Question 1

Industrial products have few national differences in consumer taste and preference, hence the need for local responsiveness is reduced for such products.

Accepted Answer

A product feature that can influence location decisions is whether the product serves universal needs, needs that are the same all over the world. Examples include many industrial products (e.g., industrial electronics, steel, bulk chemicals) and modern consumer products (e.g., handheld calculators, personal computers, video game consoles). Because there are few national differences in consumer taste and preference for such products, the need for local responsiveness is reduced.

Question 2

With flexible manufacturing technologies, a firm can manufacture products customized to various national markets at a single factory sited at the optimal location but will nevertheless incur a significant cost penalty.

Accepted Answer

Besides improving efficiency and lowering costs, flexible manufacturing technologies enable companies to customize products to the demands of small consumer groups-at a cost that at one time could be achieved only by mass-producing a standardized output. When flexible manufacturing technologies are available, a firm can manufacture products customized to various national markets at a single factory sited at the optimal location. And it can do this without absorbing a significant cost penalty.

Question 3

A firm that improves its quality control cannot reduce its costs of value creation simultaneously.

Accepted Answer

The firm that improves its quality control will also reduce its costs of value creation. The effect is to lower the costs of value creation by reducing both production and after-sales service costs. This creates an increased overall reliability in global production and supply chain management.

Question 4

A wide product variety makes it easier for a firm to increase its production efficiency and thus reduce its unit costs.

Accepted Answer

A wide product variety makes it difficult for a company to increase its production efficiency and thus reduce its unit costs. According to this logic, the way to increase efficiency and drive down unit costs is to limit product variety and produce a standardized product in large volumes.

Question 5

In terms of minimum efficient scale of output, the "unit cost curve" rises with output until a certain output level is reached, at which point further increases in output realize little reduction in unit costs.

Accepted Answer

The concept of economies of scale tells us that as plant output expands, unit costs decrease. The reasons include the greater utilization of capital equipment and the productivity gains that come with specialization of employees within the plant. However, beyond a certain level of output, few additional scale economies are available. Thus, the "unit cost curve" declines with output until a certain output level is reached, at which point further increases in output realize little reduction in unit costs.

Question 6

Flexible machine cells cannot be used for mass customization.

Accepted Answer

The term mass customization has been coined to describe the ability of companies to use flexible manufacturing technology to reconcile two goals that were once thought to be incompatible-low cost and product customization. Flexible machine cells are a common flexible manufacturing technology. A flexible machine cell is a grouping of various types of machinery, a common materials handler, and a centralized cell controller (computer). Improved capacity utilization and reductions in work in progress (i.e., stockpiles of partly finished products) and in waste are major efficiency benefits of flexible machine cells.

Question 7

W. Edward Deming believed that achieving better quality requires the commitment of everyone in a company.
A. V. Feigenbaum. Deming argued that management has the responsibility to train employees in new skills to keep pace with changes in the workplace. In addition, he believed that achieving better quality requires the commitment of everyone in the company.

Accepted Answer

The total quality management philosophy was developed by a number of American consultants such as W. Edward Deming, Joseph Juran, and

Question 8

Flexible manufacturing technologies allow a company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.

Accepted Answer

The term flexible manufacturing technology-or lean production, as it is often called-covers a range of manufacturing technologies. Flexible manufacturing technologies allow the company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output. Research suggests the adoption of flexible manufacturing technologies may actually increase efficiency and lower unit costs relative to what can be achieved by the mass production of a standardized output while enabling the company to customize its product offering to a much greater extent than was once thought possible.

Question 9

The concept of economies of scale tells us that as plant output expands, unit costs decrease.

Accepted Answer

In terms of international business, the concept of economies of scale tells us that as plant output expands, unit costs decrease. The reasons include the greater utilization of capital equipment and the productivity gains that come with specialization of employees within the plant.

Question 10

In international business, a relatively high level of fixed costs can make it economical to perform a particular activity in several locations at once.

Accepted Answer

In international business, a relatively low level of fixed costs can make it economical to perform a particular activity in several locations at once. This allows the firm to better accommodate demands for local responsiveness. Manufacturing in multiple locations may also help the firm avoid becoming too dependent on one location.

Question 11

In international business, when consumer demand is prone to large and unpredictable shifts, the firm that can adapt most quickly to these shifts will gain an advantage.

Accepted Answer

In international business, production and supply chain management must be able to respond quickly to shifts in customer demand. In recent years, time-based competition has grown more important. When consumer demand is prone to large and unpredictable shifts, the firm that can adapt most quickly to these shifts will gain an advantage.

Question 12

Currency appreciation can transform a low-cost location into a high-cost location.

Accepted Answer

Adverse changes in exchange rates can quickly alter a country's attractiveness as a manufacturing base. Currency appreciation can transform a low-cost location into a high-cost location.

Question 13

With the advent of flexible manufacturing technologies and mass customization, establishing manufacturing facilities in each major market in which the firm is active is becoming less attractive.

Accepted Answer

Most important for international business, flexible manufacturing technologies can help a firm customize products for different national markets. The importance of this advantage cannot be overstated. When flexible manufacturing technologies are available, a firm can manufacture products customized to various national markets at a single factory sited at the optimal location. And it can do this without absorbing a significant cost penalty. Thus, firms no longer need to establish manufacturing facilities in each major national market to provide products that satisfy specific consumer tastes and preferences, part of the rationale for a localization strategy.

Question 14

In terms of Six Sigma, the higher the number of "sigmas," the greater the number of errors.

Accepted Answer

Six Sigma, the modern successor to total quality management, is a statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company. Sigma comes from the Greek letter that statisticians use to represent a standard deviation from a mean; the higher the number of "sigmas," the smaller the number of errors.

Question 15

In recent years, the trend among U.S. firms is to outsource the "production" of certain service activities to developing nations where labor costs are lower.

Accepted Answer

In recent years, the trend among U.S. firms is to outsource the "production" of certain service activities to developing nations where labor costs are lower (e.g., the trend among many U.S. companies to outsource customer care services to places such as India, where English is widely spoken and labor costs are much lower).

Question 16

The objectives of reducing costs and increasing quality in a firm are independent of each other.

Accepted Answer

Through the upstream and downstream chains, the objectives of reducing costs and increasing quality are not independent of each other. The firm that improves its quality will also reduce its costs of value creation.

Question 17

In international business, production and supply chain functions accommodating demands for local responsiveness work independent of host-government demands.

Accepted Answer

In addition to the lowering of costs and the improvement of quality, two other objectives have particular importance in international businesses. One of them is that production and supply chain functions must be able to accommodate demands for local responsiveness. Demands for local responsiveness arise from national differences in consumer tastes and preferences, infrastructure, distribution channels, and host-government demands. Demands for local responsiveness create pressures to decentralize production activities to the major national or regional markets in which the firm does business or to implement flexible manufacturing processes that enable the firm to customize the product coming out of a factory according to the market in which it is to be sold.

Question 18

The level of output at which most plant-level scale economies are exhausted is referred to as the maximum efficient scale of output.

Accepted Answer

The level of output at which most plant-level scale economies are exhausted is referred to as the minimum efficient scale of output. This is the scale of output a plant must operate to realize all major plant-level scale economies.

Question 19

The production and supply chain management of an international firm are independent of each other.

Accepted Answer

Production and supply chain management are closely linked because a firm's ability to perform its production activities efficiently depends on a timely supply of high-quality material and information inputs, for which purchasing and logistics are critical functions.

Question 20

In recent years, time-based competition has become less important in international business.

Accepted Answer