International Business Ch 15

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

True. Reason: A DC is at the center of the global supply chain and is used to store quantities and assortments of products and allow for customization of those products.

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

True. Reason: When fixed costs are low, it can be more economical for a company to manufacture in multiple locations which can also allow the firm to better accommodate demands for local responsiveness.

What are three factors that would lead a company to establish a concentrated production configuration? Choose all that apply.

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

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.

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

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)

hidden cost of foreign production

What are two major strategic objectives of logistics and production?

increase product quality lower costs

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

increase utilization of machines reduce setup times improve quality control

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 economically feasible for the company to manufacture rocking chairs in several locations.

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

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

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

lower

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

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

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

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

secondary

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

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

source

According to the text, the two keys to interorganizational relationships are: (check all that apply.)

trust. commitment.

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

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

False. Reason: Production refers to the activities involved in creating a physical product or a service.

True or false: When considering the building blocks for global supply chains, all relationships between vendors, suppliers, and partners are equally valuable.

False. Reason: When considering the building blocks for global supply chains, all relationships between vendors, suppliers, and partners are not equally valuable.

What are three strategic roles a foreign factory might have?

Offshore factory Outpost factory Server factory

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

Ability to minimize costs and improve quality

What are the three broad groups of factors that a company should consider when making decisions on where to produce its products? (Check all that apply.)

Country factors Technological factors Production factors

Given equivalent factor costs, which three conditions should have the most influence on a firm's decision on where to develop a production site? (Check all that apply.)

Economic Cultural Political

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

Global supply chain

What are two potential "hidden" costs of outsourcing production to a foreign location? (Check all that apply.)

High employee turnover Poor product quality shoddy workmanship poor product quality low productivity

Which of the two factors would lead a firm to choose a concentrated production configuration? (Check all that apply.)

High minimum efficient scale of production High fixed costs

Which three decisions are part of global inventory management? (Check all that apply.)

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

What two factors are critically important to the success of global supply chain coordination? (Check all that apply.)

Integration Coordination

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

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? (Check all that apply.)

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

Supply chain management refers to the integration and coordination of what three activities from raw material to the end-customer? (Check all that apply.)

Operations Logistics Purchasing

Which type of factory can be viewed as an information-gathering unit? A(n) ______ factory is placed near a competitor or the most-demanding customers and acts as an intelligence gathering unit.

Outpost

set of techniques and tools for process improvement.

Six Sigma

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

Six Sigma.

A benefit of flexible machine cells is

a reduction in work in progress.

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