Exam 13: Exporting and Global Sourcing

Global Sourcing Debate (Scenario) Prof. Sean Peterson's class of international business has been studying the controversies surrounding global sourcing. Prof. Peterson divided the class into two groups, A and B. Group A was assigned the task of defending global sourcing, whereas Group B was assigned the task of arguing against global sourcing. -The concept of creative destruction can be reasonably used by Group A to support the view that ________.

Global sourcing eliminates the possibility of new rivals being created in a country.

Global sourcing enables a firm to free expensive analysts, engineers, and managers from routine tasks.

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. -Global sourcing becomes a catalyst to overhaul organizational processes and company operations and increases the firm's overall competitive advantages by ________.

In the decision about whether to outsource, manufacturing of products is considered of high importance to a firm.

Exporting and importing collectively refers to international trade.

Which of the following refers to a risk, stemming from environmental factors, that is closely associated with global sourcing?

The exporter usually first issues a quotation or pro forma invoice upon request by potential customers.

Incoterms were developed by the International Chamber of Commerce in order to ________.

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 most strongly suggests OTC should NOT export its towels to Earth Waves?

Distinguish between captive sourcing and contract manufacturing.

What role do logistics play in global sourcing? In a short essay, discuss how logistics relates to cost. Provide an example of a firm that lost money as a result of inadequate logistics.

The bill of lading is the "birth certificate" of the goods being shipped and indicates the country where they originate.

Value chain is the collection of logistics specialists and activities that provides inputs to manufacturers or retailers.

Critics of global sourcing maintain that it ________.

Trade fairs are not only excellent sites to meet potential intermediaries, they also provide the means to become familiar with key players in the local industry and to generally learn about the target market.

In a short essay, explain how global sourcing can affect home-country employees.

What are the benefits of global sourcing?

Incoterms are universally accepted terms of sale that specify how the buyer and the seller share the cost of freight and insurance in an international transaction and at which point the buyer takes title to the goods.

The relocation of a business process or entire manufacturing facility to a foreign country is known as ________.