Deck 15: Managing International Operations

Question 1

Deciding the spatial arrangement of production processes within production facilities is called capacity planning.

Answer 1

False

Question 2

Deciding whether to make a component or buy it from another company is called vertical integration.

Answer 2

False

Question 3

Deciding the process a company will use to create its product is called process planning.

Answer 3

True

Question 4

Companies selling differentiated products find centralized production the better option.

Question 5

Capacity planning applies only to manufacturing companies and not service companies.

Question 6

Productivity is a very important factor in determining the value that a location adds to a certain economic activity.

Question 7

Facility layout depends on the type of production process a company uses, which in turn depends on its business-level strategy.

Question 8

Deciding whether to make a component or buy it from another company is called the make-or-buy decision.

Question 9

It is usually important for low-cost competitors to locate near their markets in order to stay on top of changes in buyer preferences.

Question 10

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

Question 11

Selecting the location for production facilities is called facilities location planning.

Question 12

Low-cost strategies normally require large-scale production because producers want the cost savings generated by economies of scale.

Question 13

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

Question 14

With centralized production, facilities are spread over several locations and possibly one facility for each national business environment in which the company markets its products.

Question 15

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

Question 16

Locating separate production facilities near different markets helps firms develop a deeper understanding of buyer behavior in local cultures.

Question 17

Important environmental factors in facilities location planning include the cost and availability of labor and management, raw materials, component parts, and energy.

Question 18

Location economies arise when each production activity generates more value in a particular location than it could generate elsewhere.

Question 19

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

Question 20

Companies with differentiated products often have decentralized facilities designed to improve local responsiveness.

Question 21

The practice of buying from another company a good or a service that is part of a company's value-added activities is called outsourcing.

Question 22

Fixed assets include production facilities, inventory warehouses, computer storage capacity, retail outlets, and production and office equipment.

Question 23

Companies that buy products from one or more outside suppliers gain flexibility.

Question 24

Companies usually decide to divest when a market is experiencing rapid growth.

Question 25

Making an in-house product that requires large investments in equipment and buildings can reduce flexibility.

Question 26

One way a company can eliminate the exposure of assets to political risk in other countries is by refusing to invest in plants and equipment abroad.

Question 27

By outsourcing, a company can reduce the degree to which it is vertically integrated and the overall amount of specialized skills and knowledge it must possess.

Question 28

The two external sources through which organizations obtain financial resources are borrowing and issuing equity.

Question 29

Persuading an outside supplier to make significant modifications to quality or features is usually fairly easy in today's competitive environment.

Question 30

One reason to buy instead of make a part or product in-house is greater flexibility.

Question 31

A company that succeeds in combining a low-cost position with a high-quality product can gain a tremendous competitive advantage in its market.

Question 32

A production technique in which inventory is kept to a minimum and inputs to the production process arrive exactly when they are needed is called the ISO 9000.

Question 33

Companies strive toward quality improvements for two reasons: cost and customer value.

Question 34

American Depository Receipts (ADRs) are certificates that trade in the United States and represent a specific number of shares of stock in a non-U.S. company.

Question 35

Above all, companies make products rather than buy them in order to reduce total costs.

Question 36

Political instability can cause delays in the timely receipt of needed parts.

Question 37

Large companies are less likely than small companies to make rather than buy, especially when a product requires a large financial investment in equipment or facilities.

Question 38

A back-to-back loan is when a subsidiary acquires a loan from the same bank where its parent secured the first loan.

Question 39

By buying from multiple suppliers located in several countries, a company can maintain the flexibility needed to change sources and reduce the risk associated with sudden swings in exchange rates.

Question 40

Companies may scale back their international investments when it becomes apparent that making operations profitable will take longer than expected.

Question 41

Deciding the process a company will use to create its product is called ________.

A) a mission statement
B) capacity planning
C) location economics
D) process planning

Question 42

Patient money is cash that can be quickly withdrawn from a market in times of crisis.

Question 43

Two resources that heavily influence the productivity of a location are ________.

A) labor and capital
B) land and labor
C) capital and information
D) information and land

Question 44

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

A) Location economies
B) Facilities production layout
C) Centralized production
D) Decentralized production

Question 45

Companies with centralized production facilities are often pursuing ________.

A) low-cost strategies
B) multidomestic strategies
C) differentiation strategies
D) multinational strategies

Question 46

Those who supply a new venture with the capital it needs are called venture capitalists.

Question 47

Which of these refers to deciding the spatial arrangement of production processes within production facilities?

A) Facilities layout planning
B) Capacity planning
C) Location economics
D) Process planning

Question 48

Selecting the location for production facilities is called ________.

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

Question 49

Important environmental factors in facilities location planning include ________.

A) energy
B) raw materials
C) component parts
D) all of the above

Question 50

Many international subsidiaries obtain financial capital by issuing equity that is purchased solely by the parent and as a rule is not publicly traded.

Question 51

All of the following are true of location economies EXCEPT ________.

A) to take advantage of location economies, companies can undertake business activities in a particular location
B) to take advantage of location economies, companies can obtain products and services from firms located in a particular location
C) they are economic benefits derived from locating production activities in optimal locations
D) they cannot be derived from performing research and development in a particular location

Question 52

The disadvantage of American Depository Receipts (ADRs) is that investors who buy them must pay currency-conversion fees.

Question 53

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

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

Question 54

Financing by investors who believe the borrower will experience rapid growth and who receive equity part ownership in return is called venture capital.

Question 55

Economic benefits derived from locating production activities in optimal locations are known as ________.

A) production economies
B) location economies
C) manufacturing economies
D) facilities economies

Question 56

Deciding whether to make a component or buy it from a competitor is called the ________.

A) facilities layout decision
B) capacity planning decision
C) make-or-buy decision
D) production decision

Question 57

Non-U.S. companies can list shares directly in the United States by issuing American Depository Receipts (ADRs).

Question 58

Which of these may be a better option for companies selling differentiated products?

A) Global strategy
B) Decentralized production
C) Low-cost strategy
D) Centralized production

Question 59

Which of these refers to the situation when facilities are spread over several locations and could even mean having one facility for each national business environment in which the company markets its products?

A) Centralized production
B) Global strategy
C) Decentralized production
D) Low-cost leader strategy

Question 60

Which of the following is NOT an issue in facilities layout planning?

A) Supply of land
B) Type of production process a company uses
C) Company's business-level strategy
D) Age and experience of the company

Question 61

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

A) outsourcing
B) horizontal recruitment
C) vertical integration
D) capital structure

Question 62

Companies can obtain financial resources through which of the following means?

A) borrowing
B) issuing equity
C) internal funding
D) all of the above

Question 63

Which of these is a reason to buy instead of make a component?

A) Lower risk
B) Greater flexibility
C) Market power
D) All of the above

Question 64

Total quality management ________.

A) requires the individual to take responsibility for quality
B) requires that only the team take responsibility for quality
C) applies to factory workers only
D) applies to factory and administrative personnel only

Question 65

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

A) just-in-time (JIT) manufacturing
B) total quality manufacturing
C) ISO 9000 technique
D) channel management

Question 66

Risk can be reduced in markets abroad by ________.

A) taking out large insurance policies
B) forming joint ventures with other domestic companies abroad
C) buying from multiple suppliers located in several countries
D) remaining inflexible

Question 67

A computer maker who decides to manufacture its own monitors and printers is engaging in ________.

A) outsourcing
B) vertical integration
C) transfer pricing
D) lower risk technique

Question 68

TQM principles can be linked to ISO 9000 standards through ________.

A) process definition
B) process improvement
C) process management
D) all of the above

Question 69

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

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

Question 70

The ISO 9000 standards ________.

A) outline specifics on how companies should follow TQM principles
B) were initiated in Asia
C) focus on continuous quality improvement
D) require each company to define and document its own quality processes and show evidence of implementing them

Question 71

Production facilities, inventory warehouses, computer storage capacity, retail outlets, and production and office equipment are all types of ________.

A) fixed facilities
B) tangible needs for companies
C) fixed assets
D) intangible assets

Question 72

A loan in which a parent deposits money with a host-country bank, which then lends the money to a subsidiary located in the host country is known as a(n) ________.

A) internal funding
B) external funding
C) back-to-back loan
D) American Depository Receipt

Question 73

If a Mexican company forms a new subsidiary in the U.S. but the subsidiary cannot obtain a U.S. bank loan, the company might want to obtain funding by ________.

A) issuing equity
B) using a back-to-back loan
C) using internal funding
D) borrowing locally

Question 74

A company might divest or reduce its investment because of ________.

A) political problems
B) social problems
C) economic problems
D) all of the above

Question 75

A decision to reinvest in business operations is likely in the presence of a(n) ________.

A) short payback period
B) expanding market share
C) rapidly growing market
D) all of the above

Question 76

American Depository Receipts (ADRs) are ________.

A) certificates that trade outside the U.S., but represent American companies
B) dollar deposits made by foreign firms doing business in the U.S.
C) certificates that trade in the U.S. and represent a specific number of shares of stock in a non-U.S. company
D) currency deposits made in the United States by non-U.S. firms

Question 77

Shipping costs are affected by which of the following?

A) A country's level of economic development
B) The condition of a country's airports
C) A country's rail networks
D) All of the above

Question 78

Total Quality Management (TQM) places an emphasis on ________.

A) continuous quality improvement
B) each individual's responsibility on the quality of his or her own output
C) company-wide commitment to quality
D) all of the above

Question 79

The practice of buying from another company a good or service that is part of a company's value-added activities is called ________.

A) outsourcing
B) vertical integration
C) greater control technique
D) transfer pricing

Question 80

Which of these is a reason to make a component instead of buying from others?

A) Greater flexibility
B) Lower risk
C) Lower cost
D) All of the above