Which of the following is true about production and logistics in international businesses?
answer
In an international firm, production and logistics are closely linked.
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_____ refers to the activity that controls the transmission of physical materials through the value chain, from procurement through production and into distribution.
answer
Logistics
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Champion Works Inc. is an animation company, headquartered in the U.S. The CEO of the company has decided to outsource some of the production to companies in developing countries, as the firm seems to be losing out on its competitive advantage. This decision to shift functions or processes to less developed countries is due to their:
answer
lower labor costs.
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An important objective shared by both production and logistics functions of an international firm is to:
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lower costs by dispersing production activities.
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A second strategic objective shared by production and logistics is to increase product quality by eliminating defective products from both the supply chain and the manufacturing process. In this context, quality means _____, implying that the product has no defects and performs well.
answer
reliability
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Which of the following is a consequence of improved quality control?
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Direct reduction in unit costs
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The effect of improved quality control is to lower the costs of value creation by reducing production and:
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decreasing after-sales service costs.
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Manufacturing firms should typically aim at lowering the costs of value creation by:
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reducing production costs.
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The principal tool that most managers now use to increase the reliability of their product offering is _____, a statistically based methodology for improving product quality. It is a direct descendant of the total quality management philosophy.
answer
Six Sigma
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The Six Sigma methodology is a direct descendant of the _____ philosophy that was widely adopted, first by Japanese companies and then American companies during the 1980s and early 1990s.
answer
total quality management
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The total quality management philosophy was developed by a number of American consultants. Which of the following individuals is one of them?
answer
W. Edward Deming
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Which of the following is true of W. Edward Deming's beliefs about the total quality management philosophy?
answer
He suggested that the quality of supervision should be improved by allowing more time for supervisors to work with employees.
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Which of the following companies adheres to the total quality management steps identified by W. Edward Deming?
answer
Galaxy Inc. empowers its employees to report problems or recommend improvements without any fear.
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Which of the following best describes the relationship between the number of "sigmas" and the number of errors?
answer
The higher the number of "sigmas," the smaller the number of errors.
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A statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company is known as _____.
answer
Six Sigma
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Six Sigma refers to a statistically based philosophy that aims to:
answer
eliminate waste.
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Which of the following statements is true of Six Sigma?
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It is almost impossible for a company to achieve Six Sigma perfection.
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Pink Polka Fashion Inc., a multinational clothing brand, has plans to expand in the European Union (EU) marketplace. In order to be able to do so, the EU requires that the:
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firm's products be certified under ISO 9000.
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Which of the following is a drawback of ISO 9000 certification?
answer
It is bureaucratic and costly for many firms.
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To be able to accommodate demands for local responsiveness, a firm should:
answer
decentralize production activities to the major national or regional markets.
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Uniway Technologies Inc. has based its manufacturing units in the country of Lanthania. The country's stable economic and political environment has helped the firm gain competitive advantage by lowering its production costs and improving product quality. Other things being equal, the benefits realized from such a strategy can be typically referred to as _____.
answer
location economies.
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Which of the following location externalities is favorable for foreign direct investment in a country?
answer
Presence of supporting industries
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Which of the following is a consequence of adverse changes in exchange rates?
answer
It alters a country's attractiveness as a manufacturing base.
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Which of the following statements is true about performing a manufacturing activity in several locations at once?
answer
Many firms disperse their manufacturing plants to different locations as a "real hedge" against potentially adverse moves in currencies.
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The concept of _____ tells us that as plant output expands, unit costs decrease. One reason is the greater utilization of capital equipment.
answer
economies of scale
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The level of output at which most plant-level scale economies are exhausted is known as _____.
answer
minimum efficient scale
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Uvicon Inc. and Bionor Inc. are firms that compete against each other in the global market. Uvicon Inc. has a high level of fixed costs and high minimum efficient scale, while Bionor Inc. has a low level of fixed costs and minimum efficient scale. In this scenario, which of the following is true?
answer
Uvicon Inc. will benefit from centralizing its production activities and Bionor Inc. from decentralizing.
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Which of the following statements is true about minimum efficient scale of output?
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An advantage of a low minimum efficient scale is that it allows the firm to accommodate demands for local responsiveness.
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Which of the following is a consequence of a low minimum efficient scale?
answer
It allows a firm to hedge against currency risk by manufacturing the same product in several locations.
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A firm with a wide product variety will find it:
answer
difficult to reduce its unit costs.
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Producing a standardized product in large volumes will:
answer
increase production efficiency.
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Adopting flexible manufacturing technology to produce a wide variety of end products results in:
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increased utilization of individual machines.
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Which of the following is an objective of lean production?
answer
Reducing setup times for complex equipment
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Mass customization reconciles the two goals of:
answer
low cost and product customization.
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Which of the following is an implication of a mass production system?
answer
It creates massive inventories that have to be stored in large warehouses.
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A _____ includes a grouping of various types of machinery, a common materials handler, and a computer to control the production of a family of parts or products.
answer
flexible machine cell
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Which of the following is a consequence of using flexible machine cells?
answer
It improves capacity utilization and reduces wastes.
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Flexible manufacturing technologies help a company achieve mass customization, which increases its _____.
answer
customer responsiveness
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Amber Engineers Inc. wants to be able to customize products for different national markets and in turn increase its customer responsiveness. However, the fixed costs associated with its production are high. Hence, these functions will be performed most efficiently if Amber Engineers Inc.:
answer
adopts flexible manufacturing technologies to help achieve mass customization.
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Flexible manufacturing technologies enable companies to:
answer
produce customized products without a significant cost penalty.
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_____ refers to the production of a variety of end products at a unit cost that could once be achieved only through bulk production of a standardized output.
answer
Mass customization
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Which of the following statements is true of flexible manufacturing technologies?
answer
They allow firms to customize products to national differences at a single facility.
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Technological factors are making it feasible for firms to concentrate manufacturing facilities at optimal locations. The major brakes on this trend are:
answer
transportation costs and trade barriers.
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A product's value-to-weight ratio affects location decision primarily because of its influence on:
answer
transportation costs.
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Two product factors impact location decisions. They are the product's value-to-weight ratio and:
answer
whether the product serves universal needs.
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Which of the following is true of high value-to-weight ratio products?
answer
Their transportation costs account for a very small percentage of total costs.
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Which of the following is true of products with high value-to-weight ratios?
answer
They are expensive and do not weigh very much.
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Which of the following products is best manufactured in multiple locations close to major markets to reduce transportation costs?
answer
Petroleum products
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Which of the following holds true for products with low value-to-weight ratios?
answer
It is advisable to manufacture them in multiple locations close to major markets.
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Which of the following statements is true of industrial products such as steel?
answer
They serve needs that are the same all over the world.
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Which of the following is true of a product that serves universal needs?
answer
It increases the attractiveness of concentrating production at an optimal location.
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Concentration of production makes most sense when:
answer
trade barriers are low.
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When should a firm concentrate its production facilities in a centralized location?
answer
When important exchange rates are expected to remain relatively stable
question
Which of the following firms should concentrate its production in a centralized location?
answer
Jupiter Inc. operates in an industry where the fixed costs are high and services of supporting industries are of prime importance.
question
When is decentralization of manufacturing facilities most appropriate?
answer
When the production technology has low minimum efficient scale
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Which of the following firms should concentrate its production in a decentralized location?
answer
Saturn Inc. operates in an industry where volatile fluctuations in important exchange rates are expected.
question
Which of the following is a step taken by automobile companies in situations where either centralization or decentralization of production is not feasible?
Which of the following is a hidden cost to basing production in a foreign location?
answer
Poor product quality
question
Which of the following is the initial reason for the establishment of a foreign production facility?
answer
Labor costs are low.
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Which of the following is a result of pressure from the headquarters of a company to customize a product to the demands of consumers in a particular nation at a foreign production site?
answer
Development of additional capabilities
question
Which of the following is a source of improvement in the capabilities of foreign factories?
answer
Abundance of advanced factors of production in the nation in which the factory is located
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Which of the following is true according to the transnational strategy?
answer
Foreign sites can take the lead role for the design of products to serve important regional markets.
question
The flow of skills and product offerings from foreign subsidiary to home country and from foreign subsidiary to foreign subsidiary is known as _____.
answer
global learning
question
Due to the upward migration in the strategic role of foreign production sites, they are now viewed as:
answer
globally dispersed centers of excellence.
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Which of the following statements is true about make-or-buy decisions?
answer
Historically, most outsourcing decisions have involved the manufacture of physical products.
question
The Maroon Apparel company controls the weaving, dyeing, cutting, and sewing of its merchandise. Apart from these activities, it also manufactures buttons, zips, buckles, and other accessories for its apparel. This is done in order to exercise tight control over its manufacturing processes and to reduce production costs. This strategy of the company is known as _____.
answer
vertical integration
question
Which of the following is a recent trend among international businesses regarding make-or-buy decisions?
answer
Outsourcing decisions are expanding to embrace the production of service activities.
question
A(n) _____ refers to an asset designed to perform a specific task, whose value is significantly reduced in its next-best use.
answer
specialized asset
question
Which of the following statements is true about specialized assets?
answer
When one firm must invest in specialized assets to supply another, mutual dependency is created.
question
Which of the following is an argument that supports vertical integration?
answer
It makes planning, coordination, and scheduling of adjacent processes easy.
question
A firm should make a component internally rather than contracting it out to a supplier when:
answer
the firm uses proprietary product technology that helps in gaining competitive advantage.
question
If a firm possesses proprietary product technology, the best option for that firm would be to
answer
manufacture the product in-house so that it does not lose its competitive advantage.
question
Which of the following refer(s) to skills of a corporation that become more valuable over time through learning?
answer
Dynamic capabilities
question
Which of the following is an advantage for a firm that buys component parts from independent suppliers?
answer
It allows a firm to maintain its flexibility by switching orders between suppliers.
question
Which of the following is a disadvantage of vertical integration?
answer
It is difficult to determine appropriate prices for goods transferred to subunits within a firm.
question
Which of the following can a vertically integrated firm that buys its components from independent suppliers avoid?
answer
Problems associated with transfer pricing decisions
question
Which of the following is true of vertical integration?
answer
The greater the number of subunits in an organization, the more problems controlling those units.
question
Which of the following is a disadvantage of outsourcing production to independent suppliers?
answer
It increases the risk of suppliers expropriating a firm's proprietary product technology for their own use.
question
The government of Lithaya placed a large order for buses with Blue Ace Inc., a manufacturing company in Lodesia. In return, it asks the company to subcontract some work to Lithayan manufacturers. This is an example of a(n) _____ in international business.
answer
offset agreement
question
Which of the following statements is true about strategic alliances with suppliers?
answer
There is nothing as trust between the firm and its suppliers in strategic alliances.
question
Which of the following is a drawback of entering into strategic alliances with independent suppliers?
answer
The firm risks giving away key technological know-how to a potential competitor.
question
The arrangement of strategic alliances with suppliers was pioneered by the:
answer
large auto companies of Japan.
question
Which of the following is a disadvantage of a firm that enters long-term alliances?
answer
It may limit its strategic flexibility by the commitments it makes to its alliance partners.
question
Which of the following is an objective of logistics?
answer
Manage firms global supply chain at a low cost
question
Which of the following was pioneered by Japanese firms during that country's remarkable economic transformation during the 1960s and 1970s?
answer
Just-in-time inventory systems
question
_____ refers to a logistics system designed to deliver parts to a production process as they are needed, not before.
answer
Just-in-time inventory system
question
The basic philosophy behind just-in-time (JIT) inventory systems is to:
answer
economize on inventory holding costs.
question
Which of the following is true about firms using just-in-time (JIT) inventory system?
answer
Parts enter the manufacturing process immediately; they are not warehoused.
question
Which of the following increase(s) under just-in-time (JIT) inventory system?
answer
Inventory turnover
question
A major cost saving from just-in-time inventory systems comes from:
answer
speeding up inventory turnover.
question
Under a more traditional system as opposed to a just-in-time inventory system, warehousing parts for weeks before they are used:
answer
allows many defective parts to be produced before a problem is recognized.
question
The drawback of a just-in-time inventory system is that it:
answer
leaves a firm without a buffer stock of inventory.
question
Which of the following is a consequence of using just-in-time inventory systems?
answer
It can help firms improve product quality.
question
One way to reduce the risks associated with a global supply chain that operates on just-in-time principles is to:
answer
source inputs from several suppliers located in different countries.
question
Firms now typically use _____ via the Internet to coordinate the flow of materials into manufacturing, through manufacturing, and out to customers.
answer
electronic data interchange
question
Which of the following allows suppliers, shippers, and the purchasing firm to communicate with each other via the Internet with no time delay?
answer
Electronic data interchange system
question
Geminia System, manufacturer of car components, wants to set up a system that will help in sending invoices to its customers once orders for input supply are placed. Which of the following should the company use to perform this function?
answer
Electronic data interchange
question
Which of the following is a consequence of an electronic data interchange system?
answer
Reduction in paperwork between suppliers, shippers, and the purchasing firm
question
Which of the following is a result of using electronic data interchange systems?
answer
It helps a firm decentralize materials management decisions to the plant level.
question
Which of the following has caused proprietary software solutions to implement electronic data interchange systems obsolete?
answer
The Internet
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