FINAL: Supply Chain Ch 11

Critical Location Factors include:

1. Regional Trade Agreements and the WTO 2. Competitiveness of Nations (looks at economics performance, government efficiency, business efficiency, infrastructure) 3. Federal Taxes and Incentives 4. Currency Stability 5. Environmental Issues 6. Access and proximity to market 7. Labor Issues 8. Access to suppliers and cost 9. Transportation 10. Utility Availability and Cost 11. Quality of Life Issues 12. State Taxes and Incentives 13. Right to Work Laws 14. Local Taxes and Incentives 15. Land Availability and Costs

What specific advantages would a Free Trade Zone offer a manufacturing company? Also, under which circumstances would a company utilize a Free Trade Zone?

A free trade zone offers a manufacturing firm the ability to import components or subassemblies into a designated area without paying any import related tariffs on the condition that any subassemblies or end items assembled in the designated free trade zone will be exported to customers in other countries. A company would seek to utilize a free trade zone when import tariffs for subassemblies or components were considerable and somewhat significant amount of product was going to ultimately be re-exported. This allows a company to avoid the opportunity cost associated with paying the import tariffs.

T OR F Facility location is a business decision that ultimately has minimal impact on issues like the cost of supplies, facilities, and materials, as well as lead times and customer service levels since trade-offs tend to negate gains in any single category.

False

Organizations that primarily compete on speed of delivery, such as FedEx and UPS, utilize which of the following approaches for location determination:

Hub and spoke

Planning Factor

Number of components needed to produce a unit of the parent item

Certain states in the United States have laws that secure the rights of employees to decide for themselves whether or not to join or financially support a labor union. These laws are called:

Right-to-work Laws

Which of the following strategic foreign facilities is set-up primarily to avoid tariff barriers, minimize exchange risk, and/or take advantage of government incentives? Ultimately the factory operates as most normal factories making only minor improvements in either the products or processes.

Server factory

Which of the following strategic foreign facilities is set-up primarily produce products at a low cost with minimal technical and managerial resources? The items produced at these factories are often exported to countries where costs to produce similar items would be higher. a. Offshore factory b. Server factory c. Source factory d. Outpost factory

a. Offshore factory

Which of the following issues is (are) important to consider when trying to determine the location of a firm's facilities? a. The stability in the location considered b. Environmental issues regulated by domestic laws or international trade agreements c. Access to suppliers from the location considered

all of these

Some companies import components, use them in the production of their end items, and ultimately export them to other countries. If a company wanted to import the components duty-free, use those components in the production of their end items, and then export them to other countries, they would most likely utilize a(n): a. Duty-free Territory b. Foreign Trade Zone c. International Cross Docking Zone d. International Processing Center

b. Foreign Trade Zone

Which of the following regional trade agreements is paired with the appropriate region of the world? a. NAFTA − Southeast Asian Nations b. COMESA − United States, Canada, and Mexico c. MERCOSUR − Argentina, Brazil, Paraguay, and Uruguay d. EU − Middle East nations, not including Israel

c. MERCOSUR − Argentina, Brazil, Paraguay, and Uruguay

List four reasons why it would be favorable to locate the new manufacturing facility in the United States rather than in Southeast Asia.

closer to markets NAFTA utilities (US infrastructure is best in the world) US labor force free trade zones right to work laws

When an organization is considering future facilities locations, provide 3 human resource related issues that the organization would need to consider.

cost of labor, employee skill set, employee education level, Quality-of-life issues for employees − schools, taxes, housing, natural environment, public safety, health...

While there are many questions and concerns that must be addressed before a final location is determined, there are basically three levels of location decisions. Which of the following is not one of those three levels of location decisions? a. Global market or country selection b. Subregion or state selection c. Community and site selection d. Territory and quadrant selection

d. Territory and quadrant selection

If a country is seeking to attract foreign investment in the form of manufacturing related facilities, list 3 things the government might do to increase the chances of this occurring.

establish free trade zones, trade agreements, make labor force more competitive, creating laws that create a more competitive market in terms of environmental issues

T OR F A country that imposes high tariffs encourages foreign-based companies to import goods.

false

T OR F A list of quality-of-life factors would most likely include proximity to customers, proximity to suppliers, tariff rates, and currency stability.

false

T OR F Business clusters are areas of extremely high competition where companies that are in the same industry compete for labor, materials, and distribution. They are typically a sign of an unstable economy and are thus likely to produce low levels of innovation and productivity

false

T OR F Many multinational corporations are moving their factories and headquarters out of China and into Taiwan and some Southeast Asian countries in order to take advantage of the proximity to customers. The more attractive customer markets are developing in the Southeast Asian region, not in China.

false

T OR F The Americas have two primary regional trade agreements, NAFTA, an agreement between the United States, Canada, and Mexico, and COMESA, an agreement between all of the South American countries.

false

T OR F While the development and proliferation of the Internet and web-based commerce has not completely eliminated the relevancy of facilities location, because of the Internet, the speed of delivery and cost in serving the customer are no longer factors in determining the strategic location of an organization's facilities.

false

T oR F If an organization wanted to set up a facility in an area near a number of advanced suppliers, competitors, and research facilities in order to have access to current information on materials, components, and technologies the organization would likely set up a source factory.

false

T OR F A country that imposes high tariffs discourages foreign-based companies from importing goods and they also may encourage multinational corporations to set up local factories to produce items locally in order to avoid those high tariffs.

true

T OR F A list of quality-of-life factors would most likely include education system, healthcare system, effectiveness of law enforcement, and travel infrastructure (roads/highways).

true

T OR F China's economy is shifting from labor-intensive industries to arrears like marketing and the production of high technology products that typically provide higher levels of value.

true

T OR F Facility location is a business decision that will ultimately impact issues like the cost of supplies, facilities, and materials, as well as lead times and customer service levels.

true

T OR F If an organization wanted to set up a facility in an area near a number of advanced suppliers, competitors, and research facilities in order to have access to current information on materials, components, and technologies the organization would likely set up an outpost factory.

true

T OR F Many multinational corporations are moving their facilities and headquarters out of Taiwan and some Southeast Asian countries in order to take advantage of the proximity to customers. The more attractive customer markets are developing in China.

true

T OR F The Americas have two primary regional trade agreements, NAFTA, an agreement between the United States, Canada, and Mexico, and MERCOSUR, an agreement between Argentina, Brazil, Paraguay, and Uruguay to develop a common South American market.

true

T OR F When trying to gauge a nation's competitiveness a manager may want to consult one of two primary world competitiveness rankings, the World Competitiveness Yearbook published by IMD and The Global Competitiveness Report prepared by the World Economic Forum.

true

T OR F While business clusters seem logical in well-established areas with developed economies like Silicon Valley and Hollywood, California because companies can easily collaborate, compete, and share knowledge, some high-tech clusters have developed in areas with emerging economies such as Mexico, Singapore, and India.

true