Exam 13: Exporting and Global Sourcing

Prox Inc. is a U.S.-based manufacturer of consumer electronics. It decides to export to Mexico and wants to protect its goods against damage, loss, and pilferage. Which of the following documents is applicable here?

Audio Component Outsourcing (Scenario) Echo Corp., a company based in Boston, manufactures high-quality audio components, such as speakers, amplifiers, and receivers for home entertainment systems. Echo has been losing market share in recent years due to the competitive pricing of other audio component manufacturers that engage in global sourcing. Echo managers are attempting to convince Nathan Douglas, the firm's founder and CEO, that global sourcing would enable the firm to be more competitive without sacrificing quality. -Which of the following, if TRUE, most supports the argument in favor of global sourcing?

Fun Play Global Sourcing (Scenario) Fun Play Inc., a company manufacturing toys for children, has decided to outsource some of its value-chain activities. However, the firm has no experience with global sourcing and has hired a consulting firm to assist its managers. The consulting firm has been assigned the task of determining which activities should be outsourced and where the outsourced activities should be located. -If Fun Play decides to source from its own wholly owned subsidiary, it would be engaging in ________.

Organic Towel Exports (Scenario) The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the company's website. Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada, for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels. -Which of the following questions must be evaluated by OTC managers as a first step to exporting?

In a short essay, describe how cost efficiencies are a benefit to sourcing abroad, and explain how information and communications technology can help reduce costs for an international firm.

Front-office activities typically include internal, upstream business functions.

In a short essay, describe three key drivers responsible for the recent growth of global sourcing.

Environmental challenges of global sourcing include currency fluctuations, tariffs and other trade barriers, and adverse macroeconomic events.

What is offshoring? Describe the types of industries that tend to offshore.

________ is the primary rationale for sourcing abroad.

A focal firm's overreliance on suppliers can potentially lead to ________.

Which of the following is TRUE with regard to global sourcing?

Firms usually internalize those value-chain activities they consider part of their core competencies.

Fun Play Global Sourcing (Scenario) Fun Play Inc., a company manufacturing toys for children, has decided to outsource some of its value-chain activities. However, the firm has no experience with global sourcing and has hired a consulting firm to assist its managers. The consulting firm has been assigned the task of determining which activities should be outsourced and where the outsourced activities should be located. -Which of the following is most likely to be the consultants' utmost concern while deciding if clothing for Fun Play dolls needs to be outsourced?

The more diverse the firm's global supply chain, the lesser the cost of logistics.

What are the potential problems that critics point to with regard to global sourcing? Why is offshoring often referred to as a process of "creative destruction"?

International logistics usually make use of a variety of transportation modes.

The recent economic turndown is expected to pressure advanced-economy firms to seek further ways to reduce costs.

Countries with weak legal environments can erode key strategic assets of firms.

Exporters usually purchase an insurance certificate to protect the exported goods against damage, loss, pilferage (theft), and, in some cases, delay.