exporting and / or importing of goods are the major sources of international revenue and expenditure for most countries. Among companies engaged in some form of international business, more are involved in importing and exporting than in any other type of transaction.

　　Importing and or exporting is usually, but not always, the first type of foreign operations in which a firm gets involved. (9)………. For example, firms may be able to export by using excess capacity thus limiting the need to invest more capital. Firms may be able to use the services of trade intermediaries who, for a fee, will take on the export-import functions, thus eliminating the need to have trained personnel and a department to carry out foreign sales or purchases.

　　Service Exports and Imports

　　Service exports and imports refer to international earnings other than those from goods sent to another country. (10)……….Services are also referred to as invisible. International business comprises many different types of services.

　　A. Travel, Tourism, and Transportation

　　Earnings from transportation and from foreign travel can be an important source of revenue for international airlines, shipping companies, reservation agencies, and hotels. (11)………. The Bahamas earns much more from foreign tourists than it earns from exporting merchandise.

　　B. Performance of Activities Abroad

　　(12)………. Engineering services are often handled through turn-key operations, contracts for the construction of operating facilities that are transferred to the owner when the facilities are ready to begin operations. Fees for management services are often the result of management contracts, arrangements through which one firm provides management personnel to perform general or specialized management functions for another firm.

　　C. Use of Assets From Abroad

　　Royalties are the payment for use of assets from abroad, such as for trademarks, patents, copyrights, or other expertise under contracts known as licensing agreements. (13)……….In addition, the franchisor assists on a continuing basis in the operation of the business, such as by providing components, managerial services, or technology.

　　Firms often move to foreign licensing or franchising after successfully building exports to a market. (14)……….The greater involvement occurs because the firm commonly has to send technicians to the foreign country to assist the licensee or franchisee in establishing and adapting its production facilities for the new product.

　　A On a national level, such countries as Greece and Norway depend heavily on revenue collected from carrying foreign cargo on their ships.

　　B This move usually involves a greater international commitment than in the early stages of exporting.

　　C This is because at an early stage of international involvement these operations usually take the least commitment and least risk of a firm’s resources.

　　D Fees are payments for the performance of certain activities abroad, such services as banking, insurance, rentals (e.g. the Star Wars film), engineering, and management.

　　E When two or more organizations share in the ownership of a direct investment, the operation is known as a joint venture.

　　F The terms exports or imports are used frequently yet in reality the reference is only to the merchandise exports or imports.

　　G Royalties are also paid for franchising, a way of doing business in which one party (the franchisor) sells an independent party (the franchisee) the use of a trademark that is an essential asset for the franchisee’s business.

　　H Receipt of these earnings is considered a service export, whereas payment is considered a service import.