48) Of all the value creation activities in a firm, ________ creates value by discovering consumer
needs and communicating them back to the R&D function of the company, which can then design
products that better match those needs.
A) production
B) marketing and sales
C) its human resources
D) logistics
E) its information system
49) Lindsey works at Lincoln Office Furniture Group. She fields calls from people who purchase
their ready-to-build products and need assistance during the process. Which primary activity is
Lindsey involved with?
A) production
B) marketing and sales
C) human resources
D) customer service
E) logistics
50) Midwest Sports produces in-house all the products that it sells through its network of stores. It
has a function in its value chain that controls sending the physical materials through the value
chain, from procurement through production and into distribution. This function is called
A) human resources.
B) finance.
C) marketing.
D) logistics.
E) research and development.
51) The 2,500 people working in Saturn Inc.’s corporate office deal with the organizational
structure, control systems, and culture of the firm. These three things comprise which support
function of Saturn Inc.?
A) human resources
B) logistics
C) information systems
D) company infrastructure
E) inventory management
52) Who should be considered as part of a firm’s infrastructure because of the considerable
influence associated with the position?
A) procurement manager
B) top management
C) production manager
D) research and development scientist
E) marketing personnel
53) At the beginning of the year, Marissa created three goals for each sales person on her staff and
she uses those goals as a way to measure their performance throughout the year. These goals are an
example of
A) reports.
B) controls.
C) rewards.
D) knowledge flows.
E) folkways.
54) Processes are defined as the
A) manner in which decisions are made and work is performed within the organization.
B) metrics used to measure the performance of subunits.
C) devices used to reward appropriate managerial behavior.
D) metrics used to make judgments about how well managers are running the subunits.
E) norms and value systems that are shared among employees of an organization.
55) When Nathan accepted his new job, his manager explained that each employee who
demonstrated at least two ideas that could lead the company to a competitive advantage received a
$5,000 bonus at the end of the year. This bonus is an example of a(n)
A) control.
B) hierarchy.
C) folkway.
D) incentive.
E) process.
56) GreenFresh Food Products believes that as far as its products are concerned, tastes vary
worldwide and so it has to customize its products, marketing strategy, and business strategy to
allow for differing national conditions. What is affecting the company’s ability to increase its
profitability and profit growth by expanding globally?
A) the imperative of localization
B) economies of scale
C) customer surplus.
D) the leveraging of skills developed in foreign operations
E) the dispersion of individual value creation activities
57) A company can increase its growth rate by taking goods or services developed at home and
selling them internationally. The returns from such a strategy are likely to be greater if
A) the product is already being offered by local companies in the nations that the company enters.
B) the product is a generic product that requires little differentiation.
C) indigenous competitors in the nations that the company enters lack comparable products.
D) there is a high inflation in the nations that the company enters.
E) the product is perceived to be very costly in the home country of the company.
58) How does possessing a core competency help a firm?
A) It helps a firm to create value in such a way that premium pricing is impossible.
B) It reduces a firm’s dependence on its logistics function.
C) It enables a firm to reduce the costs of value creation.
D) It reduces the scope of transfer of skills to foreign markets.
E) It reduces the need to replicate a business model in a foreign market.
59) Kitchen-Rite believes that by producing its small appliances in Canada, they can take
advantage of lower wage rates in that country. By pursuing such a strategy, Kitchen-Rite hopes to
realize
A) a position inside the efficiency frontier.
B) the experience curve.
C) economies of scale.
D) location economies.
E) demographic advantages.
60) AR Supply locates its global manufacturing in Mexico, its global distribution in Indonesia, and
its design in Italy. By dispersing different stages of its value chain to those locations around the
world where the value added is maximized or where the costs of value creation are minimized, AR
Supply has created a(n)
A) factor endowment.
B) dispersal chain.
C) global web.
D) exchange rate.
E) home country advantage.
61) ________ are most likely to discourage global expansion of businesses.
A) Economies of scale
B) Factor endowments
C) Trade barriers
D) Mass customization
E) Low transportation costs
62) The ________ refers to systematic reductions in production costs that have been observed to
occur over the life of a product.
A) experience curve
B) learning effect
C) location economies
D) efficiency slope
E) economies of scale
63) A number of studies have observed that a product’s production costs decline by some quantity
about each time
A) annual output is halved.
B) cumulative output doubles.
C) the workforce is trimmed by 75 percent.
D) fixed investment triples.
E) foreign domestic investment doubles.
64) The two phenomena that help explain the experience curve are
A) learning effects and economies of scale.
B) technology inputs and wealth transfer.
C) leveraging subsidiary and local responsiveness.
D) standardized manufacturing and global web.
E) efficiency frontier and location economies.
65) Merck, a pharmaceutical company, has taken thousands of drugs through the federal approval
process and so can do it more cost efficiently than many competitors who are new to the industry.
These cost savings that come to Merck in the drug approval process are an example of
A) learning effects.
B) factor endowments.
C) ancillary effects.
D) economies of scale.
E) location economies.
66) When Brite Fabrics first began operations, it took six hours to make a coat in the workroom.
Today, that task takes three hours as more efficient sewing and patterning techniques have been
introduced. This improvement in efficiency is an example of
A) diminishing returns.
B) location economies.
C) a geographic implication.
D) learning effects.
E) an efficiency frontier.
67) Learning effects will be most significant in which of these tasks?
A) pizza delivery for a fast-food major
B) data entry for a loan recovery center
C) assembly process involving 1,000 complex steps
D) switchboard operator at an automobile dealer
E) delivering letters to different recipients
68) Learning effects tend to be more significant when
A) a task involves a few simple steps.
B) a task is repeated for a period of over five years.
C) the workforce consists of unskilled labor.
D) the cumulative output becomes half of what it was originally.
E) a technologically complex task is repeated.
69) By producing its products in larger volume than its competitors, Epli-Mart is able to achieve
substantial reductions in unit cost. In other words, Epli-Mart achieves
A) location economies.
B) learning effects.
C) standardization economies.
D) core economies.
E) economies of scale.
70) Amazon Prime incurs a huge fixed cost to obtain streaming rights to movies and television
programs. However, it is able to spread this cost over a large number of subscribers that results in
a cost-savings phenomenon referred to as
A) volume synergies.
B) economies of scale.
C) captured savings.
D) size effects.
E) location economies.
71) Economies of scale are achieved when a company reduces unit costs by
A) manufacturing products based on factor endowments.
B) producing a larger volume of product.
C) reducing staff.
D) eliminating competitor value.
E) acquiring a new supplier.
72) Gen-Supply reminds employees that its flagship product used to cost the company $154 to
manufacture when the company launched ten years ago. Now, the same product costs just $58 to
manufacture. This demonstrates the effects of
A) a global web.
B) dispersion linkage.
C) economies of scale.
D) the experience curve.
E) the efficiency frontier.
73) Firms that compete in the global marketplace typically face which two types of competitive
pressure?
A) pressures for increasing investment and pressures to minimize consumer surplus
B) pressures for labor skill enhancement and pressures to minimize economies of scale
C) pressures for cost reductions and pressures to be locally responsive
D) pressures for global promotions and pressures to move down the efficiency frontier
E) pressures for product standardization and pressures to move up the experience curve
74) Cost reduction pressures tend to be particularly intense in industries that
A) create products that serve universal needs.
B) create customized products.
C) are not involved in international business.
D) produce products that have inelastic demand.
E) serve different customers with different needs.
75) Products such as steel, bulk chemicals, and industrial electronics do not require much
differentiation because the taste and preference for these products is similar all around the world.
These products are examples of
A) universal needs.
B) the efficiency frontier.
C) local customization.
D) lateral requirements.
E) market differentiation.
76) The liberalization of the world trade and investment environment in recent decades, by
facilitating greater international competition, has generally
A) increased cost pressures.
B) decreased the demand for local responsiveness.
C) decreased pressures for cost reduction.
D) increased consumer surplus.
E) reduced the production of conventional commodity products.
77) A ________ is most favorable to reap gains from global scale economies.
A) low demand for local responsiveness
B) high pressure for cost reduction
C) lack of universal needs
D) national difference in accepted business practices
E) high pressure to delegate production to domestic subsidiaries
78) One argument for the idea that customer demands for local customization are on the decline
worldwide is that
A) local and indigenous industries are increasingly filling up available demand.
B) high costs of local customization are deterring companies from doing so.
C) governments across the world are standardizing their legal procedures.
D) customer tastes have converged worldwide.
E) managers worldwide ignore the differences in consumer tastes and preferences.
79) Marketing functions may have to be delegated to national subsidiaries when there is a
A) difference in distribution channels.
B) pressure for decreasing consumer surplus.
C) lack of product customization.
D) pressure for increasing economies of scale.
E) pressure for increasing consumers’ reservation price.
80) Rite-Right Pen Corp., based in Florida, has a manufacturing facility in Thailand where local
content rules regulate manufacturing processes. These rules show the effects of
A) variances in distribution channels.
B) host-government demands.
C) service-oriented processes.
D) infrastructure differences.
E) traditional practices.
81) Firms that pursue a(n) ________ strategy focus on increasing profitability and profit growth by
reaping the cost reductions that come from economies of scale, learning effects, and location
economies.
A) international
B) transnational
C) localization
D) global standardization
E) nationalization
82) How do firms approach customization of products when using the global standardization
strategy?
A) These firms focus on customizing products to various conditions.
B) These firms are typically first-movers in customizing product offerings.
C) These firms focus on regional differences but do not assess national differences.
D) These firms rely on customization to reduce production runs and lower costs.
E) These firms try not to customize to meet local conditions to allow for longer production runs.
83) A firm is most likely to pursue a global standardization strategy when
A) it wants to implement a high-cost strategy on a global scale.
B) it wants to reduce consumer surplus.
C) there are no universal needs to be served.
D) there are strong demands for local responsiveness.
E) there are strong pressures for cost reduction.