Northeastern Illinois University

MNGT 377

CHAPTER 2: OPERATIONS STRATEGY IN A GLOBAL

ENVIRONMENT

TRUE/FALSE

1)NAFTA seeks to phase out all trade and tariff barriers among Canada, Mexico, and the United States.

2. The World Trade Organization has helped to significantly reduce tariffs around the world.

3. Production processes are being dispersed to take advantage of national differences in labor costs.

4. NAFTA seeks to phase out all trade and tariff barriers between the United States and Asia.

5. One reason for global operations is to gain improvements in the supply chain.

6. One reason to globalize is to learn to improve operations.

7. To attract and retain global talent, and to expand a product's life cycle, are both reasons to globalize.

8. A product will always be in the same stage of its product life cycle regardless of the country.

9. The World Trade Organization helps provide governments and industries around the world with protection from firms that engage in unethical conduct.

10. An organization's strategy is its purpose or rationale for an organization's existence.

11. Operations strategies are implemented in the same way in all types of organizations.

12. Between 1980 and 2005, the amount of money (bank deposits, government and corporate debt securities, and equity securities) invested in global capital markets more than tripled.

13. Experience differentiation is an extension of product differentiation, accomplished by using people's five senses to create an experience rather than simply providing a service.

14. An organization's ability to generate unique advantages over competitors is central to a successful strategy implementation.

15. Low-cost leadership is the ability to distinguish the offerings of the organization in any way that the customer perceives as adding value.

16. Most services are tangible; this factor determines how the ten decisions of operations management are handled differently for goods than for services.

17. The relative importance of each of the ten operations decisions depends on the ratio of goods and services in an organization.

18. Decisions that involve what is to be made and what is to be purchased fall under the heading of supply chain management.

19. Manufacturing organizations have ten strategic OM decisions, while service organizations have only eight.

20. Errors made within the location decision area may overwhelm efficiencies in other areas.

21. Southwest Airlines’ core competence is operations.

22. Critical success factors and core competencies are synonyms.

23. SWOT analysis identifies those activities that make a difference between having and not having a competitive advantage.

24. For the greatest chance of success, an organization's operations management strategy must support the company's strategy.

25. Critical Success Factors are those activities that are key to achieving competitive advantage.

26. A multinational corporation has extensive international business involvements.

27. The multidomestic OM strategy maximizes local responsiveness while achieving a significant cost advantage.

MULTIPLE CHOICE

28. Examples of response to the global environment include
    1. Boeing's worldwide sales and production
    2. Benneton's flexibility in design, production, and distribution
    3. A Chinese manufacturer, Haier, opening plants in the United States
    4. Ford's partnerships with Volvo and Mazda
    5. All of the above are examples.

29. Which of the following is an example of globalization of operations strategy?
    1. Boeing's Dreamliner has engines with higher fuel/payload efficiency.
    2. Ford's new auto models have dent-resistant panels.
    3. A Chinese manufacturer, Haier, now operates plants in the United States.
    4. Hard Rock Café provides an "experience differentiation" at its restaurants.
    5. All of the above are examples.

30. Cost cutting in international operations can take place because of
    1. lower taxes and tariffs
    2. lower wage scales
    3. lower indirect labor costs
    4. less stringent regulations
    5. all of the above

31. Which of the following did the authors not suggest as a reason for globalizing operations?
    1. reduce costs
    2. improve the supply chain
    3. stockholder approval ratings
    4. attract new markets
    5. All of the above were suggested.

32. Multinational organizations can shop from country to country and cut costs through
    1. lower wage scales
    2. lower indirect labor costs
    3. less stringent regulations
    4. lower taxes and tariffs
    5. all of the above

33. The term maquiladora is most synonymous with
    1. free trade zones
    2. Chinese forced labor camps
    3. home-based or cottage industry
    4. areas that do not meet U.S. standards for workplace safety and pollution
    5. none of the above

34. Which of the following represent reasons for globalizing operations?
    1. to gain improvements in the supply chain
    2. to improve operations
    3. to expand a product's life cycle
    4. to attract and retain global talent
    5. All of the above are valid.

35. Which of the following does not represent reasons for globalizing operations?
    1. reduce costs
    2. improve supply chain
    3. reduce responsiveness
    4. attract and retain global talent
    5. All of the above are valid reasons for globalizing operations.

36. Which of the following is true about business strategies?
    1. An organization should stick with its strategy for the life of the business.
    2. All firms within an industry will adopt the same strategy.
    3. Well defined missions make strategy development much easier.
    4. Strategies are formulated independently of SWOT analysis.
    5. Organizational strategies depend on operations strategies.

37. Which of the following activities takes place once the mission has been developed?
    1. The firm develops alternative or back-up missions in case the original mission fails.
    2. The functional areas develop their functional area strategies.
    3. The functional areas develop their supporting missions.
    4. The ten OM decision areas are prioritized.
    5. Operational tactics are developed.

38. Which of the following statements about organizational missions is false?
    1. They reflect a company's purpose.
    2. They indicate what a company intends to contribute to society.
    3. They are formulated after strategies are known.
    4. They define a company's reason for existence.
    5. They provide guidance for functional area missions.

39. The impact of strategies on the general direction and basic character of a company is
    1. short range
    2. medium range
    3. long range
    4. temporal
    5. minimal

40. The fundamental purpose of an organization's mission statement is to
    1. create a good human relations climate in the organization
    2. define the organization's purpose in society
    3. define the operational structure of the organization
    4. generate good public relations for the organization
    5. define the functional areas required by the organization

41. Which of the following is true?
    1. Corporate mission is shaped by functional strategies.
    2. Corporate strategy is shaped by functional strategies.
    3. Functional strategies are shaped by corporate strategy.
    4. External conditions are shaped by corporate mission.
    5. Functional area missions are merged to become the organizational mission.

42. According to the authors, which of the following strategic concepts allow firms to achieve their missions?
    1. productivity, efficiency, and quality leadership
    2. differentiation, cost leadership, and quick response
    3. differentiation, quality leadership, and quick response
    4. distinctive competency, cost leadership, and experience
    5. differentiation, distinctive competency, quality leadership, and capacity

43. A firm can effectively use its operations function to yield competitive advantage via all of the following except
    1. customization of the product
    2. setting equipment utilization goals below the industry average
    3. speed of delivery
    4. constant innovation of new products
    5. maintain a variety of product options

44. Which of the following has progressed the furthest along its product life cycle?
    1. drive-thru restaurants
    2. Internet search engines
    3. iPods
    4. LCD & plasma TVs
    5. Xbox 360

a (Issues in operations strategy, moderate)

45. The ability of an organization to produce goods or services that have some uniqueness in their characteristics is
    1. mass production
    2. time-based competition
    3. competing on productivity
    4. competing on flexibility
    5. competing on differentiation

e (Achieving competitive advantage through operations, moderate)

46. A strategy is a(n)
    1. set of opportunities in the marketplace
    2. broad statement of purpose
    3. simulation used to test various product line options
    4. plan for cost reduction
    5. action plan to achieve the mission

e (Achieving competitive advantage through operations, moderate)

47. Which of the following statements best characterizes delivery reliability?
    1. a company that always delivers on the same day of the week
    2. a company that always delivers at the promised time
    3. a company that delivers more frequently than its competitors
    4. a company that delivers faster than its competitors
    5. a company that has a computerized delivery scheduling system

b (Achieving competitive advantage through operations, difficult)

48. Which of the following is an example of competing on the basis of differentiation?
    1. A firm manufactures its product with less raw material waste than its competitors do.

1. 2. A firm's products are introduced into the market faster than its competitors’ products are.
   3. A firm's distribution network routinely delivers its product on time.
   4. A firm offers more reliable products than its competitors do.
   5. A firm advertises more than its competitors do.

d (Achieving competitive advantage through operations, moderate)

49. The ability of an organization to produce services that, by utilizing the consumer's five senses, have some uniqueness in their characteristics is
    1. mass production
    2. time-based competition
    3. differentiation
    4. flexible response
    5. experience differentiation

e (Achieving competitive advantage through operations, moderate)

50. Which of the following best describes "experience differentiation"?
    1. immerses consumers in the delivery of a service
    2. uses people's five senses to enhance the service
    3. complements physical elements with visual and sound elements
    4. consumers may become active participants in the product or service
    5. All are elements of experience differentiation.

e (Achieving competitive advantage through operations, easy)

51. Experience Differentiation
    1. isolates the consumer from the delivery of a service
    2. is an extension of product differentiation in the service sector
    3. uses only the consumer's senses of vision and sound
    4. keeps consumers from becoming active participants in the service
    5. is the same as product differentiation, but applied in the service sector

b (Achieving competitive advantage through operations, easy)

52. Which of the following is the best example of competing on low-cost leadership?
    1. A firm produces its product with less raw material waste than its competitors.
    2. A firm offers more reliable products than its competitors.
    3. A firm's products are introduced into the market faster than its competitors’ products.
    4. A firm's research and development department generates many ideas for new products.
    5. A firm advertises more than its competitors.

a (Achieving competitive advantage through operations, difficult)

53. Which of the following is an example of competing on quick response?
    1. A firm produces its product with less raw material waste than its competitors.
    2. A firm offers more reliable products than its competitors.
    3. A firm's products are introduced into the market faster than its competitors’ products.
    4. A firm's research and development department generates many ideas for new products.
    5. A firm advertises more than its competitors.

54. Costs, quality, and human resource decisions interact strongly with the                    decision.
    1. layout design
    2. process and capacity design
    3. supply chain management
    4. goods and service design

1. 5. All of the above are correct.

55. Which of the following influences layout design?
    1. inventory requirements
    2. capacity needs
    3. personnel levels
    4. technology decisions
    5. All of the above influence layout decisions.

56. Response-based competitive advantage can be
    1. flexible response
    2. reliable response
    3. quick response
    4. all of the above
    5. none of the above

57. Which of the following is not an operations strategic decision?
    1. maintenance
    2. price
    3. layout design
    4. quality
    5. inventory

58. Which of the following OM strategic decisions pertains to sensible location of processes and materials in relation to each other?
    1. layout design
    2. goods and service design
    3. supply chain management
    4. inventory
    5. scheduling

59. Which of the following will more likely locate near their customers?
    1. an automobile manufacturer
    2. an aluminum manufacturer
    3. an insurance company headquarters
    4. a medical clinic
    5. All of the above will tend to locate near their customers.

60. Which of these organizations is likely to have the most important inventory decisions?
    1. a marketing research firm
    2. a lobbying agency
    3. a management consulting firm
    4. an aluminum manufacturer
    5. a law firm

61. The PIMS program has identified the
    1. operations decisions all organizations must make
    2. distinctive competencies any company needs
    3. characteristics of firms with high "ROI"
    4. corporate decisions any company needs to make
    5. all of the above

62. Which of these is not one of the PIMS characteristics of high return on investment organizations?
    1. high product quality
    2. high capacity utilization
    3. low investment intensity
    4. low direct cost per unit
    5. All of the above are PIMS characteristics.

63. Standardization is an appropriate strategy in which stage of the product life cycle?
    1. introduction
    2. growth
    3. maturity
    4. decline
    5. retirement

64. Cost minimization is an appropriate strategy in which stage of the product life cycle?
    1. introduction
    2. growth
    3. maturity
    4. decline
    5. retirement

65. Which of the following preconditions does not affect the formulation of an OM strategy?
    1. knowledge of each product's life cycle
    2. external economic and technological conditions
    3. the company's employment benefits
    4. competitors' strengths and weaknesses
    5. knowledge of the company's strategy

66. The stage in the product life cycle at which it is a poor time to change quality is
    1. introduction
    2. growth
    3. maturity
    4. decline
    5. incubation

c (Issues in operations strategy, moderate)

67. Which of the following changes does not result in strategy changes?
    1. change in the company's financial situation
    2. a company's adoption of new technology
    3. change in the product life cycle
    4. change in the competitive environment
    5. change in job scheduling techniques

e (Issues in operations strategy, moderate)

68. All of these preconditions affect an operations management strategy except
    1. external economic and technological conditions
    2. competitors' strengths and weaknesses
    3. maintenance policies
    4. knowledge of the company's strategy
    5. knowledge of each product's life cycle

c (Issues in operations strategy, moderate)

69. Understanding competitors' strengths and weaknesses, understanding current and prospective technological issues, and understanding product life cycle are examples of
    1. what is important to the transnational strategy but not the multidomestic strategy
    2. SWOT analysis
    3. elements in the formulation of an organization's mission
    4. preconditions to establishing and implementing a strategy
    5. the critical decision area of supply chain analysis

d (Issues in operations strategy, moderate)

82. Which of the following statements is most correct?
    1. CSFs are often necessary, but not sufficient for competitive advantage.
    2. CSFs are often sufficient, but not necessary for competitive advantage.
    3. CSFs are neither necessary nor sufficient for competitive advantage.
    4. CSFs are both necessary and sufficient for competitive advantage.
    5. None of the above statements is correct.

a (Strategy development and implementation, difficult)

83. Which of these organizations is likely to have the most complex inventory decisions?
    1. a marketing research firm
    2. a stock brokerage firm
    3. a management consulting firm
    4. a computer manufacturing company
    5. a high school

d (Strategy development and implementation, moderate)

84. The three steps of the operations manager's job, in order, are
    1. develop the strategy, establish the organizational structure, find the right staff
    2. develop the strategy, find the right staff, establish the organizational structure
    3. find the right staff, establish the organizational structure, develop the strategy
    4. find the right staff, develop the strategy, establish the organizational structure
    5. establish the organizational structure, find the right staff, develop the strategy

85. When developing the operations strategy for a new manufacturing organization, one of the most important considerations is that it
    1. requires minimal capital investment
    2. utilizes as much automation as possible
    3. utilizes an equal balance of labor and automation
    4. supports the overall competitive strategy of the company
    5. none of the above

d (Strategy development and implementation, moderate)

86. Which of the international operations strategies involves high cost reductions and high local responsiveness?
    1. international strategy
    2. global strategy
    3. transnational strategy
    4. multidomestic strategy
    5. none of the above

c (Global operations strategy options, moderate) {AACSB: Multiculture and Diversity}

87. Which of the international operations strategies involves low cost reductions and low local responsiveness?
    1. international strategy
    2. global strategy
    3. transnational strategy
    4. multidomestic strategy
    5. none of the above

88. Which of the international operations strategies uses import/export or licensing of existing products?
    1. international strategy
    2. global strategy
    3. transnational strategy
    4. multidomestic strategy
    5. none of the above

89. Which of the international operations strategies uses the existing domestic model globally?
    1. international strategy
    2. global strategy
    3. transnational strategy
    4. multidomestic strategy
    5. none of the above

90. The acronym MNC stands for
    1. Mexican National Committee (for international trade)
    2. Maquiladora Negates Competition
    3. Maytag- Nestlé Corporation
    4. Multinational Corporation
    5. none of the above

91. Caterpillar and Texas Instruments are two firms that have benefited from the use of
    1. the multidomestic strategy option.
    2. the multinational corporation strategy.
    3. the transnational strategy option.
    4. the maquiladora system in Europe.
    5. the global strategy option.

SHORT ANSWER

92. How can global operations improve the supply chain?

93. State two examples of cultural and ethical issues that face operations managers in a global environment.