Question 1

In international business, a relatively high level of fixed costs make it economical for a company to perform a particular activity in several locations at once.

Accepted Answer

A high level of fixed costs typically makes it more economical to concentrate activities in fewer locations to achieve economies of scale and spread the fixed costs over a larger volume of output.

Question 2

In recent years, time-based competition has become less important in international business.

Accepted Answer

Time-based competition remains crucial in international business as companies strive to deliver products and services faster to meet customer demands and gain a competitive edge.

Question 3

In recent years, the trend among U.S. firms is to outsource the "production" of some service activities to developing nations to take advantage of lower labor costs.

Accepted Answer

Outsourcing service activities to developing nations has been a common trend for U.S. firms seeking to reduce costs by leveraging lower labor expenses in those regions.

Question 4

Location externalities, such as the presence of a skilled labor pool, affect a company's foreign direct investment decision.

Accepted Answer

Location externalities, like a skilled labor pool, can provide competitive advantages and influence a company's decision to invest in a particular foreign location.

Question 5

A business that supplies parts to a manufacturer would be part of the downstream supply chain.

Accepted Answer

A business that supplies parts to a manufacturer is part of the upstream supply chain, as it provides inputs to the production process.

Question 6

Flexible manufacturing technologies allow a company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.

Accepted Answer

Flexible manufacturing technologies enable companies to efficiently produce diverse products with cost-effectiveness similar to traditional mass production methods, which were limited to standardized outputs.

Question 7

Since refined sugar has a low value-to-weight ratio, even if it is shipped halfway around the world, the transportation costs would account for a very small percentage of total costs.

Accepted Answer

Refined sugar has a low value-to-weight ratio, meaning its value is low compared to its weight, so transportation costs can constitute a significant portion of the total cost.

Question 8

Supply chain management involves the coordination of the logistics, purchasing, operations, and market channel activities of a company.

Accepted Answer

Supply chain management encompasses the integration and coordination of various functions such as logistics, purchasing, operations, and market channel activities to ensure efficient and effective flow of goods and services from suppliers to customers.

Question 9

Industrial products have few national differences in consumer taste and preference, hence the need for local responsiveness is reduced for such products.

Accepted Answer

Industrial products often have standardized features and functions that meet universal needs, reducing the necessity for customization based on local consumer preferences.

Question 10

According to the concept of economies of scale, as plant output expands, unit costs decrease.

Accepted Answer

Economies of scale refer to the cost advantage that arises with increased output of a product, as fixed costs are spread over more units of output, leading to a decrease in average unit costs.

Question 11

The ISO 9000 system used in the European marketplace provides small companies with information regarding export opportunities.

Accepted Answer

The ISO 9000 system is a set of international standards for quality management and assurance, not specifically for providing information on export opportunities.

Question 12

An advantage of a low minimum efficient scale is it allows a company to accommodate demands for local responsiveness.

Accepted Answer

A low minimum efficient scale means a company can produce efficiently at a smaller scale, allowing it to adapt and respond to local market demands more easily.

Question 13

W. Edwards Deming believed that achieving better quality requires the commitment of everyone in a company.

Accepted Answer

Deming emphasized that quality improvement is a collective responsibility and requires the involvement and commitment of all employees, from top management to the workforce.

Question 14

Flexible machine cells enhance a company's ability to provide mass customization.

Accepted Answer

Flexible machine cells allow for quick reconfiguration and adaptation to produce customized products efficiently, supporting mass customization.

Question 15

When applying the Six Sigma approach, the lower the number of "sigmas," the greater the number of errors.

Accepted Answer

In Six Sigma, a lower sigma level indicates a higher defect rate, while a higher sigma level indicates fewer defects and higher quality.

Question 16

In terms of minimum efficient scale of output, the "unit cost curve" rises with output until a certain output level is reached, at which point further increases in output realize little reduction in unit costs.

Accepted Answer

The unit cost curve typically falls with output due to economies of scale until the minimum efficient scale is reached, after which it flattens, indicating little reduction in unit costs with further increases in output.

Question 17

Flexible manufacturing technologies force a company to establish manufacturing facilities in each major national market in order to meet demand.

Accepted Answer

Flexible manufacturing technologies allow companies to adapt production processes to different markets without needing to establish separate facilities in each one, thus enabling centralized production and distribution.

Question 18

In international business, when consumer demand is prone to large and unpredictable shifts, the firm that can adapt most quickly to these shifts will gain an advantage.

Accepted Answer

In international business, adaptability to changing consumer demands allows a firm to respond effectively to market shifts, providing a competitive edge over less agile competitors.

Question 19

One downfall of flexible manufacturing technology is that it does not help a company customize products for different national markets.

Accepted Answer

Flexible manufacturing technology is designed to allow companies to easily adapt production processes to customize products for different markets, including national markets.

Question 20

Minimum efficient scale refers to the supply levels a company produces based on consumer demand.

Accepted Answer

Minimum efficient scale refers to the lowest level of production at which a company can achieve economies of scale, minimizing average costs per unit. It is not directly related to consumer demand.

Quiz 15: Global Production and Supply Chain Management