International Business - Ch 15

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

What are three strategic roles a foreign factory might have?

Server factory Outpost factory Offshore factory

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

true

Consumers all over the world have the same preference for iPhone's and Xbox. These two products and others like them serve _____ needs.

universal

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

upstream

Supply chain management refers to the integration and coordination of what three activities from raw material to the end-customer?

Operations Purchasing Logistics

What are two examples of high value-to-weight products that should be produced at the most optimal production location?

Pharmaceuticals Electronic components

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

Poor product quality High employee turnover

What are two advantages of flexible manufacturing technology?

Produce at the lowest unit cost Produce a wider variety of end products

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

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

Six Sigma.

While mass production allows companies to produce a greater number of goods at a lower cost, flexible manufacturing technology also provides companies with these standards and at the same time allows a company to

customize its products.

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

Speeding up inventory turnover can lead to a(n) ______ in warehousing and storage costs and free up working capital.

decrease

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

downstream

Three of the mass production problems that Ohno identified at Toyota were

errors in initial machine settings created large numbers of defective items. massive inventories are expensive to maintain. mass production cannot accommodate customer preferences.

True or false: One disadvantage of a JIT system is that firms are often left with large inventories that they need to sell off at a reduced cost.

false

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.

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

One strategic objective of the logistics and production functions is to ______ costs, when moving from raw materials to the finished product.

lower

The snow equipment produced at Alpine Way Inc. requires specialized design and only a few craftspeople are trained to use the tools to make the products. For this reason, the company should use a _____ decision.

make

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

make-or-buy

After working at Toyota for five years and visiting Ford's US facilities,Taiichi Ohno recognized problems with ______.

mass production

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

Product returns cost manufacturers and retailers ______ per year in the United States.

more than $100 billion

Refer to Table 15.2. Company ABC is transferring business or information technology processes to suppliers in a nearby country. This is an example of

nearshoring

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

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

source

In which situation should a firm decide to make a product in-house?

When it wants to protect proprietary technology

The decision by many computer manufacturers to use Intel brand microchips in their computers is an example of where the importance of brand favors a(n) ____ (make or buy?) decision.

buy

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

Which of these products would have a low value-to-weight ratio?

bulk chemicals

Which form of transport is the least expensive?

ocean

The management philosophy that takes as its central focus the need to improve the quality of a company's products and services is ______.

total quality management

A high value-to-weight ratio means that

transportation costs are low.

A benefit of flexible machine cells is

a reduction in work in progress.

True or false: Cost and marketing functions are the two critical factors determining the make-or-buy decision.

false

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

mass customization

Six Sigma is a(n)

set of techniques and tools for process improvement.

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

secondary

What two benefits can a company derive from flexible manufacturing technologies?

Lower costs Improve efficiency

What are two examples of location externalities that a firm would consider when making a foreign investment decision?

Supporting industries Appropriately skilled labor pool

The Six SIgma quality improvement method evolved from the ______ system.

TQM

Which situation favors a "buy" decision?

The firm lacks the expertise to make a product.

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

Needs that are the same all over the world are called ______ needs.

universal

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

Ability to minimize costs and improve quality

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

Cultural Political Economic

True or false: ISO 9000 is the principal tool that most managers now use to increase the reliability of the product offering.

False

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

False

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

High fixed costs High minimum efficient scale of production

What are three factors that would lead a company to establish a concentrated production configuration?

High fixed costs Product serves universal needs Value-to-weight ratio is high

Which three decisions are part of global inventory management?

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

Select the three methods by which improved quality control can reduce costs.

Increased productivity Lower re-work and scrap costs Reduced warranty costs

Product quality is improved when a ______ inventory system is used because substandard inputs are identified immediately as parts enter the manufacturing process.

JIT

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

JIT

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

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

What three factors would encourage a firm to make a product in-house?

Lower costs Protect proprietary technology Quality control

The movement of raw materials, component parts, and finished goods through the supply chain is referred to as ______.

Transportation

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: Flexible machine technologies allow companies to customize products based on the needs of small consumer groups.

True

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

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

Jamie's company is interested in doing business in South America but they have been unsuccessful because of formal trade barriers that make it too costly to do business there. In this situation, which entity is affecting country attractiveness?

government

A source factory ______ than an offshore factory.

has a more significant strategic role

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

have manufacturing plants in different locations

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

hidden

Products with ____ (low or high?) value-to-weight ratios should be produced at the most optimal location and the global market should be served from there.

high

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

improve quality control reduce setup times increase utilization of machines

When there is improved performance reliability, a company's profits will

increase

What are two major strategic objectives of logistics and production?

increase product quality lower costs

Review Table 15.2. A company that decides to stop outsourcing products or services and instead starts to produce them internally is

insourcing

If the demand for rocking chairs is 5 million per year and the minimum efficient scale for a plant to manufacture these chairs is 100,000 per year, it ___ (is or is not?) economically feasible for the company to manufacture rocking chairs in several locations.

is

The ______ the minimum plant scale relative to total global demand, the ______ is the argument for centralizing production.

larger; greater

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

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

lead

Flexible manufacturing technology is also referred to as ______ production.

lean

Recently, the Japanese yen has seen steady appreciation against the dollar, as a result Japan has become _____ attractive as a manufacturing location.

less

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

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

Morton Manufacturing decided to locate its new plant in Taiwan because there was an existing pool of labor there with experience in manufacturing the same type of products Morton produces. This existing pool of labor is an example of a(n) _____.

location externalities

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

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

logistics

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

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

outpost

What are the three main functions of packaging?

perform protect inform

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

When discussing global supply chains, _____ is/are sometimes referred to as manufacturing or operations.

production

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

products

Kendrik ordered a sweater online. When it was delivered, the box holding the sweater had a large hole in it and as a result, the sweater had gotten wet and was ruined. In this situation, what function did the package fail to perform?

protect

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

What are three characteristics of the total quality management philosophy?

quality of supervision should improve mistakes should be eliminated the work environment be open to employee suggestions

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

regulate manufacturing processes

______ is the process of moving goods from their typical final destination for the purpose of capturing value or proper disposal.

reverse logistics