Deck 13: International Production, Outsourcing and Logistics

Question 1

Logistics is the procurement and transmission of material through the supply chain, from suppliers through manufacturing to customers.

Answer 1

True

Question 2

Greater product quality, which lowers warranty, scrap and rework costs, is the result of improved product development.

Answer 2

False

Question 3

The total quality management (TQM) philosophy was developed by a number of Japanese consultants concerned with the lack of reliability of Japanese products.

Answer 3

False

Question 4

In addition to saving costs, just-in-time (JIT) systems can also help firms to improve product quality.

Question 5

The supply chain is the network of material and information interchanges that is required to transform raw inputs into a finished product and deliver it into the hands of the end user.

Question 6

Improved quality control increases costs as a result of increased workloads.

Question 7

Improving quality control reduces costs by:

A) increasing sales.
B) increasing productivity.
C) eliminating warranty claims.
D) implementing internal audits.

Question 8

Manufacturing technology designed to reduce set-up time and improve job scheduling and quality control is called flexible manufacturing technology or:

A) differential stage manufacturing.
B) lean production.
C) ISO 14000.
D) just-in-time production.

Question 9

Many firms source the same products from suppliers based in different countries, primarily as a hedge against adverse movements in ______________ and ______________.

A) taxes; legislation
B) supply; demand
C) exchange rates; political attitudes
D) factor costs; exchange rates.

Question 10

The owners of some very well-known global brands contract with Li & Fung to have their products manufactured. The fact that Li & Fung owns no factories makes it one of the largest _______________ companies in the world.

A) outsourced
B) supply chain
C) logistics
D) trade-sourcing

Question 11

Activities that involve creating products and that control the transmission of physical materials through the value chain, from procurement through production and into distribution, are referred to as:

A) production and logistics.
B) manufacturing and production.
C) development and promotion.
D) trade sourcing and control.

Question 12

Improved manufacturing techniques at Dell Computers paved the way to simultaneously achieving two goals that had once been thought to be incompatible. This is known as:

A) lean and mean production.
B) flexible and tight manufacturing.
C) customised product in mass markets.
D) low cost and differentiation.

Question 13

The growth of international ______________ has focused greater attention on the importance of product quality.

A) manufacturing
B) standards
C) laws
D) policy

Question 14

One of the most difficult decisions an international business will face is whether to perform value-creation activities itself or outsource them to another entity. This is called a _­_______________ decision.

A) make-or-break
B) convergent-or-divergent
C) make-or-buy
D) divest-or-expropriate

Question 15

The arguments that support internalisation are fourfold. It may achieve lower costs, it facilitates investments in highly specialised assets, it protects proprietary technology. and it can:

A) ease the scheduling of adjacent processes.
B) build core competencies in-house.
C) reduce quality control costs.
D) allow the firm to take on work outsourced by competitors.

Question 16

Six Sigma is a statistically based philosophy that aims to _________ defects, boost productivity, __________ waste and cut costs throughout a company.

A) eliminate; recycle
B) identify; remove
C) reduce; eliminate
D) minimise; re-use

Question 17

Incentive problems do not arise when a firm uses __________ suppliers.

A) internal
B) independent
C) dependent
D) home-grown

Question 18

Arrangements between a firm and its parts suppliers were pioneered in Japan by large vehicle manufacturers such as Toyota. Many of these arrangements go back decades. Today these arrangement are commonly referred to as:

A) cooperative relationships.
B) strategic alliances.
C) product alliances.
D) outsourcing partnerships.

Question 19

The main drawback of a JIT system is that it:

A) exposes the firm to the risk of fraud.
B) can easily be replicated by competitors.
C) leaves a firm without a buffer stock of inventory.
D) is expensive to establish and maintain.

Question 20

Information technology and web-based information systems play a crucial role in supply chain management. They enhance supply chain _______________ and provide ______________ communication.

A) visibility; faster
B) performance; clear
C) flows; consistent
D) visibility; constant

Question 21

A JIT system helps to improve product quality by:

A) introducing stringent controls.
B) immediately detecting defective inputs.
C) managing by objectives.
D) re-engineering systems.

Question 22

The twin objectives of supply chain management are to lower the costs of value chain creation and to establish a competitive advantage. To obtain these objectives, supply chains need to be:

A) competitive, compatible and cost-effective.
B) agile, adaptable and aligned.
C) evolving, efficient and effective.
D) dispersed, devolved and directed.

Question 23

Some firms have tried to obtain the benefits of vertical integration and avoid its associated organisational problems by entering long-term ___________________ with essential suppliers.

A) arrangements.
B) EDIs.
C) partnerships.
D) strategic alliances.

Question 24

It is now thought that managers of international firms need to view foreign factories as potential __________________ and to encourage and foster attempts by local managers to upgrade factory _____________.

A) centres of excellence; capabilities
B) centres of innovation; infrastructure
C) competitive advantages; competencies
D) warehouses; storage capacity

Question 25

If a car manufacturer were to develop a high-performance, high-quality fuel-injection system that no other competitor in the industry could match, what would be the best strategy for Ford?

A) Strategic alliance
B) Vertical integration
C) Patenting, then outsourcing of the technology
D) Selling the technology to competitors

Question 26

If a firm possesses proprietary technology, the best option for that firm is to:

A) produce that technology in-house so that competitors do not obtain it.
B) produce that technology in-house to lower costs.
C) outsource that technology to lower costs.
D) outsource that technology to increase the level of competition in the industry.

Question 27

Externalisation offers firms several advantages: it facilitates greater flexibility, it helps drive down its cost structure and it:

A) introduces efficiencies to the firm.
B) may assist the firm to move into new markets.
C) enables the firm to reuse excess capacity for R&D.
D) may help the firm to capture orders from international customers.

Question 28

Which of the following sets of four arguments supports making component parts in-house (i.e. vertical integration)?

A) It lowers costs, facilitates investments in highly specialised assets, protects proprietary product technology and facilitates the scheduling of adjacent processes.
B) It facilitates greater flexibility, helps the firm to capture orders from international customers, facilitates investments in highly standardised assets and facilitates the scheduling of adjacent processes.
C) It helps the firm to capture orders from international customers, lowers costs, facilitates investments in highly standardised assets and facilitates the scheduling of adjacent processes.
D) It lowers costs, and it facilitates greater flexibility, the scheduling of adjacent customers and investments in highly specialised assets.

Question 29

As discussed in the Opening Case, Li & Fung sees itself as ________________ of a networked production process and not as the controlling head of a vertically integrated, hierarchical organisation.

A) an 'end-user'
B) a 'conductor'
C) an 'orchestrator'
D) a 'facilitator'