Deck 15: Managing International Operations

Question 1

________ refers to a situation in which facilities are spread over several locations,with one facility for each national business environment in which the company markets its products.

A)Continuous production
B)Decentralized production
C)Vertical integration
D)Lean production

Answer 1

B

Question 2

Companies with centralized production facilities are often pursuing ________ strategies.

A)low-cost
B)differentiation
C)retrenchment
D)combination

Answer 2

A

Question 3

Deciding the sequence of operations a company will use to create its product is called ________.

A)product planning
B)capacity planning
C)location economies
D)process planning

Answer 3

D

Question 4

Scenario: Wilson Industries Inc.
Wilson Industries Inc.is a multinational firm that designs and produces premium leather bags for major destinations worldwide.The company's board of directors is meeting to discuss changes that might be needed in the company's operations.
The board plans to examine Wilson's ability to produce enough bags to satisfy their customers' demands.This evaluation is known as ________.

A)capacity planning
B)process planning
C)lean production
D)product structure modeling

Question 5

Transportation costs are one of the driving forces behind the globalization of the ________ industry.

A)health care
B)publishing
C)software
D)steel

Question 6

________ refers to the concentration of production facilities in one location.

A)Lean production
B)Continuous production
C)Centralized production
D)Horizontal integration

Question 7

Scenario: Wilson Industries Inc.
Wilson Industries Inc.is a multinational firm that designs and produces premium leather bags for major destinations worldwide.The company's board of directors is meeting to discuss changes that might be needed in the company's operations.
The board will also examine new production techniques the company could use to create its product.This examination is a part of ________.

A)capacity planning
B)process planning
C)facilities location planning
D)centralized production

Question 8

A British toy company manufactures all of its product lines in a single facility in Europe.Which of the following is the company demonstrating?

A)continuous production
B)lean production
C)centralized production
D)horizontal integration

Question 9

The decentralization of production facilities is a typical policy for companies that pursue ________.

A)a multinational strategy
B)a global strategy
C)mass customization
D)vertical integration

Question 10

The process of assessing a company's ability to produce enough output to satisfy market demand is called ________.

A)capacity planning
B)lean production
C)process management
D)product structure modeling

Question 11

The centralization of production facilities is a typical policy for companies that pursue ________.

A)horizontal integration
B)product differentiation
C)a global strategy
D)a multinational strategy

Question 12

Which of the following statements is true regarding location economies?

A)The demand and supply factors heavily influence the productivity of a location.
B)They apply only to service providers.
C)Each production activity generates more value in a particular location than elsewhere.
D)They are restricted to business activities that involve product manufacturing.

Question 13

Which of the following factors has the least effect on facilities layout planning?

A)supply of land in a nation
B)cost of land in a nation
C)a firm's production process
D)age of the company

Question 14

Scenario: Wilson Industries Inc.
Wilson Industries Inc.is a multinational firm that designs and produces premium leather bags for major destinations worldwide.The company's board of directors is meeting to discuss changes that might be needed in the company's operations.
If Wilson Industries selects a new area for its production units,the company will be implementing ________.

A)capacity planning
B)process planning
C)facilities location planning
D)product structure modeling

Question 15

Which of the following terms refers to the decision of whether to produce a component internally or to outsource it from another company?

A)buyer decision process
B)decision problem
C)per curiam decision
D)make-or-buy decision

Question 16

An Asian jewelry company maintains production facilities in South Korea,Vietnam,and Malaysia.Which of the following is the company exemplifying?

A)lean production
B)decentralized production
C)vertical integration
D)continuous production

Question 17

Deciding the spatial arrangement of production processes within production units is called ________.

A)facilities layout planning
B)capacity planning
C)process planning
D)location economies

Question 18

Which of the following will a company that is pursuing a low-cost leadership strategy most likely use for creating its product?

A)implement handcrafted artisanship
B)manufacture in large production batches
C)manufacture components in-house
D)customize products for each customer

Question 19

Which of the following determines the process that a company will use to create its product?

A)a firm's multinational strategy
B)a firm's global strategy
C)a firm's corporate-level strategy
D)a firm's business-level strategy

Question 20

A company that sells differentiated products may maintain the ability to respond quickly to changing buyer preferences by utilizing ________.

A)vertical integration
B)decentralized production
C)lean production
D)continuous production

Question 21

How is process planning affected by a company's business-level strategy? How can outsourcing lower risk for firms?

Question 22

Discuss the standardization versus adaptation decision for managers when considering production facilities,and describe considerations for managers when acquiring fixed assets.

Question 23

The process by which a company extends its control over additional stages of production is called vertical integration.

Question 24

Worker productivity tends to be lower in most developing nations than in developed nations.

Question 25

It is important for low-cost competitors to locate near their markets in order to keep track of buyer preferences.

Question 26

Companies strive toward quality improvements for attaining economies of scale.

Question 27

The process of assessing a company's ability to produce enough output to satisfy market demand is called process planning.

Question 28

Which of the following reasons encourages companies to make a product rather than buy it?

A)Making a product gives managers greater control over the production process.
B)Making a product lowers the risk associated with the production process.
C)Making a product increases the company's flexibility to respond to market conditions.
D)Making a product gives companies a great deal of power in their relationships with suppliers.

Question 29

Describe the production managers' decision regarding whether to centralize or decentralize production facilities,and explain the benefits of vertical integration.

Question 30

Availability and cost of labor in the local market is crucial to process planning.

Question 31

Scenario: Wilson Industries Inc.
Wilson Industries Inc.is a multinational firm that designs and produces premium leather bags for major destinations worldwide.The company's board of directors is meeting to discuss changes that might be needed in the company's operations.
If the board discusses the spatial arrangement of production processes within Wilson's production facilities,they will be engaging in ________.

A)capacity planning
B)facilities location planning
C)process planning
D)facilities layout planning

Question 32

Companies selling differentiated products find centralized production most effective.

Question 33

Transportation costs are a driving force behind the globalization of the steel industry.

Question 34

The particular process to be used to create products is typically determined by a firm's business-level strategy.

Question 35

Scenario: Hafstrom Motors
Based in Kentucky,Hafstrom Motors has always used spare parts made in America for its automobiles.However,sales and profits have slumped over the past three years.A senior manager at the company comes up with new strategies for improving the firm's production activities.
The senior manager recommends that Hafstrom obtain auto parts from a country where production activities would generate more value than it would generate elsewhere.He wants to take advantage of ________.

A)just-in-time manufacturing
B)facilities layout planning
C)process planning
D)location economies

Question 36

The process by which a company extends its control over additional stages of production is called ________.

A)a push strategy
B)a pull strategy
C)vertical integration
D)horizontal integration

Question 37

Capacity planning applies only to manufacturing companies.

Question 38

Explain the process of facilities location planning.What issues must companies consider while selecting the location for their production facilities?

Question 39

Availability of energy is an important aspect of the business environment necessary for facilities location planning.

Question 40

Which of the following reasons encourages companies to buy a product rather than make it?

A)Buying a product gives managers greater control over the production process.
B)Buying a product decreases the company's total costs significantly compared to making the product in-house.
C)Buying a product ensures non-flexibility to local market conditions.
D)Buying a product enables a company to gain a great deal of power in their relationships with suppliers.

Question 41

Today,due to improved technology,it is fairly easy to persuade an outside supplier to make significant modifications to a component.

Question 42

Scenario: Hafstrom Motors
Based in Kentucky,Hafstrom Motors has always used spare parts made in America for its automobiles.However,sales and profits have slumped over the past three years.A senior manager at the company comes up with new strategies for improving the firm's production activities.
The top management of the company contends that Hafstrom would benefit most from manufacturing its own parts,rather than sourcing it from elsewhere,even if they are made at another location overseas.Which of the following is being recommended in this approach?

A)just-in-time manufacturing
B)location economies
C)vertical integration
D)outsourcing

Question 43

Scenario: Hafstrom Motors
Based in Kentucky,Hafstrom Motors has always used spare parts made in America for its automobiles.However,sales and profits have slumped over the past three years.A senior manager at the company comes up with new strategies for improving the firm's production activities.
The senior manager argues that Hafstrom could reduce its costs significantly by purchasing parts from companies located overseas rather than producing its own parts.Which of the following is the senior manager advocating?

A)outsourcing
B)a greenfield investment
C)lean production
D)vertical integration

Question 44

Scenario: Audio Component Outsourcing
Echo Corporation 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 outsourcing.Echo managers are attempting to convince Nathan Douglas,the firm's founder and CEO,that outsourcing would enable the firm to be more competitive without sacrificing quality.
Which of the following should most likely be considered in making the decision to outsource some of Echo's manufacturing activities?

A)Do purchasing components present the lowest cost option for Echo?
B)Would Echo engineers be willing to relocate to a foreign nation?
C)Is Echo prepared to cover moving expenses for its managerial talent?
D)Can Echo find employees for a customer service center in the U.S.?

Question 45

Which of the following is established by a company that builds an entirely new facility?

A)a divestiture
B)a shadow economy
C)a greenfield investment
D)a shell corporation

Question 46

A firm that buys from another company a good or service that is part of the firm's value-added activities is practicing ________.

A)outsourcing
B)vertical integration
C)horizontal integration
D)lean production

Question 47

Outsourcing refers to the practice of buying from another company a good or a service that is part of a company's value-added activities.

Question 48

________ will enable a company to reduce the degree to which it is vertically integrated and the overall amount of specialized skills and knowledge that it would have to possess.

A)Outsourcing
B)Skimming
C)Lean production
D)Centralized production

Question 49

Scenario: Audio Component Outsourcing
Echo Corporation 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 outsourcing.Echo managers are attempting to convince Nathan Douglas,the firm's founder and CEO,that outsourcing would enable the firm to be more competitive without sacrificing quality.
Which of the following most likely supports the argument of Echo managers to outsource some of the firm's manufacturing activities?

A)Echo managers could reduce the wages of U.S.based employees and sub-contractors.
B)Echo could save money by reducing the costs incurred in manufacturing the component parts.
C)Echo managers could implement a marketing campaign for foreign markets that is identical to the outsourced firm's marketing campaign.
D)Echo could merge with one of its U.S.-based competitors to gain a larger market share.

Question 50

Which of the following processes will a computer assembling firm engage in if it decides to manufacture its own monitors and printers?

A)outsourcing
B)vertical integration
C)niche marketing
D)lean production

Question 51

A company often undertakes in-house production when it can manufacture a product for less than it must pay another business to produce it.

Question 52

Companies make products rather than buy them in order to reduce total costs.

Question 53

________ in the computer industry is the outsourcing of the actual assembly of computers plus the job of shipping them to distributors and other intermediaries.

A)Agile manufacturing
B)Just in time manufacturing
C)Lean manufacturing
D)Stealth manufacturing

Question 54

One reason to buy a product instead of making it in-house is the greater flexibility to respond to market conditions.

Question 55

A fixed asset can also be referred to as a ________ asset.

A)liquid
B)current
C)tangible
D)trading account

Question 56

Storage facilities,retail outlets,and production equipment are examples of ________.

A)liquid assets
B)current assets
C)fixed assets
D)intangible assets

Question 57

Which of the following is a barrier to buying products from international suppliers?

A)extremely low tariffs
B)additional transportation costs
C)lower flexibility to respond to market conditions
D)high political risk

Question 58

Computer companies buying hardware components from component-makers,assembling them in their own facilities,and selling completed systems to consumers and businesses is an example of ________.

A)telecommuting
B)franchising
C)outsourcing
D)licensing

Question 59

Which of the following is experienced by a company that outsources its product development?

A)reduced investments in research and development
B)reduced market flexibility
C)less market influence with suppliers
D)lower product costs due to the elimination of intermediaries

Question 60

Which of the following statements is true of outsourcing?

A)It reduces economic risk by facilitating the purchase of large insurance policies.
B)It reduces production risk by eliminating delays in the timely receipt of needed parts.
C)It reduces political risk by enabling the company to avoid investing in plants and equipment abroad.
D)It reduces currency risk by allowing the company to invest the home currency on in-house production facilities.

Question 61

________ is the financing obtained from investors who believe the borrower will experience rapid growth and who receive equity in return for their investment.

A)Internal funding
B)Venture capital
C)Credit derivative
D)Mortgage loan

Question 62

Which of the following would companies do in markets that require long payback periods?

A)divest operations
B)implement retrenchment strategies
C)emphasize on decruitment
D)reinvest profits

Question 63

Discuss why companies strive toward quality improvement and the two methods of doing so.

Question 64

________ is the term used to refer to a production technique in which inventory is kept to a minimum and inputs to the production process arrive exactly when they are needed.

A)Just-in-time manufacturing
B)Lean manufacturing
C)Continuous production
D)Flow production

Question 65

The just-in-time (JIT)manufacturing technique was originally developed in ________.

A)the United States
B)China
C)Japan
D)Germany

Question 66

________ are traded in Luxembourg and London and represent a specific number of shares in an outside company.

A)Common stock
B)Bills of lading
C)Revocable letters of credit
D)Global Depository Receipts

Question 67

Which of the following statements is true regarding the ISO 9000 standards?

A)They specify details on how companies should develop its quality processes.
B)The standards are applicable to Asia exclusively.
C)ISO 9000 is a certification that companies get for their environment-friendly initiatives.
D)The standards require each company to define and document its own quality processes.

Question 68

American Depository Receipts (ADRs)are ________.

A)certificates that represent shares of stock in American companies
B)dollar deposits made by foreign firms conducting business in the U.S.
C)certificates that trade in the U.S.and represent shares of stock in a non-U.S.company
D)currency deposits made in the U.S.by firms based in other countries

Question 69

A company using just-in-time (JIT)manufacturing involves ________.

A)increased availability of components in large inventories
B)quicker detection of defective materials and components
C)easier training of sales staff regarding product descriptions
D)benefits stemming from combining several Japanese technologies

Question 70

Which of the following statements is true regarding total quality management (TQM)?

A)TQM emphasizes on a single effort at the start to improve the quality of its products.
B)TQM largely increases the responsibility on each individual to focus on quality.
C)TQM philosophy initially took hold in the U.S.
D)TQM applies solely to an employee's activities based inside a factory.

Question 71

What role does flexibility play in the make-or-buy decision?

Question 72

________ requires each individual to be focused on the quality of his or her own output.

A)Total quality management
B)Quality-of-life index
C)Integrated business planning
D)Organizational restructuring

Question 73

Money earned from the sale of goods and services is known as ________.

A)revenue
B)dividend
C)depreciation
D)book value

Question 74

Which of the following types of money adds to the volatility of emerging markets because it can be quickly withdrawn from its investment?

A)hot money
B)patient money
C)key money
D)fiat money

Question 75

Total quality management reduces the responsibility on each individual in the production process.

Question 76

Describe the issues involved in the decision of how a company acquires raw materials and fixed assets.

Question 77

A loan in which a parent company deposits money with a host-country bank,which then lends the money to a subsidiary located in the host country is called a ________.

A)syndicated loan
B)back-to-back loan
C)mortgage loan
D)title loan

Question 78

Which of the following is true of American Depository Receipts (ADRs)?

A)Investors who buy ADRs have to pay a currency-conversion fee.
B)There is a minimum purchase requirement for ADRs.
C)Companies offer ADRs in the U.S.to appeal to mutual funds.
D)ADRs are listed and traded in London and Luxembourg.

Question 79

When a market is experiencing rapid growth,a company will ________.

A)emphasize on decruitment
B)divest its operations
C)reinvest in its operations
D)implement retrenchment strategies

Question 80

________ refers to the foreign direct investment in factories,equipment,and land that cannot be pulled out of the market quickly.

A)Hot money
B)Patient money
C)Fiat money
D)Key money