Hill12e Chapter 17 TB Answer Key PDF

Preview

Summary

1 Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the priorInternational Business, 12e (Hill)Chapter 17 Global Production and Supply Chain Management Production is also sometimes referred to as operations as part of a global supply chain. Answer: ...

Description

International Business, 12e (Hill) Chapter 17

Global Production and Supply Chain Management

1) Production is also sometimes referred to as operations as part of a global supply chain. Answer: TRUE Explanation: Production is sometimes also referred to as manufacturing or operations when discussed in relation to global supply chains. Difficulty: 1 Easy Topic: The Importance of Production and Logistics Decisions Learning Objective: 17-01 Explain why global production and supply chain management decisions are of central importance to many global companies. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 2) Logistics includes the buying of raw materials and component parts. Answer: FALSE Explanation: Purchasing represents the part of the supply chain that involves worldwide buying of raw material, component parts, and products used in manufacturing of the company's products and services. Logistics is the part of the supply chain that plans, implements, and controls the effective flows and inventory of raw material, component parts, and products used in manufacturing. Difficulty: 1 Easy Topic: The Importance of Production and Logistics Decisions Learning Objective: 17-01 Explain why global production and supply chain management decisions are of central importance to many global companies. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 3) The upstream portion of the global supply chain includes all of the organizations and resources in the supply chain. Answer: TRUE Explanation: The upstream supply chain includes all of the organizations (e.g., suppliers) and resources that are involved in the portion of the supply chain from raw materials to the production facility (this is sometimes also called the inbound supply chain). Difficulty: 1 Easy Topic: The Importance of Production and Logistics Decisions Learning Objective: 17-01 Explain why global production and supply chain management decisions are of central importance to many global companies. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 1 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

4) Six Sigma is a qualitative alternative to total quality management that focuses primarily on managing human resources to improve profitability. Answer: FALSE Explanation: Six Sigma, the modern successor to TQM, is a statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company. Difficulty: 1 Easy Topic: The Importance of Production and Logistics Decisions Learning Objective: 17-01 Explain why global production and supply chain management decisions are of central importance to many global companies. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 5) Other things being equal, a firm should locate its various manufacturing activities where the relative factor costs are conducive to the performance of those activities. Answer: TRUE Explanation: Other things being equal, a firm should locate its various manufacturing activities where the economic, political, and cultural conditions, including relative factor costs, are conducive to the performance of those activities. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 6) The argument for centralizing production will be greater if the minimum efficient scale of a plant relative to total global demand is low. Answer: FALSE Explanation: The larger the minimum efficient scale of a plant relative to total global demand, the greater the argument for centralizing production in a single location or a limited number of locations. Difficulty: 2 Medium Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation

2 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

7) Mass customization facilitates product customization at low costs. Answer: TRUE Explanation: 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. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 8) Flexible manufacturing technologies enable companies to customize products to the demands of small consumer groups. Answer: TRUE Explanation: Besides improving efficiency and lowering costs, flexible manufacturing technologies also 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. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 9) Products such as electronic components and pharmaceuticals have low value-to-weight ratios. Answer: FALSE Explanation: Many electronic components and pharmaceuticals have high value-to-weight ratios. They are expensive and they do not weigh very much. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation

3 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

10) Organizations are under pressure to produce products in the optimal location and to serve the world market from there if their products have low value-to-weight ratios. Answer: FALSE Explanation: Products that have high value-to-weight ratios are expensive and they do not weigh very much. Their transportation costs account for a very small percentage of total costs. Given this, other things being equal, there is great pressure to produce these products in the optimal location and to serve the world market from there. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 11) Modern consumer products such as personal computers serve universal needs. Answer: TRUE Explanation: Many industrial products, such as industrial electronics, steel, and bulk chemicals, and modern consumer products, such as handheld calculators, personal computers, and video games, serve universal needs. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 12) Poor product quality and low productivity are hidden costs associated with basing production in a foreign location. Answer: TRUE Explanation: There may be some hidden costs to basing production in a foreign location. Numerous anecdotes suggest that high employee turnover, shoddy workmanship, poor product quality, and low productivity are significant issues in some outsourcing locations. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-02 Explain how country differences, production technology, and production factors all affect the choice of where to locate production activities. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation

4 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

13) Concentration of production should be avoided when important exchange rates are expected to remain relatively stable. Answer: FALSE Explanation: Concentration of production makes the most sense when important exchange rates are expected to remain relatively stable. Difficulty: 1 Easy Topic: Factors Affecting the Location of Production Activities Learning Objective: 17-03 Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 14) Decentralization of production is appropriate when the product does not serve universal needs. Answer: TRUE Explanation: Decentralization of production is appropriate when the product does not serve universal needs. Difficulty: 1 Easy Topic: The Role of Foreign Subsidiaries in Production Learning Objective: 17-03 Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 15) Managers in a source factory operate in essentially the same way that managers in an offshore factory operate. They have very little say in purchasing or logistics decisions. Answer: FALSE Explanation: Managers of a source factory have a say in certain decisions, such as purchasing raw materials and component parts used in the production at the source factory. They also have strategic input into production planning, process changes, logistics issues, product customization, and implementation of newer designs when needed. Difficulty: 1 Easy Topic: The Role of Foreign Subsidiaries in Production Learning Objective: 17-03 Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation

5 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

16) Global learning refers to the idea that valuable knowledge does not reside just in a firm's domestic operations. Answer: TRUE Explanation: Global learning refers to the idea that valuable knowledge does not reside just in a firm's domestic operations. It may also be found in its foreign subsidiaries. Difficulty: 1 Easy Topic: The Role of Foreign Subsidiaries in Production Learning Objective: 17-03 Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 17) Make-or-buy decisions are decisions that concern the components to be used in a production process. Answer: FALSE Explanation: Make-or-buy decisions are decisions about whether companies should perform a certain value creation activity themselves or outsource it to another entity. Difficulty: 1 Easy Topic: Global Sourcing Arrangements Learning Objective: 17-04 Identify the factors that influence a firm's decision of whether to source supplies from within the company or from foreign suppliers. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 18) Firms would prefer buying component parts, or an entire product, from independent suppliers to protect proprietary product technologies. Answer: FALSE Explanation: Proprietary product technology is unique to a firm. If the firm outsources the production of entire products or components containing proprietary technology, it runs the risk that those suppliers will expropriate the technology for their own use or that they will sell it to the firm's competitors. Thus, to maintain control over its technology, the firm might prefer to make such products or component parts in-house. Difficulty: 1 Easy Topic: Global Sourcing Arrangements Learning Objective: 17-04 Identify the factors that influence a firm's decision of whether to source supplies from within the company or from foreign suppliers. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation

6 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

19) The firm that sources from independent suppliers has less inventory to manage. Answer: TRUE Explanation: The firm that sources from independent suppliers has less inventory to manage. Difficulty: 1 Easy Topic: Global Sourcing Arrangements Learning Objective: 17-04 Identify the factors that influence a firm's decision of whether to source supplies from within the company or from foreign suppliers. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 20) Buying a product from external vendors is highly appropriate when a firm intends to protect proprietary technology. Answer: FALSE Explanation: Making a product in-house is more appropriate when a firm intends to protect proprietary technology. Difficulty: 1 Easy Topic: Global Sourcing Arrangements Learning Objective: 17-04 Identify the factors that influence a firm's decision of whether to source supplies from within the company or from foreign suppliers. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 21) The term distribution center is rarely used today in a global context. Answer: FALSE Explanation: When warehousing shifted from passive storage of products to strategic assortments and processing, the term distribution center became more widely used to capture this strategic and dynamic aspect of not only storing but also of adding value to products that are being warehoused or staged. A DC is at the center of the global supply chain; specifically, the order-processing part of the order-fulfillment process. Difficulty: 1 Easy Topic: Global Sourcing Arrangements Learning Objective: 17-05 Understand the functions of logistics and purchasing (sourcing) within global supply chains. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation

7 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

22) In the context of a tube of toothpaste, the box in which the toothpaste is shipped to the store from the warehouse is the primary packaging. Answer: FALSE Explanation: Primary packaging holds the product itself, so in this case it would be the tube or the box the tube in sold in. Difficulty: 1 Easy Topic: Global Sourcing Arrangements Learning Objective: 17-05 Understand the functions of logistics and purchasing (sourcing) within global supply chains. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 23) In global purchasing, Level I involves domestic purchasing activities only. Answer: TRUE Explanation: Level I is simply companies engaging in domestic purchasing activities only. Often, these companies stay close to their home base in their domestic market when purchasing raw materials, component parts, and the like for their operations. Difficulty: 1 Easy Topic: Global Sourcing Arrangements Learning Objective: 17-05 Understand the functions of logistics and purchasing (sourcing) within global supply chains. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation 24) Just-in-time systems are used to economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process and not before. Answer: TRUE Explanation: The basic philosophy behind just-in-time (JIT) systems is to economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process and not before. Difficulty: 1 Easy Topic: Supply Chain Management Learning Objective: 17-06 Describe what is required to efficiently manage a global supply chain. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation

8 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

25) Just-in-time systems reduce product quality although it brings about huge cost savings. Answer: FALSE Explanation: In addition to the cost benefits, just-in-time systems can also help firms improve product quality. Difficulty: 1 Easy Topic: Supply Chain Management Learning Objective: 17-06 Describe what is required to efficiently manage a global supply chain. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 26) One way to reduce risks associated with a JIT global supply chain is to source inputs from several suppliers located in different countries. Answer: TRUE Explanation: There are ways of reducing the risks associated with a global supply chain that operates on just-in-time principles. To reduce the risks associated with depending on one supplier for an important input, some firms source these inputs from several suppliers located in different countries. Difficulty: 1 Easy Topic: Supply Chain Management Learning Objective: 17-06 Describe what is required to efficiently manage a global supply chain. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 27) Logistics is the activity that controls the A) effective flows of physical materials through the value chain. B) customer contact points of a business. C) activities involved in creating a product. D) information flows between a business and its customers. Answer: A Explanation: Logistics is the part of the supply chain that plans, implements, and controls the effective flows and inventory of raw material, component parts, and products used in manufacturing. Difficulty: 1 Easy Topic: The Importance of Production and Logistics Decisions Learning Objective: 17-01 Explain why global production and supply chain management decisions are of central importance to many global companies. Bloom's: Remember AACSB: Knowledge Application Accessibility: Keyboard Navigation

9 Copyright 20 19 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

28) The Six Sigma methodology A) is used to compare and benchmark the performances of competing firms. B) gives more importance to productivity than product quality. C) is a direct descendant of the total quality management philosophy. D) says that at six sigmas, there would be only 3.4 defects per million units. Answer: C Explanation: The Six Sigma methodology is a direct descendant of the total quality management (TQM) philosophy that was widely adopted, first by Japanese companies and then American companies during the 1980s and early 1990s. While it is almost impossible for a company to achieve such perfection, Six Sigma quality is a goal to strive toward. The Six Sigma program is particularly informative in structuring global processes that multinational corporations can follow in quality and productivity initiatives. As such...