Deck 12: Global Supply Management

Question 1

Foreign governments may impose countertrade requirements.

Answer 1

True

Question 2

Foreign governments never impose countertrade requirements.

Answer 2

False

Question 3

Assists are used in aiding the production outside of the buying firm's country and are provided by the buying firm.

Answer 3

True

Question 4

Substituting direct procurement with intermediaries usually results in lowest purchase price,but direct procurement requires extra cost beyond price.

Question 5

A pro forma invoice enables the firm to obtain an import or exchange permit.

Question 6

Countertrade requires a stock exchange.

Question 7

Statutory rates are full rates for tariffs.

Question 8

GSP is the acronym for Generalized System of Preferences.

Question 9

A pro forma invoice is a commercial invoice estimate used mainly for banking and permit needs.

Question 10

According to the textbook,supply managers who strive for excellence have chosen to pursue a global supply philosophy that divides rather than unites humanity.

Question 11

Countertrade refers to any transaction in which payment is made partially or fully with goods instead of money.

Question 12

A world-class supply manager chooses to pursue global supplier relationships that are based on fairness,honesty and trust,coupled with exploitation where possible and when the trust approach results in higher prices.

Question 13

Substituting intermediaries with direct procurement usually results in lowest purchase price,but direct procurement requires extra cost beyond price.

Question 14

GSP is the acronym for Greek System of Procurement.

Question 15

A bill of lading is a receipt issued by the carrier for merchandise.

Question 16

Countertrade links the sale of a product into a foreign country and sale of goods out of that country.

Question 17

According to the textbook,supply managers who strive for excellence have chosen to pursue a global supply philosophy that unifies rather than divides humanity.As such,a world-class supply manager chooses to pursue global supplier relationships that are based on fairness,honesty and trust,which result in lower total costs without exploitation.

Question 18

MFN is the acronym for Monetary Freedom Notice.

Question 19

Countertrade refers to any international contract that requires reciprocity.

Question 20

MFN is the acronym for Most Favored Nation.

Question 21

Which is not a typical question that should be asked prior to going global when evaluating the supply network?

A) Are inventory levels transparent using an online information technology system?
B) Is the buying firm prepared to make a financial commitment for expensive trips to the supplier?
C) Is the supplying firm's management willing to change the approach of how business and transactions are conducted?
D) Is the buying firm's management willing to change the approach of how business and transactions are conducted?
E) Is the buyer aware of the environment?

Question 22

Which is not a typical question that should be asked about a product before trying to source it globally?

A) Does it qualify as high-volume in your industry?
B) Does it have a long life (two to three years)?
C) Does it lend itself to repetitive manufacturing or assembly?
D) Is demand for the product stable?
E) Should the product be produced at all?

Question 23

A bill of lading is an invoice issued by the supplying firm for the lading process that occurs at the port of entry.

Question 24

Which of the following is generally not be considered part of the future of global supply management?

A) Fewer marketplace differences will exist
B) World financial markets will become even more closely linked through 24-hour trading
C) "Westernization" of global consumer markets will slow to a stop in the next decade
D) Manufacturing firms in "developing" countries will continue to improve their capabilities
E) Productivity and quality will continue to dramatically improve worldwide

Question 25

Which of the following is not a potential problem of global sourcing?

A) Cultural Issues
B) Long lead times
C) Additional Inventories
D) Low Opacity
E) Lower Quality

Question 26

Which of the following is typically not a reason for a corporation to pursue global purchasing?

A) To Achieve Better Timeliness
B) To Acquire More Advanced Technology
C) To Develop a Broader Supply Base
D) To Expand the Customer Base
E) To Reduce Lead Times

Question 27

Which of the following is not a global trade intermediary?

A) Import merchants: easiest method, basically like buying from a "domestic source"
B) Commission houses: act for exporters abroad, paid by the exporter, they do selling, shipping and customs details
C) Import brokers: commission paid by sellers and buyers, charges fee for bringing parties together
D) Trade seekers: utilize the Internet to broker the deal between both parties
E) Trading companies: may work for both or one party, handles selling, shipping, customs details

Question 28

Which of the following is generally not considered a part of the "future" of global supply management?

A) World financial markets will become even more closely linked through 24-hour trading
B) International business will no longer be limited to large multinational corporations
C) Fewer marketplace differences will exist
D) Productivity and quality improvements will slow and even digress worldwide
E) "Westernization" of global consumer markets will continue to occur at a rapid rate

Question 29

According to the CAPS study presented in Chapter 12,several trends exist in global sourcing.Which of the following was not one of the trends presented in the study?

A) Supply management will be increasingly integrated with the strategic plans of the firm to maximize company-wide leverage
B) Supply management performance measures will become further aligned with company-wide measurements
C) Information technology systems will replace supply management in many areas of strategic decision making
D) Information systems/technology will be key to globalization and sourcing strategies enterprise wide
E) New, more complex skills and focus will be required in supply management to operate in a globally complex and uncertain world

Question 30

Which is not a typical question that should be asked prior to going global when evaluating the supply network?

A) Does sufficient engineering support exist (at the supplier's facility) to efficiently facilitate ECOs when they occur?
B) Will the buyer be able to allow sufficient time to phase out existing "in the pipeline" inventory?
C) Will the supplying firm be able to build up inventories "in the pipeline" to ensure the buying firm never runs out of material?
D) Will the supply manager's firm take responsibility when required?
E) Is the buying firm prepared to make a financial commitment for expensive trips to the supplier?

Question 31

A pro forma invoice is a government invoice estimate used mainly for banking and permit needs.

Question 32

Which of the following is not one of the features of a transnational corporation?

A) Instantaneous electronic communications capabilities
B) Conducts business in two or more continents
C) Instantaneous electronic funds transfer
D) Distributed, highly autonomous local operations
E) Global real-time flow of intellectual property

Question 33

According to the CAPS study presented in Chapter 12,several trends exist in global sourcing.Which of the following was not one of the trends presented in the study?

A) Regional and global sourcing strategies will become a critically important source of competitive advantage
B) The number of key suppliers to firms will be reduced to maximize leverage on a global basis
C) Supply management departments will be phased out much the same way that quality departments were phased out in the early 1990s
D) Strategic and tactical sourcing work will be further separated
E) Executive management expectations of supply management will increase

Question 34

Assists are used in aiding the production outside of the buying firm's country and are provided by the supplying firm.

Question 35

Which of the following is typically not a reason for a corporation to pursue global purchasing?

A) To Achieve Superior Quality
B) To Achieve Better Timeliness
C) To Experience Foreign Cultures
D) To Lower Costs
E) To Acquire More Advanced Technology

Question 36

Which of the following is not one of the features of a transnational corporation?

A) Distributed, highly autonomous local operations
B) Highly differentiated products
C) Global real-time flow of intellectual property
D) Promotes democracy throughout the world
E) Worldwide flow of raw materials, and finished goods, highly insensitive to both national and corporate boundaries

Question 37

Which of the following is not one of the three stages to global supply management presented in Chapter 12?

A) International Purchasing
B) Geopolitical Engagement
C) Global Sourcing
D) Global Supply Management

Question 38

Statutory rates are partial rates for tariffs.

Question 39

Which is not a typical question that should be asked about a product before trying to source it globally?

A) Which countries can supply the product through government subsidies?
B) Does it qualify as high-volume in your industry?
C) Does it lend itself to repetitive manufacturing or assembly?
D) Are specifications and drawings clear and well defined?
E) Is technology not available domestically at a competitive price and quality?

Question 40

Which of the following is not a potential problem of global sourcing?

A) Long lead times
B) Poor Quality
C) Social and Labor Problems
D) Higher Costs of Doing Business
E) High Opacity

Question 41

Which of the following is not one of the original goals of NAFTA?

A) Elimination of tariffs
B) Subsidize border companies
C) Remove agricultural barriers
D) Remove manufacturing barriers
E) Remove service trade barriers

Question 42

Which is not a type of letter of credit?

A) Irrevocable
B) Recyclable
C) Revocable
D) Confirmed
E) Unconfirmed

Question 43

Which of the following is not an advantage of the Euro as presented in the textbook?

A) Greatly Reduced Transaction Costs
B) Increased Competition
C) Elimination of Tariffs
D) Reduced Exchange Rate Risk
E) Increased Trade and Capital Movement

Question 44

Which of the following is an advantage of countertrade over using currency?

A) Lengthier negotiations
B) Complex negotiations
C) Government involvement
D) Higher transaction costs
E) Goodwill created

Question 45

Which of the following is not a typical benefit of an International Procurement Office?

A) Expands buyer's supplier base
B) Allows personal contact
C) Provides a venue for handling bribes
D) Better understanding of local conditions
E) On-site support

Question 46

Which is not a type of letter of credit?

A) Revocable
B) Retrievable
C) Confirmed
D) Revolving
E) Non-revolving

Question 47

Which of the following steps is not given in the textbook as recommended to include in a technical and commercial analysis in preparation for direct relations?

A) Prepare and review specifications and drawings
B) Avoid including the requirements for special packaging
C) Pack samples or photos of required materials if helpful
D) Clearly prepare the quality requirements
E) Identify specific scheduling requirements

Question 48

Which of the following countertrade definitions is false?

A) Rescindable: A clause in the countertrade agreement that enables either party to cancel the contract without notice
B) Barter: Goods are exchanged for other goods with no money involved
C) Offset: The value of the sale is offset by purchases of items produced in the buying country
D) Counterpurchase: Unrelated goods are exchanged
E) Buy-Back/Compensation: Agreement by the seller of turnkey plants, machinery, or other capital equipment to accept as partial or full payment products produced in the plants and/ or on the capital equipment

Question 49

Which of the following is not a political or economic alliance?

A) North American Free Trade Agreement
B) MERCOSUR
C) African Committee of Nations
D) Association of Southeast Asian Nations
E) Asia Pacific Economic Cooperation

Question 50

Which of the following points is not given in the textbook as something that supply professionals must learn with respect to global supply management?

A) Develop a global supply management view
B) How to lobby government officials for foreign tariff reductions
C) Learn to deal with changing global environments
D) Deal with diverse cultures effectively
E) Work within distributed organizational structures

Question 51

Which of the following information points is not recommended in the textbook as a point that should be included in the initial meeting with a direct supplier?

A) Provide gifts to the supplier's critical personnel
B) Provide a briefing on your firm
C) Provide a tour of your facility if the meeting is at your facility
D) Meet with critical personnel
E) Describe how and when the supplier's firm would get paid

Question 52

Which of the following is not an advantage of countertrade over using currency?

A) Allows companies to avoid taxes
B) Enables selling to countries with inconvertible currencies
C) Reduces risks with an unstable currency
D) Goodwill with foreign countries
E) Fuller use of plant capacity

Question 53

Which of the following is not one of the original goals of NAFTA?

A) Remove agricultural barriers
B) Remove service trade barriers
C) Remove investment restrictions
D) Reduce intellectual property rights
E) Resolve environmental concerns

Question 54

Which of the following steps is not given in the textbook as recommended to include in a technical and commercial analysis in preparation for direct relations?

A) Determine what percentage of production can be placed offshore
B) Determine requirements for special packaging
C) Hire a consulting firm to conduct the analysis
D) Identify likely lead times
E) Develop a clear idea of the price objective

Question 55

In meeting with a direct global supplier,all of the following tips are suggested in the textbook except one.Which tip does not belong in the list?

A) Explain your company's goals and values
B) Be prepared to bend ethical boundaries
C) Take care not to appear to be unreasonable
D) State your intention to deal directly right from the start
E) Be prepared to give reasons for direct buying

Question 56

Which of the following information points is not recommended in the textbook as a point that should be included in a briefing on your firm for the supplier?

A) Personal preferences of gifts to gain business
B) Actual and forecasted sales volume
C) Unclassified corporate strategy information
D) Annual reports
E) An indication of why the buying firm is soliciting the potential global supplier's interest

Question 57

Which of the following is not an advantage of countertrade over using currency?

A) Avoiding exchange controls
B) Transaction requires less administration
C) Enables selling to countries with inconvertible currencies
D) Enables marketing products in less-developed countries
E) Reduces risks with an unstable currency

Question 58

Which of the following points is not given in the textbook as something that supply professionals must learn with respect to global supply management?

A) Deal with diverse cultures effectively
B) Conduct negotiations in the country's native language
C) Work within distributed organizational structures
D) Work with teams composed of global members
E) Learn to communicate effectively with cultural beliefs and values different than their own

Question 59

Which of the following is not one of the four potential currency/exchange rate situations that can exist in the absence of fixed exchange rates? (Assume the buyer is a United States company and the contract extends beyond one year)

A) Contract is with a global supplier, with payment in foreign currency, exchange rate stays exactly the same during the life of the contract
B) Contract is with a global supplier, with payment in foreign currency, and the dollar strengthens
C) Contract is with a global supplier, with payment in dollars, and the dollar weakens
D) Contract is with a global supplier with payment in dollars, and the dollar strengthens
E) Contract is with a global supplier, with payment in foreign currency, and the dollar weakens

Question 60

Which of the following information points is not recommended in the textbook as a point that should be include in a briefing on your firm for the supplier?

A) Information on the relevant product line and related lines
B) Classified corporate strategy information
C) Actual and forecasted sales volume
D) Customers
E) Market share

Question 61

Which of the following is not true of hedging?

A) Used to minimize market risk
B) Requires dedicated professional hedging managers
C) Requires organized commodity exchange
D) Can be used to address the risk of buying in dollars
E) Can be used to protect the dollar value of future foreign currency cash flow

Question 62

Which of the following is not true about currencies and/or prices in global trade?

A) The stability of a floating currency is more questionable than pegged currencies
B) A cost driven product is one with few if any competitors
C) A buying firm is prohibited from using hedging in most countries
D) The supplier can set the price based on his/her firm's costs with a cost driven product
E) A market driven product's prices are set on the world market.

Question 63

Which of the following is not true about currencies and/or prices in global trade?

A) Floating currency is a currency not associated to the U.S. dollar
B) The stability of a floating currency is more questionable than pegged currencies
C) A currency may be pegged and floating simultaneously in some countries
D) Pegged currency is a currency associated to the U.S. dollar
E) A pegged currency is more stable than floating or unpegged currency

Question 64

The European Union is an advantage for US and other global supply managers because

A) The development of a European single market
B) The creation of European standards
C) The reduction of trade barriers
D) The Euro
E) All of the above