Q&A Hero

Q: Which of the following is true according to the transnational strategy? A. Foreign facilities are viewed as nothing more than low-cost production facilities. B. Valuable knowledge resides only in a firms domestic operations. C. Foreign sites can take the lead role for the design of products to serve important regional markets. D. Local managers should not be empowered to enhance their factories strategic standing within the corporation. E. The strategy opposes the empowerment of local managers to enhance their factories strategic standing within the corporation.

Q: Which of the following is a source of improvement in the capabilities of foreign factories? A. The need to manufacture a product that serves universal needs B. Market stagnation in the country in which the factory is located C. Apathy of the headquarters of a company toward the foreign production facility D. Abundance of advanced factors of production in the nation in which the factory is located E. Decline in the education level of the country's population where the factory is located

Q: Which of the following is a result of pressure from the headquarters of a company to customize a product to the demands of consumers in a particular nation at a foreign production site? A. Development of additional capabilities B. Centralization of production activities C. Long production runs of standardized output D. Low demand for local responsiveness. E. Basing production facilities in a single location.

Q: Which of the following is the initial reason for the establishment of a foreign production facility? A. Employee turnover is high. B. Product quality is low. C. Inventory turnover is low. D. Exchange rate fluctuations are high. E. Labor costs are low.

Q: Which of the following is a hidden cost to basing production in a foreign location? A. Low employee turnover B. Low labor costs C. Poor product quality D. Expensive higher education system E. Low inventory turnover

Q: Which of the following is a step taken by automobile companies in situations where either centralization or decentralization of production is not feasible? A. Outsourcing production to developing countries B. Inshoring production into the home country C. Selling product patents and technology to competitors D. Refraining from international trade E. Establishing top-to-bottom manufacturing operations

Q: Which of the following firms should concentrate its production in a decentralized location? A. Univion Inc. operates in an industry where national differences in political economy and culture have a substantial impact on its cost of production. B. Saturn Inc. operates in an industry where volatile fluctuations in important exchange rates are expected. C. Brew Technology manufactures industrial machines and equipment that serve universal needs. D. Gold Dreams Inc. customizes jewelry in precious metal and stones with the aid of flexible manufacturing technologies. E. Uniton Inc. uses a production technology that has high fixed costs and high minimum efficient scale.

Q: When is decentralization of manufacturing facilities most appropriate? A. When the product serves universal needs B. When exchange rates are expected to remain relatively stable C. When the product's value-to-weight ratio is high D. When there are few trade barriers E. When the production technology has low minimum efficient scale

Q: Which of the following firms should concentrate its production in a centralized location? A. Jupiter Inc. operates in an industry where the fixed costs are high and services of supporting industries are of prime importance. B. Star Goal Inc. manufactures consumer products like processed food, apparel, and cosmetics for which national differences in consumer taste and preference are wide. C. Uranious Inc. operates in an economy where volatile fluctuations in exchange rates are frequently expected. D. Earth Ventures Inc. is a mining company that exports iron orea product with low value-to-weight ratioto various countries. E. Silver Times Inc. customizes heavy machines without the use of flexible manufacturing technologies.

Q: When should a firm concentrate its production facilities in a centralized location? A. When the production technology has a low minimum efficient scale B. When the production technology has low fixed costs C. When important exchange rates are expected to remain relatively stable D. When flexible manufacturing technologies are not available E. When the products value-to-weight ratio is low

Q: Concentration of production makes most sense when: A. trade barriers are low. B. the products value-to-weight ratio is low. C. important exchange rates are volatile. D. flexible manufacturing technology does not exist. E. the production technology has low fixed costs.

Q: Which of the following is true of a product that serves universal needs? A. It becomes necessary to customize the product to suit small consumer groups. B. It becomes necessary to accommodate demands for local responsiveness. C. It increases the attractiveness of concentrating production at an optimal location. D. It is difficult to serve national differences in consumer taste and preference. E. It is attractive to globally disperse production to all major markets.

Q: Which of the following statements is true of industrial products such as steel? A. They serve needs that are the same all over the world. B. They have drastic national differences in consumer taste and preference. C. The need for local responsiveness for these products is more than consumer products. D. It makes sense to produce these products in multiple locations close to major markets. E. A plant must operate at the highest minimum efficient scale of output for these products.

Q: Which of the following holds true for products with low value-to-weight ratios? A. They are relatively expensive. B. They do not weigh very much. C. Their transportation costs account for a very small percentage of total costs. D. It is advisable to manufacture them in multiple locations close to major markets. E. Examples of these products are electronic components and pharmaceuticals.

Q: Which of the following products is best manufactured in multiple locations close to major markets to reduce transportation costs? A. Pharmaceuticals B. Petroleum products C. Books D. Magazines E. Electronics

Q: Which of the following is true of products with high value-to-weight ratios? A. They are expensive to transport. B. They tend to increase in weight after processing C. They tend to be restricted under trade barriers. D. They are expensive and do not weigh very much. E. They have a low inventory turnover.

Q: Which of the following is true of high value-to-weight ratio products? A. They tend to have greater weight than other products. B. Their transportation costs account for a very small percentage of total costs. C. They tend to be inexpensive. D. There is great pressure to produce these products in multiple locations close to major markets. E. These products gain weight as raw materials get processed during transportation.

Q: Two product factors impact location decisions. They are the product's value-to-weight ratio and: A. whether the product serves universal needs. B. the products life cycle. C. the products packaging. D. the availability of flexible manufacturing technology. E. whether the product is produced using environmental friendly methods.

Q: A product's value-to-weight ratio affects location decision primarily because of its influence on: A. transportation costs. B. shelf life. C. work-in-progress. D. inventory turnover. E. capacity utilization.

Q: Technological factors are making it feasible for firms to concentrate manufacturing facilities at optimal locations. The major brakes on this trend are: A. differences in endowment factors. B. transportation costs and trade barriers. C. rising national differences in consumer tastes and preferences. D. growing free trade areas and democracy. E. declining fluctuations in exchange rates.

Q: Which of the following statements is true of flexible manufacturing technologies? A. The idea of manufacturing in each major market is becoming attractive due to these technologies. B. They fail to produce multiple models from the same line. C. They are used to reconcile the goals of large volumes and standardized output. D. They decrease the utilization of individual machines. E. They allow firms to customize products to national differences at a single facility.

Q: _____ refers to the production of a variety of end products at a unit cost that could once be achieved only through bulk production of a standardized output. A. Lean production B. Just-in-time C. Mass customization D. Specialized asset E. Dynamic capability

Q: Flexible manufacturing technologies enable companies to: A. establish multiple manufacturing facilities in each major national market. B. build large inventories. C. achieve product standardization across markets. D. increase their work in progress. E. produce customized products without a significant cost penalty.

Q: Amber Engineers Inc. wants to be able to customize products for different national markets and in turn increase its customer responsiveness. However, the fixed costs associated with its production are high. Hence, these functions will be performed most efficiently if Amber Engineers Inc.: A. sets up a production facility that is well suited for mass production. B. establishes multiple manufacturing facilities in each major national market. C. increases each manufacturing unit's minimum efficient scale of output. D. adopts flexible manufacturing technologies to help achieve mass customization. E. locates its production unit in countries that have drastic fluctuations in exchange rates.

Q: Flexible manufacturing technologies help a company achieve mass customization, which increases its _____. A. cost structure B. waste C. customer responsiveness D. learning effects E. externalities

Q: Which of the following is a consequence of using flexible machine cells? A. It fails to adapt to the production of different products. B. It generally results in stockpiles of partly finished products. C. It improves capacity utilization and reduces wastes. D. It increases setup time for complex equipment. E. It adds to the cost structure of a firm.

Q: A _____ includes a grouping of various types of machinery, a common materials handler, and a computer to control the production of a family of parts or products. A. specialized asset B. dynamic capability C. turnkey project D. flexible machine cell E. just-in-time inventory

Q: Which of the following is an implication of a mass production system? A. It results in short production runs B. It fails to realize economies of scale C. It reduces the number of defects and eliminates waste. D. It helps to accommodate consumer preferences for product diversity E. It creates massive inventories that have to be stored in large warehouses.

Q: Mass customization reconciles the two goals of: A. mass production and long production runs. B. standardization and economies of scale. C. high fixed costs and single production facility. D. low cost and product customization. E. local responsiveness and decentralized production.

Q: Which of the following is an objective of lean production? A. Reducing the quality of a product to keep unit costs low B. Reducing setup times for complex equipment C. Replacing customized production with mass production D. Decreasing utilization of individual machines through scheduling E. Increasing the level of minimum efficient scale of output

Q: Adopting flexible manufacturing technology to produce a wide variety of end products results in: A. increased setup times for complex equipment. B. increased utilization of individual machines. C. reduced quality control. D. increased unit cost of products. E. diseconomies of scale.

Q: Producing a standardized product in large volumes will: A. result in diseconomies of scale. B. increase production efficiency. C. increase production costs. D. result in shorter production runs. E. result in a high minimum efficient scale of output.

Q: A firm with a wide product variety will find it: A. difficult to achieve shorter product runs. B. difficult to increase its product sales. C. difficult to reduce its unit costs. D. easy to realize economies of scale. E. easy to reach optimum production efficiency.

Q: Which of the following is a consequence of a low minimum efficient scale? A. It prevents a firm from utilizing capital equipment fully. B. It enhances the need to centralize production in a single location or a limited number of locations. C. It prevents a firm from accommodating demands for local responsiveness. D. It increases the unit cost of products. E. It allows a firm to hedge against currency risk by manufacturing the same product in several locations.

Q: Which of the following statements is true about minimum efficient scale of output? A. With lesser utilization of capital equipment, the chances of a firm realizing economies of scale increases. B. A plant must avoid operating at the minimum efficient scale of output to realize all major plant-level scale economies. C. When the minimum efficient scale of production is low relative to global demand, it will be economical to manufacture a product at a single location. D. An advantage of a low minimum efficient scale is that it allows the firm to accommodate demands for local responsiveness. E. A low minimum efficient scale increases the risks against potentially adverse fluctuations in exchange rates.

Q: Uvicon Inc. and Bionor Inc. are firms that compete against each other in the global market. Uvicon Inc. has a high level of fixed costs and high minimum efficient scale, while Bionor Inc. has a low level of fixed costs and minimum efficient scale. In this scenario, which of the following is true? A. Uvicon Inc. will be better prepared to hedge against potential adverse moves in currencies than Bionor Inc. B. Uvicon Inc. will benefit from centralizing its production activities and Bionor Inc. from decentralizing. C. Uvicon Inc. will have more bargaining power over contract manufacturers than Bionor Inc. D. Uvicon Inc. will be better enabled to adapt to changes in consumer demand in regional markets than Bionor Inc. E. Uvicon Inc. will be better prepared to accommodate demands for local responsiveness than Bionor Inc.

Q: The level of output at which most plant-level scale economies are exhausted is known as _____. A. mass customization B. breakeven point C. minimum efficient scale D. just-in-time E. lean production

Q: The concept of _____ tells us that as plant output expands, unit costs decrease. One reason is the greater utilization of capital equipment. A. minimum efficient scale B. lean production C. Six Sigma D. economies of scale E. total quality management

Q: Which of the following statements is true about performing a manufacturing activity in several locations at once? A. A manufacturing activity must be performed at multiple locations when the fixed costs of setting up a production plant are high. B. Performing a manufacturing activity in several locations makes it difficult for a firm to accommodate demands for local responsiveness. C. Producing in multiple locations reduces the bargaining power of a firm against manufacturers. D. The larger the minimum efficient scale of a plant relative to total global demand, the greater the need for decentralizing production to multiple locations. E. Many firms disperse their manufacturing plants to different locations as a real hedge against potentially adverse moves in currencies.

Q: Which of the following is a consequence of adverse changes in exchange rates? A. It brings more foreign direct investment into the country. B. It decreases the dollar cost of products exported from the country. C. It alters a countrys attractiveness as a manufacturing base. D. It transforms the country into a low-cost location. E. It decreases the amount of imports brought into the country.

Q: Which of the following location externalities is favorable for foreign direct investment in a country? A. Presence of supporting industries B. Market saturated with other foreign competitors C. Lack of intellectual property rights laws D. Presence of a communist political system E. Adverse changes in currency exchange rates

Q: Uniway Technologies Inc. has based its manufacturing units in the country of Lanthania. The country's stable economic and political environment has helped the firm gain competitive advantage by lowering its production costs and improving product quality. Other things being equal, the benefits realized from such a strategy can be typically referred to as _____. A. economies of scope. B. location economies. C. diseconomies of scale. D. economies of power. E. learning economies.

Q: To be able to accommodate demands for local responsiveness, a firm should: A. ignore national differences in consumer tastes and preferences. B. decentralize production activities to the major national or regional markets. C. ensure that the manufacturing processes in all units are inflexible. D. standardize the product coming out of all manufacturing units. E. refrain from hiring host country managers.

Q: Which of the following is a drawback of ISO 9000 certification? A. It is bureaucratic and costly for many firms. B. It is an impossible standard to achieve. C. It is losing its prominence in international business. D. It is ineffective in Europe. E. It is ineffective in bringing about quality improvement.

Q: Pink Polka Fashion Inc., a multinational clothing brand, has plans to expand in the European Union (EU) marketplace. In order to be able to do so, the EU requires that the: A. firm adopt techniques of total quality management. B. firm achieve six sigma. C. firm uses just-in-time inventory system. D. firm patents its designs and technology. E. firms products be certified under ISO 9000.

Q: Which of the following statements is true of Six Sigma? A. The higher the number of "sigmas," the higher the number of errors. B. At Six Sigma, a production process would be 90 percent accurate. C. Six Sigma work standards are based solely on numbers or quotas. D. It is almost impossible for a company to achieve Six Sigma perfection. E. Six Sigma is the modern successor to ISO 9000.

Q: Six Sigma refers to a statistically based philosophy that aims to: A. increase defects. B. lower productivity. C. increase the costs of value creation. D. eliminate waste. E. increase cost per unit.

Q: A statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company is known as _____. A. ISO 9000 B. just-in-time C. Six Sigma D. lean production E. total quality management

Q: Which of the following best describes the relationship between the number of sigmas and the number of errors? A. The higher the number of "sigmas," the greater the number of errors. B. If the number of "sigmas" is a positive value, then the number of errors is always a negative value. C. The higher the number of "sigmas," the smaller the number of errors. D. The number of "sigmas" is independent of the number of errors. E. If the number of "sigmas" is negative, then the number of errors is always positive.

Q: Which of the following companies adheres to the total quality management steps identified by W. Edward Deming? A. Unisorn Inc. believes in empowering employees by reducing interactions between them and their supervisors. B. Galaxy Inc. empowers its employees to report problems or recommend improvements without any fear. C. New Run Inc. bases its work standards solely on numbers or quotas. D. Ovion Inc. believes that the management is not responsible for training employees in new skills. E. Tirex Inc. endorses that the achievement of better quality is solely dependent on the lower management.

Q: Which of the following is true of W. Edward Deming's beliefs about the total quality management philosophy? A. He suggested that the quality of supervision should be improved by allowing more time for supervisors to work with employees. B. He argued that management should embrace the philosophy that mistakes, defects, and poor-quality materials are acceptable. C. He believed that work standards should be defined as numbers or quotas. D. He believed that achieving better quality requires the commitment of only the top management. E. He recommended that management should create an environment in which employees will fear recommending improvements.

Q: The total quality management philosophy was developed by a number of American consultants. Which of the following individuals is one of them? A. W. Edward Deming B. Philip Kotler C. Michael Porter D. Henry Ford E. Valerie Zeithaml

Q: The Six Sigma methodology is a direct descendant of the _____ philosophy that was widely adopted, first by Japanese companies and then American companies during the 1980s and early 1990s. A. total quality management B. enterprise resource planning C. business process reengineering D. just-in-time E. business process outsourcing

Q: The principal tool that most managers now use to increase the reliability of their product offering is _____, a statistically based methodology for improving product quality. It is a direct descendant of the total quality management philosophy. A. Six Sigma B. lean manufacturing C. just-in-time inventory D. ISO 9000 E. mass customization

Q: Manufacturing firms should typically aim at lowering the costs of value creation by: A. decreasing inventory turnover. B. stocking huge amounts of inventory. C. lowering the quality of products. D. increasing after-sales services cost. E. reducing production costs.

Q: The effect of improved quality control is to lower the costs of value creation by reducing production and: A. decreasing inventory turnover. B. decreasing after-sales service costs. C. increasing scrap costs. D. increasing warranty costs. E. increasing time spent on fixing defects.

Q: Which of the following is a consequence of improved quality control? A. Greater warranty costs B. Higher scrap costs C. Direct reduction in unit costs D. Decreased productivity E. Reduced inventory turnover

Q: A second strategic objective shared by production and logistics is to increase product quality by eliminating defective products from both the supply chain and the manufacturing process. In this context, quality means _____, implying that the product has no defects and performs well. A. affordability B. flexibility C. reliability D. adaptability E. patentability

Q: An important objective shared by both production and logistics functions of an international firm is to: A. increase profits by lowering quality. B. increase foreign competition. C. lower costs by dispersing production activities. D. decrease inventory turnover. E. stock excess inventory on hand.

Q: Champion Works Inc. is an animation company, headquartered in the U.S. The CEO of the company has decided to outsource some of the production to companies in developing countries, as the firm seems to be losing out on its competitive advantage. This decision to shift functions or processes to less developed countries is due to their: A. strong intellectual property rights laws. B. lower labor costs. C. accessibility to better technology. D. sophisticated infrastructure. E. currency appreciation.

Q: _____ refers to the activity that controls the transmission of physical materials through the value chain, from procurement through production and into distribution. A. Promotion B. Recruitment C. Logistics D. Benchmarking E. Inshoring

Q: Which of the following is true about production and logistics in international businesses? A. The term production cannot be used to denote service activities. B. Developing nations are outsourcing the production of certain service activities to the United States. C. In an international firm, production and logistics are closely linked. D. The production functions of an international firm can only be located in its home country. E. Demands for local responsiveness create pressures to centralize production activities.

Q: Proprietary software solutions to implement electronic data interchange systems now dominate the market for global supply chain management software.

Q: Good electronic data interchange systems provide corporate-level managers with the information they need for coordinating and controlling decentralized materials management groups.

Q: Firms typically use electronic data interchange (EDI) via the Internet to coordinate the flow of materials into manufacturing, through manufacturing, and out to customers.

Q: The drawback of a just-in-time inventory system is that it leaves a firm with excess unsold inventory that it has to write off against earnings or price low to sell.

Q: Under a just-in-time inventory system, a company can reduce the amount of working capital it needs to finance inventory, freeing capital for other uses and/or lowering the total capital requirements of the enterprise.

Q: A firm that enters long-term alliances may limit its strategic flexibility by the commitments it makes to its alliance partners.

Q: A firm that sources its product components from internal suppliers has fewer subunits to control than a firm that sources from independent suppliers.

Q: The complexity of transfer pricing decisions enhances internal suppliers ability to manipulate transfer prices to their advantage, passing cost increases downstream rather than looking for ways to reduce costs

Q: When substantial investments in specialized assets are required to manufacture a component, a firm will prefer to contract it out to a supplier rather than make the component internal

Q: In recent years, the outsourcing decision in international businesses has gone beyond the manufacture of physical products to embrace the production of service activities.

Q: A major aspect of a transnational strategy is a belief that valuable knowledge resides in a firm's domestic operations instead of its foreign subsidiaries.

Q: A source of improvement in the capabilities of a foreign production site is the pressure to customize a product to the demands of consumers in a particular nation.

Q: The strategic role of establishing a foreign production facility is to produce labor-intensive products at as low a cost as possible.

Q: Since refined sugar has a low value-to-weight ratio, even if it is shipped halfway around the world, their transportation costs account for a very small percentage of total costs.

Q: Other things being equal, when fixed costs are substantial and minimum efficient scale of production is high, the arguments for concentrating production at a few choice locations are strong.

Q: Industrial products have few national differences in consumer taste and preference, hence the need for local responsiveness is reduced for such products.

Q: When flexible manufacturing technologies are not available, a firm can manufacture products customized to various national markets at a single factory sited at the optimal location.

Q: With the advent of flexible manufacturing technologies and mass customization, manufacturing in each major market in which the firm is active is becoming less attractive.