Chapter 15 International Business

What are the considerations that help determine where an international firm will locate its production facilities?

Ability to minimize costs and improve quality

A firm is considering two countries as sites for production facilities. Both countries have similar factor costs and political climates. Country A has poor infrastructure; Country B has access to technology and relatively easy transport of raw materials. Country (blank) seems to offer better location economies.

B

What two factors are critically important to the success of global supply chain coordination?

Coordination Integration

Given equivalent factor costs, which three conditions should have the most influence on a firm's decision on where to develop a production site?

Economic Cultural Political

True or False: Customers are an interacting organization within the upstream portion of the global supply chain.

False

True or false: The term production is only used to denote a physical product.

False

Garrison Electric Corp. redesigned its manufacturing area and has a dozen large machines that are controlled by a computer. Each machine is able to switch quickly between the types of parts it produces based on the computer command it receives. What type of technology is Garrison Electric Corp. using?

Flexible machine cells

Artisan Inc. needs to find a company that will store its products and when requested provide customization—then ship the products to the final customer. What type of facility can help Artisan Inc. with this?

Global distribution center

Which aspect of global logistics is concerned with the decision-making process on the raw materials, work-in-progress, and finished goods inventory for a multinational corporation?

Global inventory management

_____ coordination refers to the integrated and coordinated decisions of key global supply chain activities.

Global supply chain

Which action should a company take if it wants to hedge against potentially adverse moves in currency rates?

Have manufacturing plants in different locations

What are two potential "hidden" costs of outsourcing production to a foreign location?

High employee turnover Poor product quality

Which two factors would lead a firm to choose a concentrated production configuration?

High fixed costs High minimum efficient scale of production

The inventory model used to decrease costs by having inventory arrive at a manufacturing plant only when it is needed is called ______ inventory.

JIT

______ is an inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. This method requires producers to forecast demand accurately.

JIT

In which type of factory should cutting-edge production take place or be tested?

Lead

A company that engages in international purchasing, but does so in a reactive and uncoordinated way, is at which level of global purchasing?

Level II

A company that engages in global purchasing activities that are integrated across worldwide locations and functional groups is at which level of global purchasing?

Level V

What term is given to the activities that encompass the movement of physical materials through the supply chain?

Logistics

Which three factors would lead a company to adopt a decentralized production configuration strategy?

Low fixed costs Low value-to-weight ratio High trade barriers

Which type of factory can be viewed as an information-gathering unit?

Outpost

What are three strategic roles a foreign factory might have?

Outpost factory Server factory Offshore factory

Which three groups are part of the upstream/inbound portion of the global supply chain?

Partners Suppliers Vendors

What are the three broad groups of factors that a company should consider when making decisions on where to produce its products?

Production factors Technological factors Country factors

Flexible manufacturing involves a range of manufacturing technologies designed to do what three things?

Reduce setup times Improve quality control Increase utilization of machines

Which type of packaging is designed to contain several primary packages?

Secondary

The statistically-based process used by companies today to reduce costs and boost productivity is

Six Sigma.

Which type of factory is used and treated the same as any factory in a global firm's home country?

Source

True or False: When discussing the global supply chain, production is sometimes referred to as operations.

True

True or false: A global distribution center is used to store quantities and assortments of products and allow for customization of those products.

True

True or false: Low fixed costs can make it economical to set up production facilities in several locations at once.

True

Which three decisions are part of global inventory management?

Where to locate inventory in the supply chain How much inventory to hold In what form to hold inventory

A benefit of flexible machine cells is

a reduction in work in progress.

Six Sigma is a(n)

a set of techniques and tools for process improvement

Using a web-or ______-based information system allows a company to speed up production, if necessary, by flying in key parts to the facility.

cloud

When flexible manufacturing technologies are available, this bolsters the argument for _____ production configurations.

concentrated

A(n) ______ factory has its own infrastructure when it comes to development, engineering, and production, and often competes with the firm's home factories for testing new ideas and products.

contributor

When trade barriers are high, fixed costs are low, important exchange rates are unstable, and the value-to-weight ratio is low, a ______ production configuration is preferred.

decentralized

The portion of the supply chain from the production facility to the end-consumer is the ______ supply chain.

downstream

When a business groups various types of machinery, a common materials handler and a centralized cell controller for manufacturing purposes, it is using the technology known as

flexible machine cells.

The concept that valuable knowledge does not just reside in a firm's domestic operations but can be found in foreign subsidiaries is known as ______.

global learning

A source factory ______ than an offshore factory.

has a more significant strategic role

One drawback to basing production in a foreign location is the potential for poor product quality. This is an example of a(n) (blank) cost of foreign production.

hidden

A motorcycle company is establishing a new factory to create processes, products, and technologies that the firm will use throughout its global operations. This factory would best be described as being a(n) ______ factory.

lead

Flexible manufacturing technology is also referred to as ______ production.

lean

When a firm takes advantage of favorable economic, political, and cultural conditions when identifying a site for manufacturing activities, the benefits it can receive are called ______ economies.

location

Kalee works for Wolf Furniture Corp. and it is her job to control the inventory of raw materials, component parts, and products used in the manufacturing of the company's office furniture line. Kalee works in _____.

logistics

Web-based information systems can improve the ______ function by better tracking component parts, optimizing production schedules, and by providing good information about the company's supply chain.

logistics

When a company makes a make-or-buy decision, the strategic level is typically focused on the ______-term, while the operational level is more focused on the ______-term.

long; short

Whether a firm should perform a value creation activity themselves or outsource, it is called the _____ decision.

make-or-buy

The term used to describe a company's ability to produce a customized product at low cost is ______.

mass customization

When a company uses flexible manufacturing technology to develop a low cost, customized product, it is using the process of

mass customization.

Since unit costs decrease as plant output increases, a ______ of output is necessary for a plant to realize all major plant-level scale economies.

minimum efficient scale

The ______ is the smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to supplies and costs.

minimum efficient scale

A(n) _______ factory is developed and set up to assemble or manufacture products in a country where labor and/or raw materials are cheaper, for export and/or eventual import into the manufacturer's home country.

offshore

Manuel works on the assembly line at a factory in Mexico that produces component parts for a Japanese automaker. The factory is not involved in any decisions on the automobiles but is simply designed for parts production. This is an example of a(n) _____ factory.

offshore

A(n) ______ factory is placed near a competitor or the most-demanding customers and acts as an intelligence gathering unit.

outpost

Renee buys a new cell phone. It comes in a molded plastic package. This is an example of ______ packaging.

primary

All the activities involved in creating a product are known as _____.

production

It would be common to use the term ____ to refer to the manufacturing process when discussing the global supply chain.

production

In the European Union, companies must be certified under ISO 9000. This is a certification of a manufacturing firm's processes and

products.

A business uses the _____ function to obtain raw materials it needs to manufacture goods.

purchasing

The process of a business or organization attempting to acquire goods or services to accomplish the goals of its enterprise is called

purchasing.

ISO 9000 is used in the EU marketplace as a way to _____.

regulate manufacturing processes

A factory established to overcome tangible and intangible barriers in the global market place which supplies specific country or regional markets around the world is a(n) ______ factory.

server

One reason a company would use a(n) _____ factory is that it can minimize the costs that would be necessary if the production facility were further away from its customers.

server

The main difference between a contributor factory and a(n) __ factory is that a contributor factory has responsibilities for product and process engineering and development.

server

Terry's company will spend $4 billion to set up a production plant in China. This is a high cost for his small business to pay. This price makes it ______ to produce in several locations at once.

uneconomical

The portion of the supply chain from raw materials to the production facility is the ______ supply chain.

upstream