Deck 11: Global Location Decisions

Question 1

The Americas have two primary regional trade agreements, NAFTA, an agreement between the United States, Canada, and Mexico, and COMESA, an agreement between all of the South American countries.

Answer 1

False

Question 2

Facility location has a short-term impact on the firm's supply chains.

Answer 2

False

Question 3

Two models that utilize quantitative data, which can help determine the attractiveness of one location versus another, are the Break-Even Model and the Extrapolated Average Cost Model.

Answer 3

False

Question 4

Facility location decisions can affect the efficiency and effectiveness of managing supply chains, the level of service provided to customers, and a firm's overall competitive advantage.

Question 5

Many multinational corporations are moving their facilities into China to have access to the local markets rather than for export reasons.

Question 6

Access to global markets and corporate networks makes the role of location less important as a source of competitive advantage.

Question 7

Global location decisions are made to optimize the performance of supply chains and to be consistent with the firm's competitive strategy.

Question 8

A firm is planning to open a bicycle store and is using the weighted-factor rating model, to decide which site should be selected.Using the data from the table below, the firm should locate the store in Reno.

Question 9

A country that imposes high tariffs encourages foreign-based companies to import goods.

Question 10

The weighted-factor rating model, is a useful location analysis technique when fixed and variable costs can be determined for each potential location.

Question 11

While the development and proliferation of the Internet and web-based commerce has not completely eliminated the relevancy of facility locations, because of the Internet, the speed of delivery and cost in serving the customer are no longer factors in determining the strategic location of an organization's facilities.

Question 12

Volatile currency exchange rates do not have an impact on location decisions.

Question 13

The European Union (EU) is considered a regional trade agreement.

Question 14

Regional trade agreements and the World Trade Organization provide a framework for managers in terms of investigating important facility location elements like tariffs, costs, and the free flow of goods and services in different regions of the world.

Question 15

In the U.S.there is a trend to locate manufacturing facilities in the sunny, incentive-friendly, nonunionized South.

Question 16

Using the weighted-factor rating model, the location with the lowest total weighted score is the recommended location.

Question 17

A list of quality-of-life factors would most likely include proximity to customers, proximity to suppliers, tariff rates, and currency stability.

Question 18

Locating research and development, component manufacturing, assembly operations, marketing, and other associated businesses in one area can improve the supply chain, technology sharing, and information sharing.

Question 19

High tariffs encourage multinational corporations to set up factories to produce locally.

Question 20

While many developing countries are attractive to companies seeking out low labor costs, there are other factors such as productivity levels, employee skill and education levels, turnover rates, and employment trends that certain industries find just as important, if not more important, in determining facility locations.

Question 21

Business clusters provide the competitive environment that promotes increasing innovation and profitability.

Question 22

The development of cleaner, more fuel-efficient and affordable energy technologies will have a direct impact on the cost of production of goods and delivery of services.

Question 23

Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to two different location considered for a new manufacturing facility.

A) The breakeven point for these two locations is 625 units per year
B) The breakeven point for these two locations is 600 units per year
C) Site A is the desired location if the production rate is 500 units per year
D) Site B is the desired location if the production rate is 800 units per year

Question 24

Once a decision on locating a facility is made, it is ________ to move or shut down that facility.

A) Easy
B) Costly
C) Cheap
D) None of the above

Question 25

Facility location has ____________on the supply chain.

A) A short-term impact
B) Minimal impact
C) A long-term impact
D) No impact

Question 26

Regional trade agreements assist with which of the following?

A) Monitor national trade policies
B) Provide technical assistance for developing countries
C) Handle trade disputes
D) All of the above

Question 27

The critical issues in sustainable development are energy consumption/production, air pollution and climate change.

Question 28

Choosing to manufacture in China to sell to Chinese customers would likely involve which location decision consideration?

A) Proximity to markets
B) Environmental issues
C) Land availability and cost
D) Utility availability and cost

Question 29

Examples of regional trade agreements include all of the following EXCEPT:

A) Association of Southeast Asian Nations (ASEAN)
B) Association of Indian Markets (AIM)
C) European Union (EU)
D) Southern Common Market (MERCOSUR)

Question 30

According to the text, which of the following would be an example of Coca-Cola's international bottling plants, each serving a small geographic region?

A) Offshore factory
B) Server factory
C) Source factory
D) Outpost factory

Question 31

A firm wanting to import items duty free and then use the component for local production of a product that is then exported would most likely utilize a(n):

A) Duty-free Territory
B) International Cross Docking Zone
C) Foreign Trade Zone
D) International Processing Center

Question 32

Which of the following is a factor in choosing a location?

A) Currency stability
B) Freight forwarders
C) Yokoten
D) All of the above

Question 33

Which of the following trade agreements created the world's largest free trade area, currently with over 450 million people and GDP of more than US$20 trillion?

A) Association of Southeast Asian Nations (ASEAN)
B) European Union (EU)
C) North American Free Trade Agreement (NAFTA)
D) Southern Common Market (MERCOSUR)

Question 34

Which of the following would be considered a quality of life factor?

A) Wage rates
B) Foreign exchange rates
C) Community safety
D) All of the above

Question 35

Which of the following strategic foreign facilities is set up in a location with an abundance of advanced suppliers, competitors, research facilities, and knowledge centers to get access to the most current information on materials, components, technologies, and products?

A) Offshore factory
B) Server factory
C) Source factory
D) Outpost factory

Question 36

Due to the advances in technology, less business clusters are being created globally.

Question 37

Which of the following issues is (are) important to consider when trying to determine the location of a firm's facilities?

A) The stability in the location considered
B) Environmental issues regulated by domestic laws or international trade agreements
C) Access to suppliers from the location considered
D) All of the above

Question 38

Which of the following secures the right of employees to decide whether to join or financially support a union?

A) Union shop laws
B) Union planning forums
C) Ethical union initiatives
D) Right-to-work laws

Question 39

Organizations that primarily compete on speed of delivery, such as FedEx and UPS, utilize which of the following approaches for location determination?

A) Sourcing center
B) Air and ground
C) Hub and spoke
D) LTL consolidation

Question 40

The World Trade Organization (WTO) is critical to the facility location decision process because of their impact on:

A) Southeast Asian Nations
B) Tariffs
C) Innovation
D) Relationship marketing

Question 41

Lovely Tee is looking to open a new fulfillment center as part of their expanding network to meet faster delivery needed for their prime customers in Arizona.To assist the company in deciding where to locate this new fulfillment center, three sites have been identified with the information shown below.Use the weighted-factor rating model to answer the questions below.

a.What are the scores for each location?
b.Which location should be chosen?

Question 42

The following facility location technique uses fixed and variable costs to analyze potential locations:

A) Break-even model
B) Business cluster analysis model
C) Weighted-factor rating model
D) Mean absolute deviation model

Question 43

Suppose a company in the United States was trying to decide whether to locate their manufacturing facility in the United States or in Southeast Asia.Consider the following information in answering the question below:
•Presently, this US company, which makes only one type of finished good, sells 40% of their product in the United States, 10% of the product in Mexico, 15% of their product in Canada, and 35% of their product to the rest of the world.
•The product this company produces is presently tariffed heavily when imported into the United States.
•The product consists of about 150 components of which 75 components are imported from Southeast Asia, 40 components are imported from Mexico, and 35 components come from US suppliers.
List four reasons why it would be favorable to locate the new manufacturing facility in the United States rather than in Southeast Asia.

Question 44

The first step in the weighted-factor rating technique is to:

A) Assign a weight to each factor
B) Multiply each factor score by its weight and sum the weighted scores for each location
C) Identify all factors considered important to the facility location decision
D) Assign a performance score to each factor for each location

Question 45

When an organization is considering future facility locations, provide three human resource related issues that the organization would need to consider.

Question 46

Milan, Wall Street, and Detroit are examples of ____________.

A) Business conglomerates
B) Business clusters
C) Regional trade agreements
D) Strategic supplier alliances

Question 47

A company is considering Denver, Seattle, and Portland as candidate locations for a new facility.For the weighted-factor rating technique, the company is evaluating each location on three factors (distance to customers, labor costs, and utility costs).The factors are weighted 0.5, 0.3, and 0.2, respectively.Denver received scores of 90, 77, and 65 for the three factors.Seattle received scores of 87, 82, and 70.Portland received scores of 84, 86, and 75.Which of the three cities is ranked second by the weighted-factor rating technique?

A) Denver
B) Seattle
C) Portland
D) All sites are equally attractive

Question 48

According to the text, the development of cleaner, more fuel-efficient affordable energy technologies and renewable energy technologies will:

A) Not have an impact on the supply chain
B) Increase the cost of production and distribution
C) Decrease the costs in the supply chain
D) Cause companies to shut down

Question 49

Which of the following is a critical issue in sustainable development?

A) Labor and legal problems
B) Countertrade
C) Climate change
D) Supply base optimization

Question 50

What specific advantages would a Free Trade Zone offer a manufacturing company? Also, under which circumstances would a company utilize a Free Trade Zone?

Question 51

A certain organization trying to decide where to locate their future factory is considering three locations.They are taking into account three factors: labor costs, currency stability, and proximity to market.Using the weights for each factor listed below and the scores achieved by each of the three considered locations, determine which location should be chosen for the new facility based on the weighted factory location model.

A) Site A
B) Site B
C) Site C
D) All sites are equally attractive

Question 52

Your organization is considering building a new automobile manufacturing plant.The company is considering building their facility in either China or Tennessee (USA).
China is a rapidly expanding economic market, Tennessee is situated in a more mature market in which other car manufacturers are already located.
Using this limited information and your knowledge of these two options, China and Tennessee, provide THREE reasonable arguments for each option that relate to supply chain management.

Question 53

Bimino Corp is considering building a new bottling plant.They have collected information on fixed and variables costs for 4 potential plant locations.

a.Plot the total cost curves for the four plant locations on a single graph.
b.Find the break-even points and determine the range of demand for which each location has a cost advantage.
c.Which plant location is best if demand is 8,000 units?

Question 54

________________ is important because what we do today will affect future generations.

A) Customer churn
B) Sustainable development
C) An offshore factory
D) Progressive design

Question 55

Which of the following is NOT a reason for locating in a business cluster?

A) Technology sharing
B) Supply chain improvements
C) Sophisticated retailers
D) Competition

Question 56

Briefly define a business cluster.Give a location that exemplifies a real-life example of a business cluster, which is not listed in the textbook.Describe why it should be considered a business cluster.

Question 57

Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to three different locations considered for a new manufacturing facility.

A) The breakeven point for Site A and B is 1500 units per year
B) Choose site C if you are producing 1000 units per year
C) Choose site C if you are producing more than 1500 units per year
D) Site B is the desired location if the production rate is 833 units per year

Question 58

What are the three levels of any location decision?

Question 59

If a country is seeking to attract foreign investment in the form of manufacturing related facilities, explain three things the government might do to increase the chances of this occurring.

Question 60

Interconnected companies and institutions from a particular field which are located in a single geographic location, are referred to is a(n):

A) Business cluster
B) Metroplex
C) Regional business center
D) Industrial point