Chapter 10 — Worldwide Sourcing
True / False
1. In supply management, the cost/price benefits associated with sourcing in developing countries are an insignificant
motivation for remaining competitive in an increasingly global environment.
a.
True
b.
False
False
Easy
Analytic
2. Purchasing should consider only suppliers that capable of meeting rigid quality and delivery standards, although far too
often price differentials become the primary criterion behind an offshore sourcing decision.
a.
True
b.
False
True
Moderate
Analytic
3. The United States is still the undisputed product and process technology leader in the world.
a.
True
b.
False
False
Easy
Analytic
4. U.S. purchasers stuck with domestic suppliers that produce poor quality often begin to source offshore components
with the hope of improving end-product quality.
a.
True
b.
False
True
Moderate
Analytic
5. Buyers are never reluctant to shift business from domestic sources to unknown offshore sources.
a.
True
b.
False
False
6. A critical assessment of the increased supply risks associated with offshore sources must be made after contracting, not
before a commitment is made.
a.
True
b.
False
False
Easy
Analytic
7. The most common method for overcoming barriers to worldwide sourcing involves education and training, which can
generate support for the process as well help overcome the anxiety associated with change.
a.
True
b.
False
True
Moderate
Analytic
8. Regardless of the technique used to overcome worldwide sourcing barriers, the effort will fail unless top management
supports worldwide sourcing.
a.
True
b.
False
True
Easy
Analytic
9. Trade shows are often one of the worst ways to gather information on many suppliers at one time.
a.
True
b.
False
False
Easy
Analytic
10. The use of a full-service trading company may actually result in a lower total cost for international purchases
compared with performing each activity individually.
Easy
Analytic
Chapter 10 — Worldwide Sourcing
a.
True
b.
False
True
Easy
Analytic
11. Few trade consulates have trade experts who are eager to do business with American buyers.
a.
True
b.
False
False
Easy
Analytic
12. Always assume that an offshore company can automatically satisfy a buyer’s performance requirements or
expectations.
a.
True
b.
False
False
Easy
Analytic
13. A major complaint about Americans is our ignorance of other cultures.
a.
True
b.
False
True
Easy
Analytic
14. Cultural differences between countries seldom result in unwelcome surprises when buying internationally.
a.
True
b.
False
False
Easy
Analytic
15. In some societies, such as Thailand and Indonesia, saying “yes” is merely being polite and does not necessarily mean
that they agree with what you are saying.
a.
True
b.
False
True
Easy
Analytic
16. What is an illegal activity in the United States is never an accepted business practice in many other regions.
a.
True
b.
False
False
Easy
Analytic
17. The largest differences in communication styles across countries are message speed and level of content.
a.
True
b.
False
True
Easy
Analytic
18. Buyers should not underestimate the potential effects of extended distances on their ability to plan and manage a
worldwide supply chain.
a.
True
b.
False
True
Easy
Analytic
19. Developing countries seldom rely on personal relations and trust to cover many legal issues because of an adequate
legal system.
a.
True
b.
False
False
Easy
20. Most offshore organizations like dealing with the U.S. legal system and long contracts.
a.
True
b.
False
False
Easy
Analytic
21. Developing countries offer effective protection against the piracy of intellectual property.
a.
True
b.
False
False
Easy
Analytic
22. There is no dollar threshold on the Foreign Corrupt Practices Act, making it illegal to offer even a dollar as a bribe.
a.
True
b.
False
True
Moderate
Analytic
23. Barter requires trading parties to enter into a series of contracts to fulfill trading requirements.
a.
True
b.
False
False
Easy
Analytic
24. Despite its apparent simplicity, barter is one of the least-practiced forms of countertrade today.
a.
True
b.
False
True
Easy
Analytic
25. Counterpurchase requires a company to fulfill its countertrade requirements by purchasing products within a country
unrelated to its primary business.
a.
True
b.
False
True
Moderate
Analytic
26. Countries lacking foreign exchange for payment but rich in natural resources cannot benefit from buy-back or
compensation trading.
a.
True
b.
False
False
Easy
Analytic
27. Purchasing’s role in countertrade is not as visible as marketing’s role.
a.
True
b.
False
True
Easy
Analytic
28. FTZs allow an importing company to delay, eliminate, or decrease its duty payments on foreign-sourced goods that
enter the zone site.
a.
True
b.
False
True
Moderate
Analytic
29. An inverted tariff means that no duties or quota charges will be placed on goods that are reexported from the FTZ.
a.
True
b.
False
Analytic
Chapter 10 — Worldwide Sourcing
False
Easy
Analytic
30. Whether the purchase transaction is with a domestic or offshore producer, there are certain common costs.
a.
True
b.
False
True
Easy
Analytic
31. Domestic purchasing must include the additional costs associated with conducting domestic transactions.
a.
True
b.
False
False
Easy
Analytic
32. A supplier can draw against the letter of credit upon presentation of the required documents.
a.
True
b.
False
True
Easy
Analytic
33. Duty rates vary widely over seemingly small differences between items.
a.
True
b.
False
True
Easy
Analytic
34. Insurance protection for international shipments is optional because oceangoing carrier liability is generally unlimited.
a.
True
b.
False
Chapter 10 — Worldwide Sourcing
False
Easy
Analytic
35. A major concern with international purchasing is managing the risk associated with international currency
fluctuations.
a.
True
b.
False
True
Easy
Analytic
36. Few offshore suppliers anticipate exchange rate fluctuations by incorporating a risk factor into their price.
a.
True
b.
False
False
Easy
Analytic
37. Sharing currency fluctuation risk with a supplier works best on items that have a set delivery date such as with capital
equipment.
a.
True
b.
False
True
Moderate
Analytic
38. Hedging is a form of risk insurance that can protect both parties from currency fluctuations.
a.
True
b.
False
True
Moderate
Analytic
39. The use of forward exchange contracts encourages speculation.
Chapter 10 — Worldwide Sourcing
a.
True
b.
False
False
Moderate
Analytic
40. Options may be used to lock in favorable rates during negotiations or anytime a purchaser is anticipating the purchase
of an item from a specific country.
a.
True
b.
False
True
Moderate
Analytic
41. Social culture and laws, personnel skills and abilities, and business culture are three areas where differences are the
greatest across different geographic units.
a.
True
b.
False
True
Moderate
Diversity
42. Firms that centralize operational activities during global sourcing are likely to realize lower total cost of ownership,
better inventory management, and improved performance to external customers.
a.
True
b.
False
False
Moderate
Analytic
43. A common approach for coordinating work efforts is to rely on audio conferencing of skype type visual meeting at
scheduled time intervals.
a.
True
b.
False
True
Easy
Chapter 10 — Worldwide Sourcing
Multiple Choice
44. _____ involves contracting with independent suppliers outside the organization (domestic or foreign) to provide
products or services that were performed inside the organization.
a.
b.
c.
d.
e.
Moderate
Analytic
45. _____ involves contracting with independent suppliers located outside geographic boundaries of the United States for
goods and services.
a.
Re-shoring
b.
Domestic sourcing
c.
Nearshoring
d.
Outsourcing
e.
Offshoring
Easy
Analytic
46. _____ is relocating sourcing to countries geographically closers to the United States.
a.
Global sourcing
b.
Nearshoring
c.
Re-shoring
d.
Single sourcing
e.
Domestic sourcing
Easy
Analytic
47. _____ relates to a commercial purchase transaction between a buyer and a supplier located in different countries.
a.
Analytic
Chapter 10 — Worldwide Sourcing
b.
c.
d.
e.
Easy
Analytic
48. _____ involves proactively integrating and coordination common items and materials, processes, designs,
technologies, and suppliers across worldwide purchasing, engineering, and operating locations.
a.
b.
c.
d.
e.
Moderate
Analytic
49. All of the following are examples of why organizations source worldwide except _____.
a.
access to the only source available
b.
react to buying patterns of competitors
c.
higher ethics
d.
cost/price benefits
e.
establish a presence in another country market
Easy
Analytic
50. All of the following are examples of why organizations source worldwide except _____.
a.
cost/price benefits
b.
access to product and process technology
c.
quality
d.
introduce competition to domestic suppliers
e.
ability to influence domestic consumers
Easy