Deck 11: Global Location Decisions

Question 1

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.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

Startup and other smaller firms do not typically benefit from locating in cluster areas.

Answer 3

True

Question 4

A project with environmental implications is the Keystone XL pipeline.

Question 5

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 6

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

Question 7

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 Costa Rica,the Philippines,and Uganda.

Question 8

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.

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

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

Question 11

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 12

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

Question 13

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

Question 14

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 15

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 16

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

Question 17

Facility location is a business decision that will ultimately impact issues like project cost,shareholder and customer reaction,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

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

Question 20

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.

Question 21

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 22

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 23

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 24

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 25

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.? $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { SCORES (Maximum 100) }$
$\begin{array}{lcccc} \text { FACTOR } & \text { WEIGHT } & \text { SITE A } & \text { SITE B } & \text { SITE C } \\\text { Labor Cost } & 0.20 & 90 & 65 & 90 \\\text { Currency Stability } & 0.50 & 80 & 90 & 80 \\\text { Proximity to Market } & 0.30 & 80 & 80 & 80\end{array}$

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

Question 26

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.? $\begin{array}{ccc}\text { LOCATION } & \text { ANNUAL FIXED COSTS } & \text { UNIT VARIABLE COSTS } \\\hline \text { Site } A & \$ 50,000 & \$ 10 \\\text { Site B } & \$ 20,000 & \$ 30\end{array}$

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 27

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 28

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 29

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 30

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 31

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 32

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 33

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 34

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 35

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 36

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 37

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 38

Consideration of regional trade agreements is critical to the facility location decision process because of their impact on which of the following?:

A)Tariffs
B)Costs
C)Free flow of goods and services
D)All of these

Question 39

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 40

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.? $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { SCORES (Maximum 100) }$
$\begin{array}{lcccc} \text { FACTOR } & \text { WEIGHT } & \text { SITE A } & \text { SITE B } & \text { SITE C } \\\hline \text { Labor Cost } & 0.30 & 90 & 80 & 80 \\\text { Currency Stability } & 0.40 & 80 & 85 & 80 \\\text { Proximity to Market } & 0.30 & 80 & 80 & 80\end{array}$

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

Question 41

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 42

The Brundtland 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 43

Which of the following factors serves as a magnet for business clusters?

A)Property taxes
B)Research parks
C)Low manufacturing costs
D)Low utility costs

Question 44

What are the three levels of any location decision?

Question 45

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 46

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

Question 47

If a country is seeking to attract foreign investment in the form of manufacturing related facilities,explain 3 things the government might do to increase the chances of this occurring.

Question 48

Which of the following is a project that has environmental implications concerning public health and climate change?

A)MERCOSUR
B)Development Alliance
C)Microsoft Project
D)Keystone XL pipeline

Question 49

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 finish 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 50

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 51

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 52

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

A)Labor and legal problems
B)Energy consumption/production
C)Countertrade
D)Supply base optimization