Deck 11: Global Location Decisions

Question 1

A right-to-work law allows employees to decide for themselves whether or not they want to join or financially support a union.

Answer 1

True

Question 2

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 2

False

Question 3

A lead factory is set up in a location with an abundance of advanced suppliers, competitors, research facilities and knowledge centers in order to have access to the most current information on materials, components, technologies and products.

Answer 3

False

Question 4

While the development and proliferation of the Internet and web-based commerce has not completely eliminated the relevancy of facilities location, 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 5

The WTO is the only global international organization dealing with the rules of trade between nations.

Question 6

According to the text, global location decisions are made to optimize the performance of the supply chain and be consistent with the firm's competitive strategy.

Question 7

According to the textbook, 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.

Question 8

While many developing countries are attractive to companies seeking out low labor costs, there are other important 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 facilities' location.

Question 9

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

Question 10

According to the text, with increasing globalization the access to global markets and corporate networks makes the role of location less important as a source of competitive advantage.

Question 11

China's economy is shifting from labor-intensive industries to arrears like marketing and the production of high technology products that typically provide higher levels of value.

Question 12

When trying to gauge a nation's competitiveness a manager may want to consult one of two primary world competitiveness rankings, the World Competitiveness Yearbook published by IMD and The Global Competitiveness Report prepared by the World Economic Forum.

Question 13

According to the text, the primary objective of an offshore factory is to take advantage of low labor costs.

Question 14

The European Union (EU) created the world's largest free trade area.

Question 15

If an organization wanted to set up a facility in an area near a number of advanced suppliers, competitors, and research facilities in order to have access to current information on materials, components, and technologies the organization would likely set up a source factory.

Question 16

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

Question 17

Facility location is a business decision that will ultimately impact issues like the cost of supplies, facilities, and materials, as well as lead times and customer service levels.

Question 18

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 19

While business clusters seem logical in well-established areas with developed economies like Silicon Valley and Hollywood, California because companies can easily collaborate, compete, and share knowledge, some high-tech clusters have developed in areas with emerging economies such as Mexico, Singapore, and India.

Question 20

Many multinational corporations are moving their facilities and headquarters out of Taiwan and some Southeast Asian countries in order to take advantage of the proximity to customers.The more attractive customer markets are developing in China.

Question 21

Your company needs to determine the appropriate location of a factory in order to take advantage of government incentives and avoid tariff barriers, the type of factory needed can be referred to as a(n):

A)Offshore factory
B)Source factory
C)Server Factory
D)Lead Factory

Question 22

The World Economic Forum creates International Competitive Rankings that are ranked on their Pillars of Competitiveness.How many Pillars of Competitiveness does the World Economic Forum have?

A)Three
B)Five
C)Ten
D)Twelve

Question 23

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.SCORES (Maximum 100) FACTOR
WEIGHT
SITE A
SITE B
SITE C
Labor Cost
0)30
90
80
80
Currency Stability
0)40
80
85
80
Proximity to Market
0)30
80
80
80

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

Question 24

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 these

Question 25

Some companies import components, use them in the production of their end items, and ultimately export them to other countries.If a company wanted to import the components duty-free, use those components in the production of their end items, and then export them to other countries, they would most likely utilize a(n):

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

Question 26

Which of the following regional trade agreements is paired with the appropriate region of the world?

A)NAFTA - Southeast Asian Nations
B)COMESA - United States, Canada, and Mexico
C)MERCOSUR - Argentina, Brazil, Paraguay, and Uruguay
D)EU - Middle East nations, not including Israel

Question 27

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

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

Question 28

Which of the following strategic foreign facilities is set-up primarily produce products at a low cost with minimal technical and managerial resources? The items produced at these factories are often exported to countries where costs to produce similar items would be higher.

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

Question 29

Which of the following secures the right of employees to decide whether or not 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 30

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

A)Currency Stability
B)Proximity to Markets
C)Access to Suppliers
D)All of these

Question 31

Which of the following strategic foreign facilities is set-up primarily to avoid tariff barriers, minimize exchange risk, and/or take advantage of government incentives? Ultimately the factory operates as most normal factories making only minor improvements in either the products or processes.

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

Question 32

Which of the following trade agreements was set up after WWII and originally consisted of six countries?

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

Question 33

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

A)Education
B)Arts, culture, and recreation
C)Community safety
D)All of these

Question 34

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 locations considered for a new manufacturing facility.LOCATION ANNUAL FIXED COSTS
UNIT VARIABLE COSTS
Site A
$50,000
$10
Site B
$20,000
$30

A)Site A is the desired location if the production rate is 1000 units per year
B)The breakeven point for these two locations is 1500 units per year
C)Site B is the desired location if the production rate is 2000 units per year
D)The breakeven point for these two locations is 500 units per year

Question 35

The following facility location technique uses quantitative and qualitative dimensions and is subject to interpretation and bias by the analyst:

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

Question 36

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.SCORES (Maximum 100) FACTOR
WEIGHT
SITE A
SITE B
SITE C
Labor Cost
0)20
90
65
90
Currency Stability
0)50
80
90
80
Proximity to Market
0)30
80
80
80

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

Question 37

According to the text, when the location of a factory is dictated by low production costs, fairly developed infrastructure and availability of skilled workers the factory is referred to as a(n):

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

Question 38

The type of factory which is the source of product and process innovation and competitive advantage for the entire organization is referred to as a(n):

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

Question 39

Certain states in the United States have laws that secure the rights of employees to decide for themselves whether or not to join or financially support a labor union.These laws are called:

A)Employee freedom acts
B)Free trade laws
C)Right-to-work laws
D)Sanctioned union acts

Question 40

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)Hub and spoke
C)Air and ground
D)LTL consolidation

Question 41

The Bruntland Commission defines ____ as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

A)Lean manufacturing
B)Sustainable development
C)Six Sigma manufacturing
D)Progressive design

Question 42

When a number of interconnected companies and institutions from a particular field are located in a single geographic location, that location is referred to is a(n):

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

Question 43

All of the following are considered components of variable costs EXCEPT:

A)Labor
B)Materials
C)Property Taxes
D)Utilities

Question 44

Briefly define a business cluster.Give a location that exemplifies a real-life example of a business cluster.Describe why it should be considered a business cluster.

Question 45

What are the three levels of any location decision?

Question 46

When an organization is considering future facilities locations, provide 3 human resource related issues that the organization would need to consider.

Question 47

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 48

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 49

All of the following are considered components of fixed costs EXCEPT:

A)Cost of land
B)Equipment
C)Insurance
D)Utilities