Deck 16: Global Operations and Supply Chain Management

Question 1

According to the text, Zara's strategy focuses on continual renewal of its clothing lines.

Answer 1

True

Question 2

According to the text, Zara's strategy of speed and flexibility has enabled the company to eliminate inventory.

Answer 2

False

Question 3

As discussed in the text, global sourcing arrangements include overseas joint ventures, independent overseas manufacturers, and wholly owned subsidiaries.

Answer 3

True

Question 4

When possible, it is better for companies to initially outsource complex activities in order to achieve better cost benefits.

Question 5

The "over-the-wall" approach to product design involves an initial step in which the designers prepare the product's design, followed by sending the newly created design to the company's manufacturing engineers.

Question 6

Supply chains are an integral part of global quality and cost management initiatives, since a typical company's supply chain costs can represent over 80 percent of assets.

Question 7

According to the text, the process of coordinating and integrating the flow of materials, information, finances, and services within and among companies in the value chain is called operations management.

Question 8

According to the text, shorter and less predictable product life cycles have placed reduced emphasis on supply chains and their performance.

Question 9

Outsourcing is the relocation of some or all of a business's activities or processes to a foreign location.

Question 10

According to the text, a concurrent engineering approach to design promotes cross-functional participation in the design process and thereby helps to identify and avoid many of the potential sourcing, manufacturing, and other difficulties that can be associated with a particular design.

Question 11

Because inventory is carried at each stage in the supply chain, and because inventory ties up money, it has been argued that the ultimate goal of effective supply chain management systems is to reduce inventory.

Question 12

In U.S. industry, the proportion of purchased materials in the overall cost of goods sold has been rising for several decades.

Question 13

In the case of the United States, intrafirm trade accounts for 30 to 40 percent of exports of goods.

Question 14

According to the text, outsourcing is hiring others to do noncore activities.

Question 15

According to the text, any activity in the value chain can be outsourced except for strategy and management.

Question 16

An important consideration in design is the extent to which the international company's products and services will be standardized across nations or regions.

Question 17

Outsourcing decisions, except for the decision to use global sources of supply, are extensions of the make-or-buy decisions of earlier eras.

Question 18

According to the text, when a company offshores activities, it relocates those activities to the facilities of another company that is located in a foreign location.

Question 19

Effective supply chain management can enhance a company's ability to manage regulatory, social, and other environmental pressures, both within a nation and globally.

Question 20

The primary reason for sourcing globally is to obtain lower prices.

Question 21

Worldwide uniformity or standardization in manufacturing methods hinders headquarters' effectiveness in keeping production specifications current.

Question 22

Manufacturing rationalization is a division of production among a number of production units, thus enabling each to produce only a limited number of components for all of a firm's assembly plants.

Question 23

Unless a product or service is purchased from a company that is registered to the appropriate ISO 9000 standard, a buyer cannot be assured that the quality of what was received will be what was expected.

Question 24

Generally, it is easier for international firms to standardize the concepts of total quality management and synchronous manufacturing in their foreign plants than it is to standardize the actual production facilities.

Question 25

The effectiveness of supply chain management efforts is strongly influenced by how a company manages the interface of logistics with sourcing and manufacturing.

Question 26

Emerging industry-based B2B exchanges can help optimize the supply chain across an entire network of organizations, not merely within a single company.

Question 27

Some of the reasons for the global standardization of a firm's manufacturing system are the effects on organization and staffing.

Question 28

Although international firms maintain manufacturing facilities in countries at various levels of development, manufacturing systems should not vary significantly within the same company.

Question 29

When production equipment is similar, home office control of quality in foreign affiliates is more difficult because management must ensure that all plants adhere to the same standard.

Question 30

In many companies, the purchasing function has been viewed as a prime candidate for outsourcing to other firms, a trend encouraged by rapid developments in e-procurement.

Question 31

International freight, insurance, and packing can add as much as 8 to 10 percent to the quoted price, depending on the sales term used.

Question 32

To avoid an increase in price because the U.S. dollar has lost value versus the euro, an American importer should require European exporters to quote their products in euros.

Question 33

For purchases of capital goods such as manufacturing equipment, many U.S. buying organizations now use "business-cycle costing" to analyze purchasing decisions.

Question 34

Packaging and transportation requirements for a product can significantly influence logistics costs, and these factors should be addressed during the postdesign steps in a company's value chain.

Question 35

The traditional functions of purchasing, such as supplier determination, analysis, and selection, have to be accomplished before the actual purchasing via e-procurement.

Question 36

While indirect production-oriented goods have been the focus of management attention for many years, the purchasing of goods and services that are part of finished goods-termed indirect procurement-is also critical.

Question 37

The standardization of processes and machinery provides a reasonable guarantee that parts manufactured in the firm's various plants will be interchangeable.

Question 38

Logistics refers to managerial functions associated with the movement of raw materials and work in progress, but not finished goods.

Question 39

Standards are documented agreements containing general guidelines, rules, or definitions of the characteristics of a product, process, or service.

Question 40

Indirect procurement includes such items as maintenance, repair, raw materials and components, office equipment, and other services and supplies.

Question 41

A typical company's supply chain costs can represent more than ____ percent of assets.

A) 20
B) 35
C) 50
D) 60
E) 80

Question 42

According to the text:

A) design is an important factor in the structure of a company's global supply chain.
B) design determines the extent to which a company's strategy will be standardized across nations.
C) common approaches to design are concurrent engineering and "over the top."
D) all of the above.
E) two of A, B, and C.

Question 43

According to the text, decisions on the standardization of design are affected by:

A) competitive factors.
B) cultural factors.
C) regulatory factors.
D) all of the above.
E) two of A, B, and C.

Question 44

According to the text, which of the following is true?

A) Zara's competitive advantage comes from its stylish fashion design.
B) Zara's supply chain management processes are combined with a strategy of limited availability of its merchandise.
C) Two of A, B, and D
D) Both B and D are correct, so C is the appropriate answer.
E)All of A, B, and D.

Question 45

Backward vertical integration establishes facilities to manufacture inputs used in the production of a firm's final product.

Question 46

According to the text, increased emphasis on the achievement of effective supply chain performance has resulted from:

A) shorter, more predictable product life cycles.
B) the impact of unplanned political and social events.
C) web-enabled tools for planning, executing, and optimizing supply chains.
D) all of the above.
E) two of A, B, and C.

Question 47

Although engineers are required for the maintenance of specialized machinery, only highly-skilled people are needed to attend the machines.

Question 48

Hiring others to perform some of the noncore activities and decision making in a company's value chain, rather than having the company and its employees continue to perform these tasks, is:

A) offshoring.
B) outsourcing.
C) supply chain management.
D) subcontracting.
E) all of the above.

Question 49

According to the text, which of the following is true?

A) Zara's competitive advantage comes from its stylish fashion design.
B) Zara's supply chain management processes have allowed the company to eliminate inventory.
C) Two of A, B, and D
D) As stated directly in the text.
E)All of A, B, and D.

Question 50

The local manufacturing organization is usually integrated vertically to a greater extent than the parent company is.

Question 51

When a country needs new job creation, it follows that government officials will insist on the use of labor-intensive processes.

Question 52

Efforts to improve the efficiency and effectiveness of a firm's international operations are often referred to as:

A) offshoring.
B) outsourcing.
C) supply chain management.
D) subcontracting.
E) all of the above.

Question 53

Commonly, in designing plants for developing countries, engineers will use a hybrid of capital-intensive processes when they are considered essential to ensure product quality and labor-intensive processes to take advantage of the abundance of skilled labor.

Question 54

Production methods between capital-and labor-intensive methods are classified as intermediate technology.

Question 55

Computer-integrated manufacturing reduces the economic batch quantity to one and facilitates the potential for mass customizaton.

Question 56

A traditional approach to product design that involves a sequential approach to design has been termed:

A) product-based design.
B) concurrent engineering.
C) over the wall.
D) sequenced design.
E) participative design.

Question 57

The production organization in an overseas subsidiary is commonly a scaled-down version of that found in the parent company.

Question 58

Activities that are involved in producing a company's products and services and how these activities are linked together are often referred to as:

A) value chains.
B) supply chains.
C) organization design.
D) operations management.
E) none of the above.

Question 59

Intermediate technology will create more jobs and require less capital than will capital-intensive processes.

Question 60

According to the text, it has been argued that the ultimate goal of effective supply chain management systems is to:

A) reduce costs.
B) improve quality.
C) reduce inventory.
D) increase sales.
E) increase standardization.

Question 61

The following arrangement can provide a firm with foreign products:

A) domestic subsidiary.
B) independent overseas manufacturer.
C) two of A, B, and D
D) B and D are correct, so C is the appropriate response.
E) all of A, B, and D.

Question 62

According to the text, which of the following can be outsourced?

A) Product design
B) Human resources
C) Two of A, B, and E
D) All of A, B, and E
E) Logistics

Question 63

For purchases of capital goods such as manufacturing equipment, many U.S. buying organizations now use _______________ to analyze purchasing decisions, including trade-in or future estimated salvage value.

A) e-procurement
B) activity-based costing
C) total costing
D) life-cycle costing
E) none of the above

Question 64

Investigation of export and import data shows:

A) there is a strong relationship between global sourcing and ownership of the foreign sources.
B) there is no relationship between global sourcing and ownership of the foreign sources.
C) American firms, but not Japanese firms, buy from their U.S. subsidiaries.
D) American firms import twice as much from their overseas subsidiaries as foreign firms import from their U.S. affiliates.
E) two of the above.

Question 65

Problems associated with e-procurement include:

A) it cannot be isolated from the company's overall business system.
B) it must be completed before the firm can engage in other purchasing functions, such as supplier determination and analysis.
C) it can expose the company to a wide range of potential security issues.
D) all of the above.
E) two of A, B, and C.

Question 66

The approach to design that promotes cross-functional participation in the design stage:

A) helps to identify many of the potential sourcing, manufacturing, and other difficulties associated with a particular design.
B) may involve customers in the design process.
C) has been called concurrent engineering.
D) all of the above.
E) two of A, B, and C.

Question 67

In the case of the United States, intrafirm trade accounts for ______ percent of exports of goods.

A) 15 to 30
B) 45 to 60
C) 35 to 45
D) 30 to 40
E) over 60

Question 68

Reasons for sourcing globally include:

A) a lower price.
B) products not available locally.
C) a firm's worldwide operation and quality.
D) all of the above.

Question 69

In the case of the United States, intrafirm trade accounts for ___ ___ percent of imports of goods.

A) 15 to 30
B) 45 to 60
C) 35 to 45
D) 30 to 40
E) over 60

Question 70

The following arrangement can provide a firm with foreign products:

A) overseas joint venture.
B) overseas independent contractor.
C) Both A and B are correct, so D is the appropriate response.
C) foreign sales office.
D) two of the above.

Question 71

The following arrangement can provide a firm with foreign products:

A) domestic subsidiary.
B) wholly owned subsidiary.
C) foreign sales office.
D) two of the above.
E)all of A, B, and C.

Question 72

A reason that outsourcing has become an increasingly common option for companies is:

A) it helps companies to focus scarce resources on their core competencies.
B) it avoids problems of different languages or cultures.
C) it enhances flexibility.
D) two of the above.
E)all of A, B, and C.

Question 73

A reason that outsourcing has become an increasingly common option for companies is:

A) the cost of communications is plummeting.
B) more automation of a company's operational activities.
C) more companies are competing for outsourcing business.
D) two of the above.
E)all of A, B, and C.

Question 74

Research found that suppliers cut invoice and ordering errors by an average of ___ percent when using an e-marketplace.

A) 10
B) 24
C) 37
D) 56
E) 69

Question 75

According to the text, the cost of importing a foreign-sourced product, including freight, insurance, and packing:

A) is insignificant.
B) may range from 26 to 110 percent of the cost of the product.
C) may range from 10 to 12 percent of the cost of the product.
D) may not be charged if the terms of sale are CIF, port of entry.
E) none of the above.

Question 76

Relocating some or all of a business's activities or processes to a foreign location is:

A) offshoring.
B) outsourcing.
C) supply chain management.
D) subcontracting.
E) all of the above.

Question 77

In U.S. industry, the proportion of purchased materials in the overall cost of goods sold has been rising for several decades, to a level of ________ percent today.

A) 40
B) 45 to 60
C) 55 to 79
D) 65 to 74
E) over 80

Question 78

Electronic procurement exchanges:

A) can facilitate efforts to obtain letters of credit.
B) can permit bid/quote systems for buyers and suppliers.
C) protect companies from potential loss of proprietary data.
D) two of the above.
E)all of A, B, and C.

Question 79

According to the text, including such items as maintenance, repair, operating supplies, office equipment, and other services and supplies, indirect procurement can account for as much as what percent of the total purchasing expenditures in companies?

A) 15 percent
B) 30 percent
C) 50 percent
D) 70 percent
E) 80 percent

Question 80

It has been estimated that at least ____________ percent of products currently on the market were not available five years ago, creating additional pressure to locate suppliers worldwide that can provide inputs at competitive prices and quality and with quick responsiveness to market changes.

A) 30
B) 45
C) 50
D) 55
E) 60