Deck 12: Global Supply Chain Management

Question 1

Which of the following would not be a characteristic of a global market as opposed to a domestic market?

A) Economic conditions more variable.
B) Infrastructure varies significantly.
C) Low order cycle variability.
D) Moderate to long order cycles.
E) Supply chain costs moderate to high.

Answer 1

Low order cycle variability.

Question 2

For organizations, the most common form of international involvement is:

A) Exporting.
B) Joint ventures.
C) Licensing.
D) Ownership.
E) All forms of international involvement are equally likely.

Answer 2

Exporting.

Question 3

There are many advantages to exporting, including:

A) Always easier to compete with other firms located in the foreign market.
B) Easier to withdraw from a market if it does not meet the firm's profit and/or sales expectations.
C) Gain experience and test a market before significantly expanding into the foreign market.
D) Less financial risk than other market entry strategies.
E) No supply chain asset investment is needed in the foreign market.

Answer 3

Easier to withdraw from a market if it does not meet the firm's profit and/or sales expectations.

Question 4

Which of the following is not a consideration when a firm exports to a foreign market.

A) Determining if the destination country(s) require(s) an export license.
B) Identifying any countries that may have restrictions in terms of products that can be sold or distributed to them.
C) Know how the product will be used in the foreign market.
D) Properly classifying products for sale and distribution in the foreign market.
E) Recognizing that government regulations in foreign markets are relatively constant; they do not change very much.

Question 5

The "Pizza 4 Patriots" example is a good illustration of which form of foreign market entry?

A) Direct foreign investment.
B) Exporting.
C) Joint ventures.
D) Licensing.
E) Ownership.

Question 6

All of the following statements about licensing are correct except for:

A) Distribution strategy is usually part of any preliminary discussion with the foreign partner.
B) Domestic firms receive royalty payments without committing their own money and time to producing the products or services.
C) Licensing is an agreement that allows a firm in one country (the licensee) to use the proprietary assets of another company located in another country (the licenser).
D) Licensing allows the domestic firm more control than exporting over how the product is distributed in the foreign market.
E) The specific supply chain functions are carried out by the licenser using the established distribution systems of the foreign market.

Question 7

Reasons for supply chain joint ventures include all of the following except:

A) Access to foreign capital.
B) Low-cost sourcing.
C) Slower and more methodical entrance into foreign markets.
D) Potential competitive advantages.
E) Technology transfer opportunities.

Question 8

Which of the following is not a characteristic of ownership of a foreign subsidiary?

A) Requires the most knowledge of the international market compared to other forms of market entry.
B) Has the least risk of any option for entering foreign markets.
C) The firm is totally responsible for the marketing and distribution of its products.
D) All profits would go to the initiating company.
E) All losses would go to the initiating company.

Question 9

Disadvantages of ownership in a foreign market include all of the following except:

A) All financial risks are borne by the firm that utilizes ownership in the foreign market.
B) Exchange rate fluctuations can change the relative value of foreign investments.
C) Firms cannot compete effectively with competitors who use other methods of market entry, such as exporting and joint ventures.
D) Loss of flexibility because the firm has a long-term commitment to the foreign market.
E) The possibility of government nationalization of foreign-owned businesses.

Question 10

In nearshoring, firms relocate foreign manufacturing closer to their domestic location. In the United States, __________ has become the most popular nearshoring option.

A) Brazil
B) China
C) Cuba
D) Mexico
E) Peru

Question 11

All of the following would be potential benefits to US firms sourcing materials from vendors or suppliers in Latin America, except for:

A) Cost attractiveness (lower labor and operating expenses).
B) Cultural similarities (they share similar business cultures).
C) Quality of the labor force.
D) Time and geographic proximity (no or minimal time zone disparities).
E) There are no potential benefits to sourcing from Latin America versus doing so domestically within the United States.

Question 12

There are many documents used in importing and exporting. Which of the following documents is issued by the exporter or freight forwarder on the exporter's behalf and is required by law for any commodity with a value over a specified limit or any shipment requiring a validated export license?

A) Commercial invoice.
B) Inspection certificate.
C) Ocean bill of lading.
D) Shipper's export declaration.
E) Validated export license.

Question 13

This document serves as a contract of carriage between the carrier and shipper, spelling out legal responsibilities and liability limits for all parties to the shipment; it also can be used to transfer title to the goods to a party named in the document.

A) Certificate of origin.
B) Commercial invoice.
C) Ocean bill of lading.
D) Shipper's export declaration.
E) Validated export license.

Question 14

When best-practice companies operating under NAFTA/USMCA develop core carrier programs and cross-border shipping programs that include innovative freight consolidation approaches, that would be an example of which of the following general supply chain strategies?

A) Channel design.
B) Customer service.
C) Distribution.
D) Manufacturing.
E) Sourcing.

Question 15

Which of the following statements about Japanese supply chains is FALSE?

A) Less than 50% of domestically transported tonnage goes by truck.
B) Nontraditional supply chains, especially nonstore channels, are booming.
C) Shared distribution is common, with competitors delivering to the same stores sharing delivery facilities and trucks.
D) Standardized pallets are not mandatory and a proliferation of different pallet sizes complicates supply chain operations.
E) Traffic congestion on roads and highways is a critical problem in and around the major cities.

Question 16

While the departure of the United Kingdom from the European Union, referred to as Brexit, has not yet occurred as of mid-2019, there will be a number of post-Brexit changes that will occur. Which of the following changes would not occur in a post-Brexit environment?

A) ERP systems will have to undergo modifications to reflect that the UK is not part of the EU.
B) Firms will be hesitant to enter into long-term contracts for logistics services.
C) Foreign exchange rates for the British Pound would change.
D) The UK could not enter into Free Trade Agreements with non-EU countries.
E) The VAT rate in the UK would change.

Question 17

The World Bank developed the Logistics Performance Index (LPI) which includes several logistics and supply chain components. Which of the following is not one of the components of the LPI?

A) Ability to track and trace shipments.
B) Competence and quality of logistics services.
C) Ease of arranging competitively priced shipments.
D) Efficiency of customs clearance.
E) Perfect order percentage.

Question 18

All things considered, of the major uncontrollable elements of the environment that surround the supply chain activity, the most important element would be:

A) Economic conditions.
B) Geography of the foreign market.
C) Political and legal systems of the foreign markets.
D) Social and cultural norms of the various target markets.
E) Technology available or accessible.

Question 19

Slower or faster growth rates in some foreign markets make it even more necessary that greater discipline be exercised by supply chain executives in planning and ensuring that maximum productivity be achieved for each dollar spent. This would be an example of which uncontrollable element?

A) Economic conditions.
B) Geography of the foreign market.
C) Political and legal systems of the foreign markets.
D) Social and cultural norms of the various target markets.
E) Technology available or accessible.

Question 20

There are a number of major international trading blocs throughout the world. The countries of Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela would belong to which trading bloc?

A) Asia-Pacific Economic Cooperation (APEC)
B) Association of Southeast Asian Nations (ASEAN)
C) North American Free Trade Agreement (NAFTA)
D) Mercado Comun del Sur (MERCOSUR)
E) Union of South American Nations (UNASUR)

Question 21

Supply chains in developing countries are often characterized as having large numbers of intermediaries supplying an even larger number of small retailers.

Question 22

In an exporting strategy, the domestic firm has very little control over the pricing, promotion, or distribution of its product in the foreign market.

Question 23

Licensing is similar to exporting in that it does not require capital outlays, thereby reducing risk and increasing flexibility.

Question 24

Licensing is not a good strategy if the foreign market has high tariff barriers or strict import quotas.

Question 25

Because licensing agreements include termination or cancellation provisions, it is always very easy to end a licensing agreement.

Question 26

If wholly owned subsidiaries are prohibited by foreign governments, licensing may be the only method of market entry if management wishes to exercise a large amount of control over its products in the foreign market.

Question 27

While firms may or may not be involved in some form of foreign market entry strategy, most are almost always involved in some aspect of importing.

Question 28

Offshoring and nearshoring are similar concepts, but their primary difference lies in how close to the domestic country the suppliers or vendors are located.

Question 29

International versus domestic documentation is about the same in terms of complexity because each country or world region has similar specifications, regulations and requirements.

Question 30

Free on board (F.O.B.) determines who is responsible for the various stages of delivery of the product, who bears what risks, and who pays for the various elements of transportation.

Question 31

Products remaining in a free trade zone (also called a foreign trade zone) are not subject to duties or taxes until they are reshipped out of the zone into the country of destination. However, products in the FTZ cannot be processed, assembled, sorted or repackaged before reshipment.

Question 32

While there are potentially many benefits in using a FTZ, most FTZs in the United States are underutilized.

Question 33

In China, most supply chain activities are administered and/or controlled by the government.

Question 34

Prior to the formation of the European Union (EU), the majority of transportation was local, within a 75 km radius. Since the formation of the EU, movements have tended to be more long-distance.

Question 35

Radio frequency identification (RFID) technology can be very useful in tracking and tracing products that have long shelf lives, but RFID is of very limited use for products such as food and flowers that have limited shelf lives.

Question 36

As the speed of technology advancement accelerates, it becomes more likely that additional products will undergo "technological obsolescence."

Question 37

International transportation can only take place using air or water transport. It is not feasible to utilize truck or rail transport for international shipments.

Question 38

There are no United States container ports in the "top 10" largest container ports in the world (as measured by annual throughput in TEUs).

Question 39

"The most valuable commodity to customers is time, rather than money" would be an example of a social-cultural trend that impacts supply chain management.

Question 40

Currency exchange rates would be an example of a micro category of the political and legal uncontrollable environment.