Question 1

Deciding the spatial arrangement of production processes within production facilities is called capacity planning.

Accepted Answer

Capacity planning involves determining the production capacity needed to meet changing demands, while the spatial arrangement of production processes is referred to as facility layout planning.

Question 2

Deciding whether to make a component or buy it from another company is called vertical integration.

Accepted Answer

Vertical integration refers to a company's ownership and control over multiple stages of production or distribution within the same industry, not just the decision to make or buy a component.

Question 3

Deciding the process a company will use to create its product is called process planning.

Accepted Answer

Process planning involves determining the best way to manufacture a product, including selecting equipment, materials, and methods for production.

Question 4

Companies selling differentiated products find centralized production the better option.

Accepted Answer

Centralized production may not be ideal for companies selling differentiated products as it can limit flexibility and responsiveness to local market needs, which are crucial for differentiation.

Question 5

Capacity planning applies only to manufacturing companies and not service companies.

Accepted Answer

Capacity planning applies to both manufacturing and service companies. It involves determining the resources needed to meet the demands for a product or service, and making sure that the company has the right level of capacity to meet those demands efficiently and effectively.

Question 6

Productivity is a very important factor in determining the value that a location adds to a certain economic activity.

Accepted Answer

Productivity plays a vital role in determining the economic value added by a location to a certain economic activity. A productive location adds more value to the activity than a less productive one. Consequently, businesses often seek out locations with high productivity to enhance their profitability.

Question 7

Facility layout depends on the type of production process a company uses, which in turn depends on its business-level strategy.

Accepted Answer

Facility layout is closely linked to the type of production process a company uses, which is ultimately determined by its business-level strategy. Different business strategies require different types of production processes, and therefore different types of facility layouts.

Question 8

Deciding whether to make a component or buy it from another company is called the make-or-buy decision.

Accepted Answer

Make-or-buy decision refers to the decision-making process of whether to produce an item in-house or buy it from an external supplier.

Question 9

It is usually important for low-cost competitors to locate near their markets in order to stay on top of changes in buyer preferences.

Accepted Answer

The answer of It is usually important for low-cost competitors...

Question 10

Transportation costs are a driving force behind the globalization of the steel industry.

Accepted Answer

Transportation costs play a significant role in determining the competitiveness of steel production. As steel is a heavy and bulky product, transportation costs can be a considerable expense. Therefore, companies seek to locate their production facilities closer to the markets where the steel will be consumed, and transportation costs minimized. This has led to the globalization of the steel industry, with production facilities located in countries with lower labor and transportation costs.

Question 11

Selecting the location for production facilities is called facilities location planning.

Accepted Answer

Facilities location planning is the process of selecting the best location for a company's production facilities. It involves analyzing factors such as transportation costs, labor availability, infrastructure, and local regulations to determine the most suitable location for the company's operations.

Question 12

Low-cost strategies normally require large-scale production because producers want the cost savings generated by economies of scale.

Accepted Answer

Low-cost strategies aim to minimize production costs and increase profit margins. Economies of scale refer to the cost advantages that a company achieves when it produces goods or services in larger quantities, which can reduce the per-unit cost of production. Therefore, low-cost strategies typically require large-scale production to achieve economies of scale and lower production costs.

Question 13

Worker productivity tends to be lower in developing nations than in developed nations.

Accepted Answer

Developing nations often lack access to the same level of education, technology, infrastructure, and healthcare as developed nations, which can lead to lower levels of worker productivity. Additionally, factors such as poor working conditions, low wages, and limited opportunities for advancement can also contribute to lower productivity in developing nations.

Question 14

With centralized production, facilities are spread over several locations and possibly one facility for each national business environment in which the company markets its products.

Accepted Answer

Centralized production means that all facilities are located in one central location or region. It does not involve spreading facilities over several locations.

Question 15

The process of assessing a company's ability to produce enough output to satisfy market demand is called market planning.

Accepted Answer

The process of assessing a company's ability to produce enough output to satisfy market demand is called production planning or capacity planning. Market planning involves analyzing and identifying target markets, determining the optimal marketing mix, and developing marketing strategies to reach and influence those markets.

Question 16

Locating separate production facilities near different markets helps firms develop a deeper understanding of buyer behavior in local cultures.

Accepted Answer

Locating production facilities near different markets allows firms to interact with local customers and gain insight into their preferences and behaviors. This can help the firm tailor their products and marketing strategies to better suit the needs of each market.

Question 17

Important environmental factors in facilities location planning include the cost and availability of labor and management, raw materials, component parts, and energy.

Accepted Answer

The cost and availability of labor and management, raw materials, component parts, and energy are all important environmental factors in facilities location planning.

Question 18

Location economies arise when each production activity generates more value in a particular location than it could generate elsewhere.

Accepted Answer

Location economies refer to the advantages gained when a production activity is located in a particular location because it generates more value there than it could in other locations. Therefore, the statement is true.

Question 19

The process by which a company extends its control over additional stages of production is called vertical integration.

Accepted Answer

Vertical integration refers to the process by which a company acquires or controls the production and distribution of inputs, as well as the channels of distribution for its products or services. This involves extending a company's control over additional stages of production, such as raw materials, manufacturing, and distribution.

Question 20

Companies with differentiated products often have decentralized facilities designed to improve local responsiveness.

Accepted Answer

Decentralized facilities allow companies with differentiated products to tailor their products and services to the needs and preferences of local markets. This improves local responsiveness and enhances the company's competitive advantage.

Quiz 15: Managing International Operations