Question 1

Which theory explains why the low labor costs of Bangladesh have attracted toy, footwear, and textile manufacturers to develop manufacturing facilities in Bangladesh?

Accepted Answer

The Heckscher-Ohlin theory explains why countries trade goods and services based on their differing factor endowments. It suggests that countries will export products that utilize their abundant and cheap factors of production, and import products that require factors of production that are scarce or expensive domestically. Bangladesh's low labor costs make it an attractive location for labor-intensive manufacturing, such as toys, footwear, and textiles, according to this theory.

Question 2

What is the primary factor that influences the decision of where to locate production facilities?

Accepted Answer

Resource availability is the primary factor influencing the decision of where to locate production facilities, as it directly affects the cost and efficiency of production. Access to necessary raw materials, labor, and energy can significantly impact operational success.

Question 3

A(n) ________ is a specially designated and controlled geographical area in which imported or exported goods receive preferential tariff treatment.

Accepted Answer

A free trade zone is a specific area within a country where imported goods can be stored, handled, manufactured, or reconfigured without being subject to the country's standard import duties and taxes until they leave the zone.

Question 4

Patricia, a manager at Global Airways, has the responsibility of deciding how many passengers Global Airways can serve at a given time. Patricia is most likely involved with ________.

Accepted Answer

Capacity planning involves determining the production capacity needed by an organization to meet changing demands for its products or services. Patricia's role in deciding how many passengers Global Airways can serve at a given time directly relates to determining the capacity needed to meet the service demand, making capacity planning the correct answer.

Question 5

An experiment found that consumer preference for Tempomax watches fell by 74 percent when the consumers were told that Tempomax watches were produced in Pakistan instead of Germany. Which term best explains this occurrence?

Accepted Answer

The term "country-of-origin effects" best explains the occurrence, as it refers to how consumers' perceptions and attitudes towards products can be significantly influenced by the country where the product is made. In this case, the change in consumer preference for Tempomax watches based on the country of production (Pakistan instead of Germany) is a clear example of country-of-origin effects.

Question 6

________ is the management of the flow of materials, parts, supplies, and other resources from suppliers to the firm; the flow of materials, parts, supplies, and other resources within and between units of the firm itself; and the flow of finished products, services, and goods from the firm to customers.

Accepted Answer

International logistics involves managing the flow of materials, parts, supplies, and other resources from suppliers to the firm, within the firm, and from the firm to customers.

Question 7

A weakness of the Japanese keiretsu system is its inability to reduce the problem of enforcing contracts between a firm and its suppliers.

Accepted Answer

The Japanese keiretsu system, by fostering long-term relationships and mutual dependencies between a firm and its suppliers, actually helps in reducing the problem of enforcing contracts, as trust and cooperation are emphasized over strict contractual obligations.

Question 8

Firms that have little vertical integration typically make the inputs necessary for manufacturing.

Accepted Answer

Firms with little vertical integration usually buy inputs from other companies rather than making them themselves, as vertical integration refers to a company's ownership and control over multiple stages of production or supply chain.

Question 9

The suppliers used by Morrison Controls deliver components directly to Morrison's manufacturing center as the inputs are needed for production to minimize Morrison's inventory costs. Morrison most likely uses ________.

Accepted Answer

Just-in-time systems are designed to minimize inventory costs by having inputs delivered exactly when they are needed for production, which matches the description given for Morrison Controls.

Question 10

Buying from an external supplier reduces a firm's financial and operating risk.

Accepted Answer

Outsourcing to an external supplier can reduce financial and operating risks by lowering fixed costs, reducing the need for capital investment, and allowing the firm to focus on core competencies.

Question 11

When Nissan chose to locate a new manufacturing facility in Jackson, Mississippi, it received $295 million in incentives. What factor was likely the most critical in the location decision?

Accepted Answer

Government policies, including incentives like the $295 million provided to Nissan, play a critical role in a company's decision to locate a facility in a particular area. These incentives can significantly reduce startup and ongoing operational costs, making them a key factor in location decisions.

Question 12

A product's value-to-weight ratio primarily affects ________.

Accepted Answer

A product's value-to-weight ratio primarily affects transportation costs because items with a high value-to-weight ratio might require more expensive shipping options to ensure security and speed, while items with a low value-to-weight ratio might incur higher costs due to their bulk or weight.

Question 13

Which theory suggests that countries with large, low-cost endowments of a factor of production will attract firms needing that factor of production?

Accepted Answer

The Heckscher-Ohlin theory suggests that countries will export products that utilize their abundant and cheap factors of production and import products that require factors of production that are rare and expensive domestically. This theory explains how countries attract firms needing specific factors of production that are abundantly available and cost-effective within their borders.

Question 14

________ refer(s) to the reputation a country has for the products that it produces.

Accepted Answer

Country-of-origin effects refer to the influence that the country of manufacture, assembly, or design has on a consumer's positive or negative perception of a product. This concept captures how the reputation of a country can impact the perceived quality and desirability of products made there.

Question 15

Nissan stores hundreds of cars that will be sold in the southern part of North America at the Port of Houston. How does Nissan most likely benefit from this arrangement?

Accepted Answer

Lowering costs by storing cars at the Port of Houston allows Nissan to take advantage of lower transportation costs to the southern part of North America.

Question 16

Christopher Radko, a premium holiday ornament manufacturer, is considering locating manufacturing facilities in China in order to lower costs. However, the firm fears a backlash from ornament collectors who prefer ornaments made in Eastern Europe. What location issue is Christopher Radko dealing with?

Accepted Answer

Christopher Radko is dealing with country-of-origin effects, which refer to the perception and attitudes of consumers towards products based on the country where the product is manufactured. In this case, the concern is that moving manufacturing to China might negatively affect the perception of their ornaments among collectors who prefer those made in Eastern Europe.

Question 17

Supply chain management is the process of selecting whether to make or buy the resources necessary for the manufacturing process.

Accepted Answer

Supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. It is much broader than just selecting whether to make or buy resources.

Question 18

Because Ferrari is a relatively small automobile manufacturer, it is more likely to buy its component parts from other suppliers.

Accepted Answer

Ferrari, being a high-end, low-volume automobile manufacturer, does not have the economies of scale that larger manufacturers do for producing all components in-house. Therefore, it is more likely to source specific high-quality parts from specialized suppliers.

Question 19

The management of the flow of materials, parts, supplies, and other resources from suppliers to the firm combined with the flow of materials, parts, supplies, and other resources within and between units of the firm itself is called ________.

Accepted Answer

Materials management encompasses the planning and control of the flow of materials and parts from suppliers to the company, as well as their movement within the company to ensure efficient and effective production processes.

Question 20

The decision to buy, rather than make, dictates the need to choose between long-term and short-term supplier relationships.

Accepted Answer

The decision to buy rather than make involves evaluating supplier relationships, which can be long-term for stability and quality or short-term for flexibility and cost-effectiveness.

Quiz 17: International Operations Management