International Business: The Challenges of Globalization, 7e (Wild)
Chapter 15 Managing International Operations
1) The process of assessing a company’s ability to produce enough output to satisfy market
demand is called process planning.
2) Capacity planning applies only to manufacturing companies.
3) Availability of energy is an important aspect of the business environment necessary for
facilities location planning.
4) Worker productivity tends to be lower in most developing nations than in developed nations.
5) Transportation costs are a driving force behind the globalization of the steel industry.
6) Companies selling differentiated products find centralized production most effective.
7) It is important for low-cost competitors to locate near their markets in order to keep track of
buyer preferences.
8) The particular process to be used to create products is typically determined by a firm’s
business-level strategy.
9) Availability and cost of labor in the local market is crucial to process planning.
10) The process by which a company extends its control over additional stages of production is
called vertical integration.
11) Companies make products rather than buy them in order to reduce total costs.
12) A company often undertakes in-house production when it can manufacture a product for less
than it must pay another business to produce it.
13) Today, due to improved technology, it is fairly easy to persuade an outside supplier to make
significant modifications to a component.
14) Outsourcing refers to the practice of buying from another company a good or a service that is
part of a company’s value-added activities.
15) One reason to buy a product instead of making it in-house is the greater flexibility to respond
to market conditions.
16) Companies strive toward quality improvements for attaining economies of scale.
17) Total quality management reduces the responsibility on each individual in the production
process.
18) The ISO 9000 is a production technique in which inputs to the production process arrive
exactly when they are needed.
19) Just-in-time manufacturing drastically reduces the costs associated with large inventories in
the production process.
20) Companies usually decide to reinvest when a market is experiencing rapid growth.
21) A back-to-back loan is one in which a subsidiary acquires a loan from the same bank where
its parent secured the first loan.
22) A major disadvantage of American Depository Receipts (ADRs) is that investors who buy
them must pay currency-conversion fees.
23) Venture capital is a source of equity financing for successful multinational companies.
24) Patient money is the cash that can be quickly withdrawn from a market in times of crisis.
25) Debt appeals to companies because it lowers the amount of taxes the companies must pay.
26) The process of assessing a company’s ability to produce enough output to satisfy market
demand is called ________.
A) capacity planning
B) lean production
C) process management
D) product structure modeling
27) Transportation costs are one of the driving forces behind the globalization of the ________
industry.
A) health care
B) publishing
C) software
D) steel
28) Which of the following statements is true regarding location economies?
A) The demand and supply factors heavily influence the productivity of a location.
B) They apply only to service providers.
C) Each production activity generates more value in a particular location than elsewhere.
D) They are restricted to business activities that involve product manufacturing.
29) ________ refers to the concentration of production facilities in one location.
A) Lean production
B) Continuous production
C) Centralized production
D) Horizontal integration
30) ________ refers to a situation in which facilities are spread over several locations, with one
facility for each national business environment in which the company markets its products.
A) Continuous production
B) Decentralized production
C) Vertical integration
D) Lean production
31) A British toy company manufactures all of its product lines in a single facility in Europe.
Which of the following is the company demonstrating?
A) continuous production
B) lean production
C) centralized production
D) horizontal integration
32) An Asian jewelry company maintains production facilities in South Korea, Vietnam, and
Malaysia. Which of the following is the company exemplifying?
A) lean production
B) decentralized production
C) vertical integration
D) continuous production
33) A company that sells differentiated products may maintain the ability to respond quickly to
changing buyer preferences by utilizing ________.
A) vertical integration
B) decentralized production
C) lean production
D) continuous production
34) The decentralization of production facilities is a typical policy for companies that pursue
________.
A) a multinational strategy
B) a global strategy
C) mass customization
D) vertical integration
35) The centralization of production facilities is a typical policy for companies that pursue
________.
A) horizontal integration
B) product differentiation
C) a global strategy
D) a multinational strategy
36) Companies with centralized production facilities are often pursuing ________ strategies.
A) low-cost
B) differentiation
C) retrenchment
D) combination
37) Deciding the sequence of operations a company will use to create its product is called
________.
A) product planning
B) capacity planning
C) location economies
D) process planning
38) Which of the following determines the process that a company will use to create its product?
A) a firm’s multinational strategy
B) a firm’s global strategy
C) a firm’s corporate-level strategy
D) a firm’s business-level strategy
39) Which of the following will a company that is pursuing a low-cost leadership strategy most
likely use for creating its product?
A) implement handcrafted artisanship
B) manufacture in large production batches
C) manufacture components in-house
D) customize products for each customer
40) Deciding the spatial arrangement of production processes within production units is called
________.
A) facilities layout planning
B) capacity planning
C) process planning
D) location economies
41) Which of the following factors has the least effect on facilities layout planning?
A) supply of land in a nation
B) cost of land in a nation
C) a firm’s production process
D) age of the company
42) Which of the following terms refers to the decision of whether to produce a component
internally or to outsource it from another company?
A) buyer decision process
B) decision problem
C) per curiam decision
D) make-or-buy decision
43) The process by which a company extends its control over additional stages of production is
called ________.
A) a push strategy
B) a pull strategy
C) vertical integration
D) horizontal integration
44) Which of the following reasons encourages companies to make a product rather than buy it?
A) Making a product gives managers greater control over the production process.
B) Making a product lowers the risk associated with the production process.
C) Making a product increases the company’s flexibility to respond to market conditions.
D) Making a product gives companies a great deal of power in their relationships with suppliers.
45) Which of the following reasons encourages companies to buy a product rather than make it?
A) Buying a product gives managers greater control over the production process.
B) Buying a product decreases the company’s total costs significantly compared to making the
product in-house.
C) Buying a product ensures non-flexibility to local market conditions.
D) Buying a product enables a company to gain a great deal of power in their relationships with
suppliers.
46) Which of the following processes will a computer assembling firm engage in if it decides to
manufacture its own monitors and printers?
A) outsourcing
B) vertical integration
C) niche marketing
D) lean production
47) A firm that buys from another company a good or service that is part of the firm’s value-
added activities is practicing ________.
A) outsourcing
B) vertical integration
C) horizontal integration
D) lean production
48) ________ will enable a company to reduce the degree to which it is vertically integrated and
the overall amount of specialized skills and knowledge that it would have to possess.
A) Outsourcing
B) Skimming
C) Lean production
D) Centralized production
49) Which of the following statements is true of outsourcing?
A) It reduces economic risk by facilitating the purchase of large insurance policies.
B) It reduces production risk by eliminating delays in the timely receipt of needed parts.
C) It reduces political risk by enabling the company to avoid investing in plants and equipment
abroad.
D) It reduces currency risk by allowing the company to invest the home currency on in-house
production facilities.
50) Computer companies buying hardware components from component-makers, assembling
them in their own facilities, and selling completed systems to consumers and businesses is an
example of ________.
A) telecommuting
B) franchising
C) outsourcing
D) licensing
51) Which of the following is experienced by a company that outsources its product
development?
A) reduced investments in research and development
B) reduced market flexibility
C) less market influence with suppliers
D) lower product costs due to the elimination of intermediaries
52) ________ in the computer industry is the outsourcing of the actual assembly of computers
plus the job of shipping them to distributors and other intermediaries.
A) Agile manufacturing
B) Just in time manufacturing
C) Lean manufacturing
D) Stealth manufacturing
53) Storage facilities, retail outlets, and production equipment are examples of ________.
A) liquid assets
B) current assets
C) fixed assets
D) intangible assets
54) A fixed asset can also be referred to as a ________ asset.
A) liquid
B) current
C) tangible
D) trading account
55) Which of the following is a barrier to buying products from international suppliers?
A) extremely low tariffs
B) additional transportation costs
C) lower flexibility to respond to market conditions
D) high political risk
56) Which of the following is established by a company that builds an entirely new facility?
A) a divestiture
B) a shadow economy
C) a greenfield investment
D) a shell corporation
57) Which of the following statements is true regarding total quality management (TQM)?
A) TQM emphasizes on a single effort at the start to improve the quality of its products.
B) TQM largely increases the responsibility on each individual to focus on quality.
C) TQM philosophy initially took hold in the U.S.
D) TQM applies solely to an employee’s activities based inside a factory.
58) ________ requires each individual to be focused on the quality of his or her own output.
A) Total quality management
B) Quality-of-life index
C) Integrated business planning
D) Organizational restructuring
59) Which of the following statements is true regarding the ISO 9000 standards?
A) They specify details on how companies should develop its quality processes.
B) The standards are applicable to Asia exclusively.
C) ISO 9000 is a certification that companies get for their environment-friendly initiatives.
D) The standards require each company to define and document its own quality processes.
60) ________ is the term used to refer to a production technique in which inventory is kept to a
minimum and inputs to the production process arrive exactly when they are needed.
A) Just-in-time manufacturing
B) Lean manufacturing
C) Continuous production
D) Flow production
61) The just-in-time (JIT) manufacturing technique was originally developed in ________.
A) the United States
B) China
C) Japan
D) Germany
62) A company using just-in-time (JIT) manufacturing involves ________.
A) increased availability of components in large inventories
B) quicker detection of defective materials and components
C) easier training of sales staff regarding product descriptions
D) benefits stemming from combining several Japanese technologies
63) Which of the following would companies do in markets that require long payback periods?
A) divest operations
B) implement retrenchment strategies
C) emphasize on decruitment
D) reinvest profits
64) When a market is experiencing rapid growth, a company will ________.
A) emphasize on decruitment
B) divest its operations
C) reinvest in its operations
D) implement retrenchment strategies
65) A loan in which a parent company deposits money with a host-country bank, which then
lends the money to a subsidiary located in the host country is called a ________.
A) syndicated loan
B) back-to-back loan
C) mortgage loan
D) title loan
66) American Depository Receipts (ADRs) are ________.
A) certificates that represent shares of stock in American companies
B) dollar deposits made by foreign firms conducting business in the U.S.
C) certificates that trade in the U.S. and represent shares of stock in a non-U.S. company
D) currency deposits made in the United States by firms based in other countries
67) ________ are traded in Luxembourg and London and represent a specific number of shares
in an outside company.
A) Common stock
B) Bills of lading
C) Revocable letters of credit
D) Global Depository Receipts
68) Which of the following is true of American Depository Receipts (ADRs)?
A) Investors who buy ADRs have to pay a currency-conversion fee.
B) There is a minimum purchase requirement for ADRs.
C) Companies offer ADRs in the U.S. to appeal to mutual funds.
D) ADRs are listed and traded in London and Luxembourg.
69) ________ is the financing obtained from investors who believe the borrower will experience
rapid growth and who receive equity in return for their investment.
A) Internal funding
B) Venture capital
C) Credit derivative
D) Mortgage loan
70) Which of the following types of money adds to the volatility of emerging markets because it
can be quickly withdrawn from its investment?
A) hot money
B) patient money
C) key money
D) fiat money