1. 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.
2. The production and logistics functions of an international firm are independent of each
other.
3. The objectives of reducing costs and increasing quality in a firm are independent of each
other.
4. A firm that improves its quality control cannot reduce its costs of value creation
simultaneously.
5. W. Edward Deming believed that achieving better quality requires the commitment of
everyone in a company.
6. In terms of Six Sigma, the higher the number of “sigmas,” the greater the number of
errors.
7. In international business, production and logistics functions need not accommodate
demands for local responsiveness.
8. In recent years, time-based competition has lost its importance in international
business.
9. 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.
10. Currency appreciation can transform a low-cost location into a high-cost location.
11. In international business, a relatively high level of fixed costs can make it economical to
perform a particular activity in several locations at once.
12. The concept of economies of scale tells us that as plant output expands, unit costs
decrease.
13. The level of output at which most plant-level scale economies are exhausted is referred
to as the minimum efficient scale of output.
14. 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.
15. A wide product variety makes it easier for a firm to increase its production efficiency and
thus reduce its unit costs.
16. 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.
17. Flexible machine cells, a flexible manufacturing technology, cannot be used for mass
customization.
18. With the advent of flexible manufacturing technologies and mass customization,
manufacturing in each major market in which the firm is active is becoming less attractive.
19. When flexible manufacturing technologies are not available, a firm can manufacture
products customized to various national markets at a single factory sited at the optimal location.
20. Industrial products have few national differences in consumer taste and preference,
hence the need for local responsiveness is reduced for such products.
21. Other things being equal, when fixed costs are substantial and minimum efficient scale of
production is high, the arguments for concentrating production at a few choice locations are
strong.
22. Since refined sugar has a low value-to-weight ratio, even if it is shipped halfway around
the world, their transportation costs account for a very small percentage of total costs.
23. The strategic role of establishing a foreign production facility is to produce labor–
intensive products at as low a cost as possible.
24. A source of improvement in the capabilities of a foreign production site is the pressure to
customize a product to the demands of consumers in a particular nation.
25. A major aspect of a transnational strategy is a belief that valuable knowledge resides in a
firm’s domestic operations instead of its foreign subsidiaries.
26. In recent years, the outsourcing decision in international businesses has gone beyond the
manufacture of physical products to embrace the production of service activities.
27. When substantial investments in specialized assets are required to manufacture a
component, a firm will prefer to contract it out to a supplier rather than make the component
internal
28. The complexity of transfer pricing decisions enhances internal suppliers’ ability to
manipulate transfer prices to their advantage, passing cost increases downstream rather than
looking for ways to reduce costs
29. A firm that sources its product components from internal suppliers has fewer subunits to
control than a firm that sources from independent suppliers.
30. A firm that enters long-term alliances may limit its strategic flexibility by the
commitments it makes to its alliance partners.
31. Under a just–in-time inventory system, a company can reduce the amount of working
capital it needs to finance inventory, freeing capital for other uses and/or lowering the total
capital requirements of the enterprise.