IMPORTANT 4-5 QUESTIONS

CHAPTER 18: Multiple Choice Questions

1. Which of the following is not a characteristic of a service organization, in comparison

with a manufacturing organization?

a. intangible, perishable product.

b. output cannot be inventoried.

* c. capital intensive.

d. high customer contact.

(p. 750)

2. The competitive strategy that focuses on the reduction of manufacturing costs is known
as

* a. efficiency.

b. dependability.

c. quality.

d. flexibility.

(p. 751)

3. The competitive strategy that focuses on the degree of trust in a companys products and
its delivery and price promises is known as

a. efficiency.

* b. dependability.

c. quality.

d. flexibility.
(p. 751)

4. The competitive strategy that focuses on performance reliability, speed of delivery, etc. is

known as

a. efficiency.

b. dependability.

* c. quality.

d. flexibility.

(p. 751)

5. The competitive strategy that focuses on the ability of the production process to adjust the
volume of output is known as

a. efficiency.

b. dependability.

c. quality.

* d. flexibility.

(p. 751)

6. The competitive strategy that focuses on the ability to develop new products and ideas is
known as

a. efficiency.

b. dependability.

c. quality.

* d. innovation.
(p. 751)

7. The competitive strategy that forces MNEs to establish economies of scale in

manufacturing is known as

* a. efficiency.

b. dependability.

c. quality.

d. flexibility.

(p. 751)

8. The element of the competitive strategy known as cost/efficiency focuses on

* a. the reduction of manufacturing costs.

b. the degree of trust in a companys products and its delivery and price promises.

c. performance reliability, service quality, speed of deliver, and maintenance quality

of the product(s).

d. the ability of the production process to make different kinds of products and/or to
adjust the volume of output.

(p. 751)

9. The element of the competitive strategy known as dependability focuses on

a. the reduction of manufacturing costs.

* b. the degree of trust in a companys products and its delivery and price promises.

c. performance reliability, service quality, speed of deliver, and maintenance quality

of the product(s).

d. the ability of the production process to make different kinds of products and/or to
adjust the volume of output.
(p. 751)

10. The element of the competitive strategy known as quality focuses on

a. the reduction of manufacturing costs.

b. the degree of trust in a companys products and its delivery and price promises.

* c. performance reliability, service quality, speed of deliver, and maintenance quality

of the product(s).

d. the ability of the production process to make different kinds of products and/or to
adjust the volume of output.

(p. 751)

11. The element of the competitive strategy known as flexibility focuses on

a. the reduction of manufacturing costs.

b. the degree of trust in a companys products and its delivery and price promises.

c. performance reliability, service quality, speed of deliver, and maintenance quality

of the product(s).

* d. the ability of the production process to make different kinds of products and/or to
adjust the volume of output.

(p. 751)

12. The element of the competitive strategy known as innovation focuses on

a. the ability to develop new products and ideas.

b. the degree of trust in a companys products and its delivery and price promises.

c. performance reliability, service quality, speed of deliver, and maintenance quality

of the product(s).
* d. the ability of the production process to make different kinds of products and/or to
adjust the volume of output.

(p. 751)

13. Which of the following is not considered to be a manufacturing activity?

a. Location and scale of manufacturing facilities.

b. Choice of manufacturing process.

c. Degree of vertical integration.

* d. Licensing of the company name.

(p. 751)

OBJECTIVE: To describe different manufacturing configurations

14. The manufacturing philosophy that manufactures products close to their customers, using
country-specific manufacturing facilities to meet local needs is known as

* a. multidomestic.

b. regional.

c. global.

d. none of the above.

(p. 752)

15. The manufacturing philosophy that centralizes manufacturing and offers a selection of
standard, lower priced products to their markets is known as

a. multidomestic.
 b. regional.

* c. global.

d. none of the above.

(p. 752)

16. The international manufacturing configuration that involves the international dispersal of
stages of the production process to low-cost regions, with final assembly taking place at different
locations is known as

a. autonomous regional

b. regional/global.

* c. coordinated global.

d. multidomestic.

(p. 752)

17. The international manufacturing configuration that involves local or regional assembly of
globally produced parts and components is known as

a. autonomous regional

* b. regional/global.

c. coordinated global.

d. multidomestic.

(p. 752)

18. The product strategy that would result in having several manufacturing facilities located
close to local markets and controlled by local management would most likely be

a. technology driven.
* b. marketing intensive.

c. low cost.

d. economies of scale.

(pp. 752-753)

19. The product strategy that would result in using large-scale manufacturing and/or
manufacturing in low-wage countries would most likely be

a. technology driven.

b. marketing intensive.

* c. low cost.

d. skimming.

(pp. 752-753)

20. A manufacturing system whereby a company might specialize production by product or

process so that a particular plant produces a product or range of products or produces all products
using a particular process and services all markets is known as

a. manufacturing interchange.

* b. rationalization.

c. regional.

d. centralized.

(p. 753)

21. A manufacturing system that involves plants producing a range of components and
moving them around so that all plants assemble the finished product for the local market is
known as

* a. manufacturing interchange.
 b. rationalization.

c. regional.

d. centralized.

(p. 753)

22. Which manufacturing strategy most closely describes setting up a plant in a low-cost
foreign country followed by importation back into the home country?

a. Manufacturing interchange.

b. Offset.

c. Rationalization.

* d. Offshore manufacturing.

(p. 753)

23. The manufacturing of Nike shoes in Vietnam most closely describes

a. Manufacturing interchange.

b. Offset.

c. Rationalization.

* d. Offshore manufacturing.

(p. 753)

24. A manufacturing operation established outside of the United States, primarily in Mexico
to which components are shipped from the United states duty free for assembly is known as

* a. maquiladora.

b. manufacturing interchange.
 c. duty drawback.

d. sonora.

(p. 754)

25. Which of the following accurately describes maquiladora operations?

a. They are established to reduce growing pollution along the Mexico-U.S. border.

* b. They are able to export products to the United States and duties only apply on the
value added in Mexico.

c. They are declining in importance since Mexican wages along the border are now
nearly equal to those of U.S. workers along the border.

d. NAFTA will increase the importance of maquiladoras as duties fall on goods

traded between Mexico and the United States.

(p. 754)

26. Which of the following is not a consideration in determining plant location?

a. transportation costs.

b. duties on components.

c. local government incentives.

* d. all of the above..

(p. 754)

27. Which is true concerning layout planning?

a. Companies will generally only invest in countries where they can use exactly the
same layout.

b. Plants that use a product layout that facilitates repetitive or continuous production
must use a flat plant layout.
* c. Production technology and location can affect plant layout.

d. Multi-ethnic work forces typically work better in high rise plants rather than work
together in the same assembly line.

(p. 755)

OBJECTIVE: To examine how quality can affect a companys operations management

strategy

28. A quality system that deals with defects through repair facilities and service warranties is
known as

* a. acceptable quality level.

b. total quality management.

c. just-in-time.

d. ISO 9000.

(p. 756)

29. A quality system that is designed to eliminate all defects and ensure customer satisfaction
is known as

a. acceptable quality level.

* b. total quality management.

c. just-in-time.

d. ISO 9000.

(p. 756)
30. Which of the following accurately reflects the philosophy of zero defects?

a. The United States has adopted this philosophy because of the attitude in the
United States that a product must be so good that the customer wouldnt think of buying from
anyone else.

b. It focuses primarily on manufacturing rather than on product design and

engineering.

* c. Long-run production costs tend to decrease as the plan reaches fruition.

d. It does not deal with capital-equipment purchase decisions since those are
primarily long-term finance decisions.

(p. 756)

31. The process of continuous improvement at every level of the organization is an essential
part of

a. acceptable quality level.

* b. total quality management.

c. benchmarking.

d. plant design.

(p. 756)

32. The strategy that focuses on the percentage of production that gets through the whole
production process without rework is known as

* a. total quality management.

b. acceptable quality level.

c. just-in-time.

d. none of the above.

(p. 757)
33. A quality standard intended to promote quality at every level of the organization is
known as

a. acceptable quality level.

b. total quality management.

c. just-in-time.

* d. ISO 9000.

(p. 757)

34. ISO 9000 was established by the

a. U. S. Department of Commerce in honor of former Secretary of Commerce

Malcolm Baldrige.

b. United Nations Commission on Transnational Corporations.

* c. European Union.

d. International Patent Office in Geneva.

(p. 758)

35. Which of the following accurately describes ISO 9000?

a. It relates primarily to manufacturing rather than service companies.

* b. Companies must document how workers perform every function that affects
quality and install mechanisms to ensure that they follow through on a documented routine.

c. It can be achieved through filling out a self-study questionnaire.

d. Once a company achieves ISO 9000 certification, it can adopt that certification at
all of its facilities.

(p. 758)
36. Non-European companies do not have to be concerned about ISO 9000 certification

* a. unless they want to do business with European companies.

b. because it only relates to European business.

c. unless they have manufacturing operations in Europe.

d. if they do not sell to end consumers.

(p. 759)

OBJECTIVE: To study outsourcing, purchasing, and supplier relations

37. Which of the following is true in sourcing and manufacturing strategies for companies
that are considered to be MNEs?

a. They can manufacture the product themselves but cannot outsource.

b. They can manufacture in local markets but cannot export.

* c. They can manufacture in either the local market or another country and then
import it into the market.

d. None of these.

(p. 759)

38. The strategy in which a firm needs to determine where parts and components will be
manufactured and where final products will be assembled is known as

* a. global sourcing.

b. outsourcing.

c. manufacturing interchange.
 d. rationalization.

(p. 759)

39. Which of the following qualifies as a global sourcing and production strategy?

a. Ford assembles cars in Mexico and ships them into the United States.

b. Ford assembles cars in Mexico but only sells them locally.

c. Ford assembles cars in the United States (the parent country) and exports them to
Mexico.

* d. All of these.

(p. 759)

40. Which of the following is not a major problem with global sourcing?

a. language differences.

b. distance.

c. currency.

* d. lower costs.

(p. 760)

41. A major reason that companies source globally is

a. longer distance, giving them more time to plan production schedules.

b. political stability.

c. to get access to lower tariffs.

* d. to improve quality.

(p. 760)
42. Why is global sourcing more expensive than domestic sourcing?

a. transportation and communication are more expensive.

b. brokers and agent fees have to be paid.

c. it takes longer to get products into the supply chain.

* d. all of the above.

(p. 762)

43. Purchasing inputs from nonrelated companies is known as

* a. outsourcing.

b. global sourcing.

c. transfer sourcing.

d. domestic sourcing.

(p. 762)

44. MNEs typically outsource

* a. to take advantage of lower costs.

b. to escape trade barriers.

c. unless they can manufacture the component themselves.

d. when they have a distinct comparative advantage over outside suppliers.

(p. 762)

45. The sourcing model where the company owns different stages in the production process
is known as
* a. vertical integration.

b. arms-length purchases from outside suppliers.

c. keiretsu-like relationships with suppliers.

d. horizontal integration.

(p. 762)

46. The sourcing model where the company decides not to manufacture components itself
due to its lack of competitive advantage is known as

* a. vertical integration.

b. arms-length purchases from outside suppliers.

c. chaebol arrangements.

d. horizontal integration.

(p. 762)

47. Which of the following is true concerning outsourcing?

a. It occurs when one division of a company purchases from another division.

b. It involves components purchases by a company that are critical to the product

and that the company is distinctively good at making.

c. Japanese companies tend to rely more on vertical integration than outsourcing.

* d. U. S. manufacturers tend to outsource less than do Japanese manufacturers.

(p. 763)

48. Which of the following reflects supplier relations for U.S. and Japanese companies?

a. Toyota pioneered the Purchased Input Concept Optimization with Suppliers

program in conjunction with General Motors in their joint venture in California.
 b. Supplier relations are not crucial to U.S. companies since they tend to rely on
vertical integration.

* c. Toyota sends a team of manufacturing experts to each of its key suppliers to

observe how they organize their factories and make parts.

d. U. S. suppliers prefer the input from GMs manufacturing teams to those of the
Japanese teams due to the language barriers.

(p. 763)

49. The link between the outsourcing decision and supplier relations is performed by the

a. sales staff.

* b. purchasing agent.

c. customs agent.

d. distributor.

(p. 765)

50. What is a key commodity for which it makes sense to centralize the purchasing decision?

a. low dollar volume.

b. large supplier base.

c. low technical content.

* d. importance of and significance to quality.

(p. 766)

51. An inventory system that delivers inputs to production as they are needed is known as

a. acceptable quality level.

b. total quality management.

* c. just-in-time.

d. ISO 9000.

(p. 768)

52. A special area designated by a government where tariffs can be delayed or avoided is
known as

a. a tariff zone.

* b. a free trade zone.

c. a manufacturing interchange.

d. a flexibility zone.

(p. 769)

53. A free trade zone usually established near a port of entry and usually consisting of a
distribution facility or an industrial park is known as

* a. a general purpose zone.

b. a subzone.

c. an exporting zone.

d. a port of entry zone.

(p. 770)

54. Which of the following is true concerning subzones?

a. They must be 50 miles from a border crossing.

b. They are administered by private sector companies and must be separate

administratively from general purpose zones.
 c. They have declined in importance since the early 1980s due to the increase in
importance of general purpose zones.

* d. They are very important to the auto industry.

(p. 770)

55. Which of the following is not an activity permitted by a free trade zone?

a. Foreign goods are transshipped through U.S. zones.

b. Foreign goods are processed in U.S. zones, then shipped abroad.

* c. Domestic goods are moved into a U.S. zone to achieve import status prior to their
actual importation.

d. Goods are produced wholly of foreign content in U.S. zones and then exported.

(p. 770)

OBJECTIVE: To show how important global design is to the manufacturing process

56. Which of the following is true concerning global research and development (R&D)?

a. There is a growing trend among U.S. but not non-U.S. MNEs to engage in
foreign-based R&D.

* b. Foreign R&D has been enhanced by innovations in information and

communications technologies.

c. The breakdown of uniformity in international patenting has made it more difficult

to engage in R&D abroad.

d. There is a poor infrastructure for establishing R&D facilities abroad.

(p. 771)
57. Companies with a strong home-market orientation tend to follow which R&D strategy?

* a. Centralized.

b. Decentralized.

c. Multidomestic.

d. Idea interchange.

(p. 771)

58. Which of the following accurately reflects Hondas product design and engineering
strategy for the new Honda Accord introduced in 1993?

a. It used design teams from Japan, Brazil and the United States to design the new
car.

* b. U. S. engineers were brought to Japan to help modify the design so it would be

compatible with U.S. manufacturing facilities.

c. A single international network of worldwide design teams is coordinated with a

sophisticated computer network that allows Honda to link together design and model
development teams in Britain, the United States, Japan and Italy.

d. All of these.

(p. 771