Deck 10: Global Sourcing

Question 1

third problem companies face in global sourcing is ___________. Many times there are delays and confusion in translations.

A) negotiating
B) bargaining
C) communication
D) contracting
E) understanding one another

Answer 1

C

Question 2

Many of the exclusively foreign costs are established by ___________ and are very difficult to avoid.

A) agreements
B) suppliers
C) governments
D) negotiations
E) international companies

Answer 2

C

Question 3

The costs of global sourcing include some of the same costs found in domestic sourcing; there are also costs that are different. These costs are grouped into the following categories: _________________.

A) administrative
B) foreign
C) common
D) all of the above
E) "A" and "B" only

Answer 3

D

Question 4

Global sourcing is the trend of the future. Supply management is becoming very important to the survival of both American and offshore firms. In certain industries, using foreign suppliers can reduce total costs. Global sourcing is by no way expanded to completely replace domestic sources; however, it is a way to meet a competitor's challenge and achieve better value for goods all over the world.

Question 5

There are many ethical considerations that (companies) must learn in order to be successful. This is one reason that many companies hire _________ to do their sourcing.

A) agents
B) importers
C) nationals
D) brokers
E) wholesalers

Question 6

The buying professional who is considering offshore sourcing must be prepared to fully analyze both the _______________ factors.

A) financial and competitive
B) competitive and cost
C) quantitative and capacity
D) capacity and quality
E) qualitative and quantitative

Question 7

epending on the performance and strength of the dollar, goods can cost American firms different amounts from what's expected.

Question 8

xclusively foreign costs are those that would not be incurred if a domestic source were found. Examples of these costs are _________________.

A) duty charges
B) customs fees
C) import fees
D) currency exchange costs
E) all of the above

Question 9

When the dollar is weak, the final cost of goods tends to be relatively less than originally agreed upon.

Question 10

The general uncertainty associated with the ______________ makes offshore sourcing a risky proposition.

A) government regulations
B) business cycle
C) exchange rate
D) tariffs
E) taxes

Question 11

The intense attention on the outflow of work to overseas locations has generated ________ about which jobs or professions will be outsourced next.

A) fear
B) concern
C) stress
D) interest
E) joy

Question 12

The focus has been on a single aspect of outsourcing: the __________ of jobs, and, in particular, the outsourcing of ___________ jobs.

A) reduction / blue-collar
B) reduction / manufacturing
C) migration / white-collar
D) migration / service sector
E) creation / service center

Question 13

The quantitative costs are ____________________.

A) exchange rate uncertainties
B) direct costs of importation
C) indirect importation costs
D) all the above
E) "B" and "C" only

Question 14

Global sourcing is extremely complicated from a ___________________ viewpoint. The total cost of sourcing is perhaps the most important variable.

A) quantitative
B) qualitative
C) financial
D) "B" and "C"
E) "A" and "B"

Question 15

Lead times and delivery times can create problems also. Longer times can _______________________. The extended lead time also might push back the date at which a firm is able to introduce new products to the market.

A) increase inventory and drive down carrying costs
B) increase inventory needs and drive up carrying costs
C) reduce inventory needs and drive up ordering costs
D) increase inventory needs and drive up ordering costs
E) expand inventory and drive up production costs

Question 16

few countries, notably ______________, are often targeted as the ones that are displacing American workers by offering cheap labor.

A) Japan and China
B) South Korea and China
C) South Korea and Taiwan
D) India and Japan
E) India and China

Question 17

When the dollar has a weak performance over the life of a contract, a firm can realize savings through the exchange rates.

Question 18

irect labor and materials costs, lead-time costs, transportation costs, and inventory costs are a part of both domestic and offshore sourcing. _________________ tend to be higher when sourcing globally.

A) Transportation costs, inventory costs, and lead-time costs
B) Transportation costs, materials costs, and lead-time costs
C) Materials costs, transportation costs, and inventory costs
D) Transportation costs and inventory costs (only)
E) Transportation costs and lead-time costs (only)

Question 19

One of the most important variables to consider is the exchange rate of currencies. Since predicting the fluctuation in currency markets is relatively easy, foreign purchases may actually cost less than negotiated depending on the length of the contract.

Question 20

The associated qualitative risk profiles of _____________________ in some foreign countries must be evaluated.

A) the impact of national interest
B) the ethical consequences of "sweat shop" labor
C) hazardous working conditions
D) all the above
E) "B" and "C" only

Question 21

The United Kingdom's GNP is $490 billion. Their monetary unit is the Crown Royal. Typical trading partners include the United States, Germany, and other countries in the European Union (EU). Exports include machinery, transportation equipment, petroleum, and other manufactured goods.

Question 22

hina is now a _______ player in the world economy and accounts for more than 6 percent of world trade. This is remarkable for a developing economy. There has been strong import growth, both for processing trade and for domestic consumption.

A) relatively new
B) minor
C) major
D) major-minor
E) first class

Question 23

The distance between the buying and selling firm is significant in terms of time zones and physical location. Internet capabilities usually provide a partial solution.

Question 24

Since most offshore deals require the use of a ___________ the buying firm loses the use of funds when the ________ is established.

A) "secured credit account" / account
B) "letter of credit" / letter
C) "wire transfer" / transfer
D) "letter of recommendation" / letter
E) "credit card" / card

Question 25

___________ inventory issues will always occur when a third party (the shipper) is involved. The problems become pronounced when offshore sourcing is used.

A) Pipeline
B) Back up
C) Reserve
D) Safety stock
E) Supply

Question 26

ommunication can be described as the _______ that holds together a sourcing relationship.

A) substance
B) lubricant
C) glue
D) process
E) procedure

Question 27

Germany's GNP stands at $825 billion. Their monetary unit is the Real. Typical trading partners include the United States, the U.K., and other countries in the EU. Exports include machinery, motor vehicles, chemicals, iron, and steel products. The United States received $73.3 billion in imports from Germany in 2004.

Question 28

The French GNP is $542 billion. Their monetary unit is the Frank. Typical trading partners are the other EU members, the United States, and Africa. Exports include machinery, transportation equipment, and food. The United States received $28.5 billion in imports in 2004 from France. French exports to the United States increased 56.9 percent from the previous year. This trend is not expected to change because of the cheaper U.S. dollar and the strong French demand.

Question 29

(Most) of the (global risk) issues are ____________________________.

A) distance and communication
B) time value of money and quality issues
C) pipeline problems and staffing issues
D) competition
E) all of the above

Question 30

The FTC Act of 1934 created ___________ to encourage exports from foreign countries. The act allowed for the storage of goods within the U.S. boundaries without payment until the goods passed to the buying company.

A) special trade zones
B) tax-free zones
C) transit zones
D) foreign trade zones
E) free tariff zones

Question 31

The buying firm must spend the necessary time to correctly specify and articulate quality expectations. Then evaluation makes sure that the sample is from a legitimate production run. Prototypes/lab samples should not be analyzed.

Question 32

If a buying firm is to be effective with an offshore sourcing strategy, it must either hire experts or develop specialists that are assigned to offshore suppliers. Ideally, these individuals must have experience in purchasing management, quality control, and basic accounting. This cost also must be considered in the evaluation process.

Question 33

The direct and indirect costs (discussed in the textbook) tend to add unexpected costs to purchased items. However, the significant benefits associated with offshore sourcing enable the buying firm to ______________ domestic suppliers.

A) gain leverage over
B) compete effectively with
C) reduce costs as compared to
D) negotiate more effectively with
E) reduce the number of

Question 34

ny business or individual wanting to import goods into the United States will have to work with the Export Administration (EA) of the U.S. Department of Commerce. Several steps that (a company needs) to be aware of are the following:etermine whether the item (s) in question is subject to the exclusive jurisdiction of a State agency.etermine if the technology or software is privately available.or an item in a foreign country, the cost of the item must be determined.or items made in a foreign country, determine whether it is a decontrolled item in the US.etermine whether the foreign made item is subject to selective prohibition.

Question 35

ccording to the ________________________, export controls and restrictions may be imposed for a range of specific purposes including national security; protection of life, health, and the environment; and the preservation of national treasures.

A) 2001 Fair Trade Act of the European Union
B) Trade Protection Act of the European Communities
C) 1992 Import and Export Protection Act
D) 1991 Trade Policy Review of the European Communities
E) 1998 Fair Trade and Tariffs Act of the EU

Question 36

___________ is the exchange of goods for goods in full or partial payment of a sales transaction. Progressive companies must participate in ____________ or risk losing market share.

A) Exporting / exporting
B) Exchange trading / exchange trading
C) Market trading / market trading
D) Import trading / importing
E) Counter trade / counter trade

Question 37

The major problems when doing business in China are the language barrier, business practices, and a fluid and diverse legal system. A well-specified _______________ is a basic requirement when buying from China.

A) procurement strategy
B) game plan
C) policy and specification statement
D) competitive strategy
E) operational plan

Question 38

When doing business in France, (a buyer) will often go through a (n) _________ whose credentials are impeccable. (The) choice of __________ is important.

A) banker / a banker
B) exporter / an exporter
C) chief export director / a CED
D) intermediary contact / an intermediary
E) secretary of exports / secretary

Question 39

ue to technical expertise, German negotiators are extremely cautious. The opponent should be well prepared on technical details.

Question 40

When it comes to negotiations Americans can assume that the English and American businesses operate in the same manner.

Question 41

_______________ occur where products or services transferred in an offset arrangement are unrelated to the specific products referred to in the export agreement.

A) Offsets
B) Indirect offsets
C) Coproduction
D) Sub-contractor production
E) Licensed production

Question 42

________________________ occur as a result of an offset are research and development agreements conducted in the buying country.

A) Offsets
B) Indirect offsets
C) Technology transfers
D) Coproduction
E) Licensed production

Question 43

__________ is when the seller exchanges products for compensatory amounts of commodities.

A) Offsets
B) Indirect offsets
C) Coproduction
D) Counter-purchase
E) Licensed production

Question 44

___________________ is when the recipient obtains a share of the production work for its own order.

A) Offsets
B) Indirect offsets
C) Coproduction
D) Sub-contractor production
E) Licensed production

Question 45

Some of the more popular forms of counter trade are as follows with one exception. Which one is the exception?

A) Offsets
B) Indirect offsets
C) Coproduction
D) Production transfer
E) Licensed production

Question 46

____________ is a form of agreement that involves the purchaser being given a share in the manufacture of a foreign designed product.

A) Offsets
B) Indirect offsets
C) Licensed production
D) Sub-contractor production
E) Coproduction

Question 47

_________ is the non monetary exchange of goods-for-goods.

A) Barter
B) Offsets
C) Indirect offsets
D) Coproduction
E) Licensed production

Question 48

_____________ is when a prime contractor substitutes an existing supplier with one located in the buying country.

A) Offsets
B) Sub-contractor production
C) Indirect offsets
D) Coproduction
E) Licensed production

Question 49

_________ are commercial compensation practices required as a condition of purchase of goods and services.

A) Offsets
B) Indirect offsets
C) Coproduction
D) Sub-contractor production
E) Licensed production