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CHAPTER 17 Global Manufacturing and Supply Chain Management 1. A _____ encompasses the coordination of materials, information, and funds from the initial raw material supplier to the ultimate customer. a. supply chain b. logistics chain c. customer service department d. inventory management department Answer: a. supply chain 2. _____ is the part of the supply chain process that plans, implements, and controls the flow of goods or services between the point of origin and the point of consumption. a. Value-added management b. Materials management c. Logistics d. Inventory management Answer: c. Logistics 3. Inbound logistics is also known as _____. a. internal logistics b. materials management c. the internal supply chain d. value-added management Answer: b. materials management 4. A company's _____ is the management of the value-added process from the suppliers' supplier to the customers' customer. a. logistics plan b. materials management system c. customer service department d. supply chain Answer: d. supply chain 5. _____ is the degree of consistency between the foreign investment decision and the company's competitive strategy. a. Compatibility b. Coordination c. Control d. Configuration Answer: a. Compatibility 6. _____ is the linking or integrating of activities into a unified system. a. Control b. Coordination c. Configuration d. Compatibility Answer: b. Coordination 7. _____ is the measuring of performance so that companies can respond appropriately to changing conditions. a. Coordination b. Configuration c. Control d. Compatibility Answer: c. Control 8. Deciding whether to establish production facilities in many different countries or in one centralized location is part of the _____. a. cultural matrix b. quality c. manufacturing configuration d. innovation matrix Answer: c. manufacturing configuration 9. If a company works to reduce its manufacturing costs when striving for consistency in its manufacturing facilities, it is implementing a _____ strategy. a. efficiency/cost b. flexibility c. quality d. cost-minimization Answer: a. efficiency/cost 10. A company is focusing on a _____ strategy if it works to improve its performance reliability and service quality. a. flexibility b. innovation c. dependability d. quality Answer: d. quality 11. The ability of the production process to make different kinds of products and to adjust the volume of output is known as _____. a. quality control b. flexibility c. dependability d. innovation Answer: b. flexibility 12. _____ strategies and the drive for global efficiencies force MNEs to establish economies of scale in manufacturing. a. Efficiency/cost b. Quality control c. Cost-minimization d. Flexibility Answer: c. Cost-minimization 13. _____ is any investment that takes place in a country different from the home country. a. Offshore manufacturing b. Macarena c. Cost-minimization strategies d. Outsourcing Answer: a. Offshore manufacturing 14. Which of the following reasons explains why many firms invest in offshore manufacturing? a. distance from the United States b. cheap materials and components c. high labor costs d. high tariffs Answer: b. cheap materials and components 15. Which of the following elements is often overlooked when firms estimate the costs of outsourcing to low-wage countries? a. language barriers b. overabundance of skilled and educated workers c. lack of inventory d. shipping distances Answer: d. shipping distances 16. Which of the following is a reason that firms would choose to locate plants closer to customers than in low-cost locations? a. growing customer demand for slow deliveries b. overseas producers provide more innovation and quality than domestic producers c. the need for responsiveness or flexibility d. differences in global markets do not exist, so offshore manufacturing provides no advantages Answer: c. the need for responsiveness or flexibility 17. Which of the following configurations do MNEs consider in establishing a global manufacturing strategy? a. manufacturing in specific regions to serve those regions b. manufacturing facilities in every country in the world c. a multidomestic approach in which companies manufacture products far away from their customers d. retailing only Answer: a. manufacturing in specific regions to serve those regions 18. Centralized manufacturing is usually used _____. a. to serve customers within a specific region b. for expensive items where economies of scale are important c. to use country-specific manufacturing facilities to meet local needs d. as a manufacture-and-import strategy Answer: b. for expensive items where economies of scale are important 19. A multidomestic configuration becomes important when _____. a. demand in individual countries decreases significantly b. exporting is the company's main strategy c. demand in individual countries becomes significant d. the company's strategy is to offer standard, lower-priced products to different markets Answer: c. demand in individual countries becomes significant 20. Some companies specialize in manufacturing according to product or process, and this is known as _____. a. centralized manufacturing b. the multidomestic approach c. offshore manufacturing d. rationalization Answer: d. rationalization 21. An effective global supply chain will have _____. a. a good information system b. poor customer service requirements c. no supplier relationships d. inventory mismanagement Answer: a. a good information system 22. Which of the following elements is essential to an effective global supply chain? a. an aversion to outsourcing b. customer service requirements c. inventory mismanagement d. low performance goals Answer: b. customer service requirements 23. _____ is used to link suppliers, manufacturers, customers, and intermediaries. a. TQM (total quality management) b. JIT (just-in-time) c. EDI (electronic data interchange) d. ERP (enterprise resource planning) Answer: c. EDI (electronic data interchange) 24. Which of the following is a disadvantage of EDI? a. It is extremely flexible. b. It adapts easily to changing market conditions. c. It is relatively easy to implement. d. It focuses more on the business-to-business value chain than end-use customers. Answer: d. It focuses more on the business-to-business value chain than end-use customers. 25. _____ is software that can link information flows from different parts of a business and from different geographic areas. a. ERP (enterprise resource planning) b. EDI (electronic data interchange) c. E-commerce d. Private technology exchange (PTX) Answer: a. ERP (enterprise resource planning) 26. Dell has established a(n) _____ for its suppliers so they can organize production and delivery of parts to Dell when they need it. a. electronic data interchange (EDI) system b. extranet c. total quality management (TQM) system d. value-added network (VAN) Answer: b. extranet 27. _____ is an online collaboration model that brings manufacturers, distributors, value-added retailers, and customers together to execute trading transactions. a. Electronic data interchange (EDI) b. ERP (enterprise resource planning) c. Private technology exchange (PTX) d. E-commerce Answer: c. Private technology exchange (PTX) 28. What is the main informational challenge in global supply chain management? a. The Internet is growing too quickly in emerging markets. b. All countries are extremely technologically advanced. c. The industrial equipment and food/agriculture industries use e-commerce more than industries such as defense and motor vehicles. d. Most emerging market networks cannot be managed through the Internet because of the lack of technology. Answer: d. Most emerging market networks cannot be managed through the Internet because of the lack of technology. 29. What are the three levels of quality standards? a. general, industry-specific, company b. general, international, and domestic c. industry-specific, company, and international d. company, international, and industry-specific Answer: a. general, industry-specific, company 30. Quality is defined as _____. a. meeting or exceeding the expectations of the customer b. meeting the everyday low price of the customer c. meeting international quality standards, such as ISO 9000 d. meeting internal quality standards Answer: a. meeting or exceeding the expectations of the customer 31. The _____ is an example of an award for a general standard that is presented to firms that demonstrate excellence in quality. a. ISO 9000 b. ISO 14000 c. quality assurance system d. Deming Award Answer: d. Deming Award 32. Which of the following is a set of universal standards for a quality assurance system? a. just-in-time (JIT) inventory management b. Six Sigma c. total quality management (TQM) d. ISO 9000 Answer: d. ISO 9000 33. Before the strong emphasis on zero defects, U.S. companies operated under the premise of _____, which allows an acceptable level of poor quality. a. Six Sigma b. acceptable quality level c. just-in-time inventory management (JIT) d. ISO 9000 Answer: b. acceptable quality level 34. The Japanese approach to quality is total quality management (TQM), which stresses which of the following principles? a. employee involvement, commitment to international standards, and customer satisfaction b. customer satisfaction, continuous improvements in quality, and Six Sigma c. customer satisfaction, employee involvement, and continuous improvements in quality d. employee involvement, continuous improvements in quality, and commitment to international quality standards Answer: c. customer satisfaction, employee involvement, and continuous improvements in quality 35. _____ is a highly focused system of quality control that scrutinizes a company's entire production system. a. Total quality management (TQM) b. Acceptable quality level (AQL) c. Just-in-time (JIT) d. Six Sigma Answer: d. Six Sigma 36. The goal of _____ is to eliminate all defects by focusing on benchmarking world-class standards, product and service design, process design, and purchasing. a. total quality management (TQM) b. acceptable quality level (AQL) c. just-in-time (JIT) d. Six Sigma Answer: a. total quality management (TQM) 37. _____ is the process of a firm having inputs supplied to it from outside suppliers for the production process. a. Sourcing b. Subcontracting c. External production d. Global supply Answer: a. Sourcing 38. Sourcing in the home country enables companies to avoid numerous problems, including _____. a. Exchange-rate stability b. Language differences c. Low tariffs d. Short supply lines Answer: b. Language differences 39. Why would a company outsource abroad? a. to decrease exposure to worldwide technology b. to gain access to more domestic products c. to lower costs and improve quality d. to decrease the reliability of supply Answer: c. to lower costs and improve quality 40. How can global sourcing be more expensive than domestic sourcing? a. Transportation and communications are cheaper. b. Companies are exempt from paying brokers and agent fees. c. Supply lines are longer. d. Tariffs are lower. Answer: c. Supply lines are longer. 41. Which of the following is a major configuration of sourcing? a. outsourcing through industrial clusters b. horizontal sourcing c. other outsourcing d. keiretsu Answer: a. outsourcing through industrial clusters 42. _____ occurs when the company owns the entire supplier network or at least a significant part of it. a. Outsourcing through industrial clusters b. Other outsourcing c. Vertical integration d. Global outsourcing Answer: c. Vertical integration 43. The Japanese keiretsus are a group of independent companies that work together to manage the flow of goods and services along the entire value-added chain. A keiretsu is a good example of _____. a. vertical integration b. industrial clustering c. outsourcing independent of industrial clustering d. global supply chain management Answer: b. industrial clustering 44. _____ occurs when companies don't want to be close to competitors for security reasons or when transportation costs and inventory management costs are not major issues. a. Vertical integration b. Horizontal integration c. Industrial clustering d. Other outsourcing Answer: d. Other outsourcing 45. In deciding whether to make or buy, MNEs could focus on those parts that are _____ to the product and that they are _____ at making. a. critical; distinctively good b. incremental; distinctively good c. critical; marginally good d. incremental; marginally good Answer: a. critical; distinctively good 46. Which of the following is one of the biggest barriers to expanding the use of outsourcing? a. long-term independency from an external organization b. loss of operational control c. cultural opportunities in the organization d. language barriers Answer: b. loss of operational control 47. Which of the following is an element for MNEs to consider in the make-or-buy decision? a. increased operational control through outsourcing b. capabilities of existing suppliers compared to its own capabilities c. comparative advantages of competitors d. the possibility of offending current customers Answer: c. comparative advantages of competitors 48. An MNE may want to outsource parts _____. a. only if it has a distinct comparative advantage in relation to potential suppliers b. to improve customer relations c. if it wants to avoid long-term dependency on an external organization d. as an implied threat to underperforming employees Answer: d. as an implied threat to underperforming employees function becomes more "global"? 49. Which of the following is one of the four phases of globalization? a. foreign buying as a part of procurement strategy b. global purchasing only c. complete rejection of domestic purchasing d. foreign buying based on want Answer: a. foreign buying as a part of procurement strategy 50. Which of the phases of globalization occurs when the company realizes the benefits that result from the integration and coordination of purchasing on a global basis? a. domestic purchasing only b. integration of global procurement strategy c. foreign buying as part of a procurement strategy d. foreign buying based on need Answer: b. integration of global procurement strategy 51. As companies move into phases three and four of the globalization process, they pursue which of the following sourcing strategies? a. assign global buyers for domestic purchasing b. remove coordination for worldwide sourcing c. use foreign subsidiaries or business agents d. establish local purchasing offices Answer: c. use foreign subsidiaries or business agents 52. Which of the following is a sourcing strategy in the global context? a. use only local purchasing agents b. establish local purchasing offices c. purchase only from global suppliers d. assign the responsibility for global sourcing to a specific business unit or units Answer: d. assign the responsibility for global sourcing to a specific business unit or units 53. _____ is the process of sourcing raw materials and parts just as they are needed in the manufacturing process. a. Just-in-time (JIT) b. Total quality management (TQM) c. Six Sigma d. Acceptable quality level (AQL) Answer: a. Just-in-time (JIT) 54. What is one of the implications of using JIT? a. On-time delivery becomes less important. b. Companies do not need to develop solid supplier relationships. c. Parts must be imported only from Japanese manufacturers. d. Parts must have few defects. Answer: d. Parts must have few defects. 55. How can foreign sourcing create risks for companies that use JIT? a. The quality of incoming inventory may be higher than companies are used to. b. Uncertainty of arriving parts means firms may have to carry a safety stock of inventory, which defeats the purpose of JIT. c. Companies must reduce the number of their suppliers. d. Arrival times of inventory become more precise. Answer: b. Uncertainty of arriving parts means firms may have to carry a safety stock of inventory, which defeats the purpose of JIT. 56. Which of the following factors complicates inventory management for companies that use foreign sourcing? a. shorter distances between MNEs and their suppliers b. certainty of component arrival times c. uncertainty of the international political environment d. Foreign sourcing is no different from domestic sourcing. Answer: c. uncertainty of the international political environment 57. _____ are special locations for storing domestic and imported inventory in order to avoid paying duties until the inventory is sold. a. Foreign trade zones (FTZs) b. Ports of entry c. Duty-free zones d. Customs areas Answer: a. Foreign trade zones (FTZs) 58. What are the two types of FTZs? a. shipping ports and airports b. general-purpose and subzones c. domestic and international zones d. distribution facilities and industrial parks Answer: b. general-purpose and subzones 59. FTZs _____. a. are found only in airports b. are used worldwide c. are used only in the United States d. are extremely popular in the food-processing industry Answer: b. are used worldwide 60. Which of the following is one of the main purposes for FTZs? a. discouraging companies to locate in the host country b. forcing countries to pay extra duties c. discouraging companies from using JIT d. allowing countries to defer duties Answer: d. allowing countries to defer duties 61. In a global supply chain, suppliers must be part of the manufacturer's organizational structure. Answer: False 62. Coordination is the degree of consistency between the foreign investment decision and the company's competitive strategy. Answer: False 63. The success of a global manufacturing strategy depends on compatibility, configuration, coordination, and control. Answer: True 64. Dependability is measured by a company's performance reliability, service quality, speed of delivery, and maintenance quality of its products. Answer: False 65. Cost-minimization strategies force MNEs to establish economies of scale in manufacturing. Answer: True 66. Maquiladoras are a form of offshore manufacturing. Answer: True 67. Offshore manufacturing is attractive because it offers high labor costs, cheap materials and components, and proximity to markets. Answer: False 68. Centralized manufacturing is most widely used when customers have widely varying localized needs. Answer: False 69. A multidomestic configuration is best when companies want to manufacture products close to their customers. Answer: True 70. A good information system is the least important element of a successful global supply chain. Answer: False 71. A comprehensive supply chain strategy should include good inventory management. Answer: True 72. EDI is software that can link information flows from different parts of a business and from different geographic areas. Answer: False 73. Private technology exchange (PTX) is an online collaboration model that brings manufacturers, distributors, value-added retailers, and customers together to execute trading transactions. Answer: True 74. The Malcolm Baldrige National Quality Award is an example of a general standard that is presented annually to companies that demonstrate quality strategies and achievements. Answer: True 75. ISO 14000 is concerned with quality management. Answer: False 76. Most U.S. companies have moved from a total quality management (TQM) approach to an acceptable quality level (AQL) approach. Answer: False 77. Six Sigma aims to eliminate defects, slash product cycle times, and cut costs across the board. Answer: True 78. Sourcing in the home country enables a company to avoid numerous problems associated with global sourcing. Answer: True 79. Global sourcing is always cheaper than domestic sourcing. Answer: False 80. Horizontal integration occurs when the company owns the entire supplier network or at least a significant part of it. Answer: False 81. Keiretsu is a major configuration of sourcing. Answer: False 82. The make-or-buy decision applies only to domestic firms. Answer: False 83. Cultural barriers are often a deterrent to outsourcing. Answer: True 84. When a firm integrates its global procurement strategy, MNEs often face the choice of whether to centralize purchasing decisions. Answer: True 85. The most complex global sourcing strategy is assigning a domestic buyer for international purchasing. Answer: False 86. Foreign sourcing complicates JIT because it usually means that a company will have to have safety stocks of inventory on hand. Answer: True 87. The use of JIT does not depend on the quality of incoming parts or the time of their arrival. Answer: False 88. Foreign trade zones (FTZs) are used only for storing imported inventory in order to avoid paying customs duties until the inventory is sold. Answer: False 89. Foreign trade zones (FTZs) can be either general-purpose zones or subzones. Answer: True 90. What is a supply chain? Discuss how it differs from logistics and materials management. Answer: A company's supply chain encompasses the coordination of materials, information, and funds from the initial raw material supplier to the ultimate customer. Logistics (also called materials management) is an important dimension of the supply chain. Logistics is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements. Materials management is inbound logistics or the movement and management of materials and products from purchasing through production. The difference between supply chain management and logistics is one of degree. Logistics focuses much more on the transportation and storage of materials and final goods, whereas supply chain management extends beyond that to include the management of supplier and customer relations. 91. The success of a global manufacturing strategy depends on four factors. Name and describe these four factors. Answer: A successful global manufacturing strategy is dependent on the following factors: a. Compatibility—The degree of consistency between FDI decisions and a company's competitive strategy. Some of the strategies managers must consider include cost-minimization strategies, dependability, quality, flexibility, and innovation. b. Configuration—Managers must also determine the configuration of manufacturing facilities. MNEs consider three basic configurations: centralized manufacturing, manufacturing facilities in specific regions, and multidomestic facilities. c. Coordination—The linking or integrating of activities into a unified system The activities include everything along the global supply chain from purchasing to warehousing to shipment. d. Control—Can be the measurement of performance so that companies can respond appropriately to changing conditions. Another aspect of control structure is the organizational structure. 92. Describe the different types of information technology packages that firms can use to manage their supply chains. Answer: Many companies use electronic data interchange (EDI) to link suppliers, manufacturers, customers, and intermediaries, especially in industries in which suppliers replenish in high volumes. In a global context, EDI has been used to link exporters with customs to facilitate the quick processing. However, EDI has some drawbacks. It is relatively limited and inflexible. It is relatively expensive to implement. Also, it is based on proprietary rather than on widely accepted standards, so systems tend only to be able to link together suppliers and their customers. In addition, it focuses more on the business-to-business value chain and does not deal effectively with end-use customers. The next wave of technology affecting the global supply chain was the implementation of information technology packages known as enterprise resource planning (ERP). ERP is software that can link information flows from different parts of a business and from different geographic areas. Another technological innovation is e-commerce, which is using the Internet to join together suppliers with companies and companies with customers. Some companies have established an extranet—the use of the Internet to link a company with outsiders. The new technology wave is private technology exchange (PTX), which is an online collaboration model that brings manufacturers, distributors, value-added resellers, and customers together to execute trading transactions and to share information about demand, production, availability, and more. 93. Describe total quality management. Answer: The Japanese approach to quality is total quality management. This process stresses three principles: customer satisfaction (which is the center of the process), employee involvement, and continuous improvements in quality. The goal of TQM is to eliminate all defects. It is a process of continuous improvement at every level of the organization. TQM implies that the company is doing everything it can to achieve quality at all stages of the process, from customer demands to product design to engineering. This continuous improvement process is known as kaizen, which means identifying problems and enlisting employees at all levels of the organization to help eliminate the problems. 94. Compare and contrast global and domestic sourcing. Answer: Sourcing in the home country enables companies to avoid numerous problems, including those connected with language differences, long distances and lengthy supply lines, exchange-rate fluctuations, and other problems. However, for many companies, domestic sources may be unavailable or may be more expensive than foreign sources. Companies outsource abroad to lower costs and improve quality, among other reasons. But in some ways, global sourcing is more expensive than domestic sourcing. For example, transportation and communications are more expensive, and companies may have to pay brokers and agent fees. Given the longer length of supply lines, it often takes more time to get components from abroad, and lead times are less certain. 95. Describe a just-in-time inventory system and the implications of JIT for global firms. Answer: JIT systems focus on reducing inefficiency and unproductive time in the production process to continuously improve the process and the quality of the product. The JIT system gets raw materials, parts, and components to the buyer "just in time" for use, sparing companies the cost of storing large inventories. However, the use of JIT means that parts must have few defects and must arrive on time. That is why companies need to develop solid supplier relationships to ensure good quality and delivery times if JIT is to work. Foreign sourcing can create big risks for companies that use JIT, because interruptions in the supply line can cause havoc. Quality of inventory is important, because inventory with significant amounts of defects will create problems for JIT. If the buyer has to purchase more because of expected defects, there will be not only wasted inventory but also higher carrying costs. JIT typically implies sole sourcing for specific parts in order to get the supplier to commit to the stringent delivery and quality requirements inherent in JIT. However, if the only supplier is a foreign supplier, it would be too risky to permit just one supplier. That means cultivating multiple suppliers, but the problem of using multiple suppliers may preclude the buyer from getting volume pricing from the supplier. One strategy is that buyers may use a sole supplier for all but critical inputs. Then it is best to cultivate solid secondary suppliers. 96. What are foreign trade zones? How are they used? Answer: FTZs are areas in which domestic and imported merchandise can be stored, inspected, and manufactured free from formal customs procedures until the goods leave the zones. The zones are intended to encourage companies to locate in the country by allowing them to defer duties, pay fewer duties, or avoid certain duties completely. Sometimes inventory is stored in an FTZ until it needs to be used for domestic manufacture. FTZs can be general-purpose zones or subzones. A general-purpose zone usually is established near a port of entry, such as a shipping port, a border crossing, or an airport, and it usually consists of a distribution facility or an industrial park. A subzone usually is physically separate from a general-purpose zone but is under the same administrative structure. Test Bank for International Business: Environments and Operations John D. Daniels, Lee H. Radebaugh, Daniel P. Sullivan 9780131869424, 9780201846188, 9780130308016, 9780201566260, 9780201107135, 9780132668668
