ch 2

Question 1

T/F
NAFTA seeks to phase out all trade and tariff barriers among Canada, Mexico, and the United
States.

Answer 1

True

Question 2

T/F
The World Trade Organization has helped to significantly reduce tariffs around the world.

Answer 2

True

Question 3

T/F
Production processes are being dispersed to take advantage of national differences in labor costs.

Answer 3

True

Question 4

T/F
Production processes are being dispersed to take advantage of national differences in labor costs.

Answer 4

True

Question 5

T/F
One reason for global operations is to gain improvements in the supply chain.

Answer 5

True

Question 6

T/F
One reason to globalize is to learn to improve operations.

Answer 6

True

Question 7

T/F
To attract and retain global talent, and to expand a product’s life cycle, are both reasons to globalize.

Answer 7

True

Question 8

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

Answer 8

False

Question 9

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

Answer 9

True

Question 10

T/F
Boeing’s development of the 787 Dreamliner is an example of a company obtaining a competitive advantage via product differentiation/innovation.

Answer 10

True

Question 11

T/F
An organization’s strategy is its purpose or rationale for an organization’s existence.

Answer 11

False

Question 12

T/F
Operations strategies are implemented in the same way in all types of organizations.

Answer 12

False

Question 13

T/F
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.

Answer 13

True

Question 14

T/F
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.

Answer 14

True

Question 15

T/F
An organization’s ability to generate unique advantages over competitors is central to a successful strategy implementation.

Answer 15

True

Question 16

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

Answer 16

False

Question 17

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

Answer 17

False

Question 18

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

Answer 18

True

Question 19

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

Answer 19

True

Question 20

T/F
Manufacturing organizations have ten strategic OM decisions, while service organizations have only eight.

Answer 20

False

Question 21

T/F
Errors made within the location decision area may overwhelm efficiencies in other areas.

Answer 21

True

Question 22

T/F
The PIMS study indicated that high ROI firms tend to have high product quality.

Answer 22

True

Question 23

T/F
Southwest Airlines’ core competence is operations.

Answer 23

True

Question 24

T/F
Critical success factors and core competencies are synonyms.

Answer 24

False

Question 25

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

Answer 25

False

Question 26

T/F
For the greatest chance of success, an organization’s operations management strategy must support
the company’s strategy.

Answer 26

True

Question 27

T/F
Critical Success Factors are those activities that are key to achieving competitive advantage.

Answer 27

True

Question 28

T/F
A multinational corporation has extensive international business involvements.

Answer 28

True

Question 29

T/F
The multidomestic OM strategy maximizes local responsiveness while achieving a significant cost advantage.

Answer 29

False

Question 30

T/F
Firms using the global strategy can be thought of as “world companies.”

Answer 30

False

Question 31

Which of the following statements regarding the Dreamliner 787 is true?
a. Boeing has found partners in over a dozen countries.
b. The new aircraft incorporates a wide range of aerospace technologies.
c. The new aircraft uses engines from not one, but two manufacturers.
d. Boeing will add only 20 to 30 percent of the aircraft’s value.
e. All of the above are true.

Answer 31

e. All of the above are true.

Question 32

Boeing’s new 787 Dreamliner
a. is assembled in Washington, D.C.
b. uses engines from Japan
c. has its fuselage sections built in Australia
d. has increased efficiency from new engine technology
e. results from a partnership of about a dozen companies

Answer 32

d. has increased efficiency from new engine technology

Question 33

Examples of response to the global environment include
a. Boeing’s worldwide sales and production
b. Benneton’s flexibility in design, production, and distribution
c. A Chinese manufacturer, Haier, opening plants in the United States
d. Ford’s partnerships with Volvo and Mazda
e. All of the above are examples.

Answer 33

e. All of the above are examples.

Question 34

Which of the following is an example of globalization of operations strategy?
a. Boeing’s Dreamliner has engines with higher fuel/payload efficiency.
b. Ford’s new auto models have dent-resistant panels.
c. A Chinese manufacturer, Haier, now operates plants in the United States.
d. Hard Rock Café provides an “experience differentiation” at its restaurants.
e. All of the above are examples.

Answer 34

e. All of the above are examples.

Question 35

Cost cutting in international operations can take place because of
a. lower taxes and tariffs
b. lower wage scales
c. lower indirect labor costs
d. less stringent regulations
e. all of the above

Answer 35

e. all of the above

Question 36

Which of the following did the authors not suggest as a reason for globalizing operations?
a. reduce costs
b. improve the supply chain
c. stockholder approval ratings
d. attract new markets
e. All of the above were suggested.

Answer 36

c. stockholder approval ratings

Question 37

Multinational organizations can shop from country to country and cut costs through
a. lower wage scales
b. lower indirect labor costs
c. less stringent regulations
d. lower taxes and tariffs
e. all of the above

Answer 37

e. all of the above

Question 38

The term maquiladora is most synonymous with

Answer 38

free trade zones

Question 39

Which of the following represent reasons for globalizing operations?
a. to gain improvements in the supply chain
b. to improve operations
c. to expand a product’s life cycle
d. to attract and retain global talent
e. All of the above are valid.

Answer 39

e. All of the above are valid.

Question 40

Which of the following does not represent reasons for globalizing operations?
a. reduce costs
b. improve supply chain
c. reduce responsiveness
d. attract and retain global talent
e. All of the above are valid reasons for globalizing operations.

Answer 40

c. reduce responsiveness

Question 41

NAFTA seeks to
a. substitute cheap labor in Mexico for expensive labor in the United States
b. curb illegal immigration from Mexico to the United States
c. phase out all trade and tariff barriers between the United States and Mexico
d. phase out all trade and tariff barriers between the United States, Canada, and Mexico
e. All of the above are NAFTA goals.

Answer 41

d. phase out all trade and tariff barriers between the United States, Canada, and Mexico

Question 42

With reference to cultural and ethical issues, the World Trade Organization has
a. succeeded in providing equal protection of intellectual property among nations
b. made progress in providing equal protection of intellectual property among nations
c. phased out all trade and tariff barriers between the United States and Mexico
d. eliminated slave labor and child labor
e. played little role in addressing cultural and ethical issues among nations

Answer 42

b. made progress in providing equal protection of intellectual property among nations

Question 43

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

Answer 43

c. Well defined missions make strategy development much easier.

Question 44

Which of the following activities takes place once the mission has been developed?
a. The firm develops alternative or back-up missions in case the original mission fails.
b. The functional areas develop their functional area strategies.
c. The functional areas develop their supporting missions.
d. The ten OM decision areas are prioritized.
e. Operational tactics are developed.

Answer 44

c. The functional areas develop their supporting missions.

Question 45

Which of the following statements about organizational missions is false?
a. They reflect a company’s purpose.
b. They indicate what a company intends to contribute to society.
c. They are formulated after strategies are known.
d. They define a company’s reason for existence.
e. They provide guidance for functional area missions.

Answer 45

c. They are formulated after strategies are known

Question 46

The impact of strategies on the general direction and basic character of a company is

Answer 46

long range

Question 47

The fundamental purpose of an organization’s mission statement is to

Answer 47

define the organization’s purpose in society

Question 48

Which of the following is true?
a. Corporate mission is shaped by functional strategies.
b. Corporate strategy is shaped by functional strategies.
c. Functional strategies are shaped by corporate strategy.
d. External conditions are shaped by corporate mission.
e. Functional area missions are merged to become the organizational mission.

Answer 48

c. Functional strategies are shaped by corporate strategy.

Question 49

According to the authors, which of the following strategic concepts allow firms to achieve their
missions?
a. productivity, efficiency, and quality leadership
b. differentiation, cost leadership, and quick response
c. differentiation, quality leadership, and quick response
d. distinctive competency, cost leadership, and experience
e. differentiation, distinctive competency, quality leadership, and capacity

Answer 49

c. differentiation, quality leadership, and quick response

Question 50

A firm can effectively use its operations function to yield competitive advantage via all of the
following except
a. customization of the product
b. setting equipment utilization goals below the industry average
c. speed of delivery
d. constant innovation of new products
e. maintain a variety of product options

Answer 50

b. setting equipment utilization goals below the industry average

Question 51

Which of the following has progressed the furthest along its product life cycle?
a. drive-thru restaurants
b. Internet search engines
c. iPods
d. LCD & plasma TVs
e. Xbox 360

Answer 51

a. drive-thru restaurants

Question 52

The ability of an organization to produce goods or services that have some uniqueness in their characteristics is

Answer 52

competing on differentiation

Question 53

Which of the following has made the least progress along its product life cycle?
a. drive-thru restaurants
b. Internet search engines
c. iPods
d. LCD & plasma TVs
e. Xbox 360

Answer 53

e. Xbox 360

Question 54

A strategy is a(n)
a. set of opportunities in the marketplace
b. broad statement of purpose
c. simulation used to test various product line options
d. plan for cost reduction
e. action plan to achieve the mission

Answer 54

e. action plan to achieve the mission

Question 55

Which of the following statements best characterizes delivery reliability?
a. a company that always delivers on the same day of the week
b. a company that always delivers at the promised time
c. a company that delivers more frequently than its competitors
d. a company that delivers faster than its competitors
e. a company that has a computerized delivery scheduling system

Answer 55

b. a company that always delivers at the promised time

Question 56

Which of the following is an example of competing on the basis of differentiation?
a. A firm manufactures its product with less raw material waste than its competitors do.
b. A firm’s products are introduced into the market faster than its competitors’ products are.
c. A firm’s distribution network routinely delivers its product on time.
d. A firm offers more reliable products than its competitors do.
e. A firm advertises more than its competitors do.

Answer 56

d. A firm offers more reliable products than its competitors do.

Question 57

The ability of an organization to produce services that, by utilizing the consumer’s five senses, have
some uniqueness in their characteristics is
a. mass production
b. time-based competition
c. differentiation
d. flexible response
e. experience differentiation

Answer 57

e. experience differentiation

Question 58

Which of the following best describes “experience differentiation”?
a. immerses consumers in the delivery of a service
b. uses people’s five senses to enhance the service
c. complements physical elements with visual and sound elements
d. consumers may become active participants in the product or service
e. All are elements of experience differentiation.

Answer 58

e. All are elements of experience differentiation.

Question 59

Experience Differentiation
a. isolates the consumer from the delivery of a service
b. is an extension of product differentiation in the service sector
c. uses only the consumer’s senses of vision and sound
d. keeps consumers from becoming active participants in the service
e. is the same as product differentiation, but applied in the service sector

Answer 59

b. is an extension of product differentiation in the service sector

Question 60

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

Answer 60

a. A firm produces its product with less raw material waste than its competitors.

Question 61

Franz Colruyt has achieved low-cost leadership through
a. Spartan headquarters
b. absence of voice mail
c. low-cost facilities
d. no background music
e. all of the above

Answer 61

e. all of the above

Question 62

Franz Colruyt has achieved low-cost leadership through
a. effective use of voice mail
b. plastic, not paper, shopping bags
c. background music that subtly encourages shoppers to buy more
d. converting factories, garages, and theaters into retail outlets
e. use of the Euro, not the currency of each European country

Answer 62

d. converting factories, garages, and theaters into retail outlets

Question 63

Which of the following is an example of competing on quick response?
a. A firm produces its product with less raw material waste than its competitors.
b. A firm offers more reliable products than its competitors.
c. A firm’s products are introduced into the market faster than its competitors’ products.
d. A firm’s research and development department generates many ideas for new products.
e. A firm advertises more than its competitors.

Answer 63

c. A firm’s products are introduced into the market faster than its competitors’ products.

Question 64

Costs, quality, and human resource decisions interact strongly with the _______ decision.

Answer 64

goods and service design

Question 65

Which of the following influences layout design?
a. inventory requirements
b. capacity needs
c. personnel levels
d. technology decisions
e. All of the above influence layout decisions.

Answer 65

e. All of the above influence layout decisions.

Question 66

Response-based competitive advantage can be
a. flexible response
b. reliable response
c. quick response
d. all of the above
e. none of the above

Answer 66

d. all of the above

Question 67

Which of the following is not an operations strategic decision?
a. maintenance
b. price
c. layout design
d. quality
e. inventory

Answer 67

b. price

Question 68

Which of the following OM strategic decisions pertains to sensible location of processes and
materials in relation to each other?

Answer 68

layout design

Question 69

Which of these companies is most apt to have quality standards that are relatively subjective?
a. Chrysler
b. Dell Computer
c. Sanyo Electronics
d. Harvard University
e. Whirlpool

Answer 69

d. Harvard University

Question 70

Which of the following will more likely locate near their customers?
a. an automobile manufacturer
b. an aluminum manufacturer
c. an insurance company headquarters
d. a medical clinic
e. All of the above will tend to locate near their customers.

Answer 70

d. a medical clinic

Question 71

Which of the following statements concerning the operations management decision is relevant to
services?
a. There are many objective quality standards.
b. The customer is not involved in most of the process.
c. The work force’s technical skills are very important.
d. Labor standards vary depending on customer requirements.
e. Ability to inventory may allow the leveling of the output rates.

Answer 71

d. Labor standards vary depending on customer requirements

Question 72

Which of these organizations is likely to have the most important inventory decisions?
a. a marketing research firm
b. a lobbying agency
c. a management consulting firm
d. an aluminum manufacturer
e. a law firm

Answer 72

d. an aluminum manufacturer

Question 73

The PIMS program has identified the
a. operations decisions all organizations must make
b. distinctive competencies any company needs
c. characteristics of firms with high “ROI”
d. corporate decisions any company needs to make
e. all of the above

Answer 73

c. characteristics of firms with high “ROI”

Question 74

Which of these is not one of the PIMS characteristics of high return on investment organizations?
a. high product quality
b. high capacity utilization
c. low investment intensity
d. low direct cost per unit
e. All of the above are PIMS characteristics.

Answer 74

e. All of the above are PIMS characteristics.

Question 75

Standardization is an appropriate strategy in which stage of the product life cycle?

Answer 75

maturity

Question 76

Cost minimization is an appropriate strategy in which stage of the product life cycle?

Answer 76

decline

Question 77

Which of the following preconditions does not affect the formulation of an OM strategy?
a. knowledge of each product’s life cycle
b. external economic and technological conditions
c. the company’s employment benefits
d. competitors’ strengths and weaknesses
e. knowledge of the company’s strategy

Answer 77

c. the company’s employment benefits

Question 78

The stage in the product life cycle at which it is a poor time to change quality is

Answer 78

maturity

Question 79

Which of the following changes does not result in strategy changes?
a. change in the company’s financial situation
b. a company’s adoption of new technology
c. change in the product life cycle
d. change in the competitive environment
e. change in job scheduling techniques

Answer 79

e. change in job scheduling techniques

Question 80

All of these preconditions affect an operations management strategy except
a. external economic and technological conditions
b. competitors’ strengths and weaknesses
c. maintenance policies
d. knowledge of the company’s strategy
e. knowledge of each product’s life cycle

Answer 80

c. maintenance policies

Question 81

Understanding competitors’ strengths and weaknesses, understanding current and prospective
technological issues, and understanding product life cycle are examples of
a. what is important to the transnational strategy but not the multidomestic strategy
b. SWOT analysis
c. elements in the formulation of an organization’s mission
d. preconditions to establishing and implementing a strategy
e. the critical decision area of supply chain analysis

Answer 81

d. preconditions to establishing and implementing a strategy

Question 82

Which of the following statements is most correct?
a. CSFs are often necessary, but not sufficient for competitive advantage.
b. CSFs are often sufficient, but not necessary for competitive advantage.
c. CSFs are neither necessary nor sufficient for competitive advantage.
d. CSFs are both necessary and sufficient for competitive advantage.
e. None of the above statements is correct.

Answer 82

a. CSFs are often necessary, but not sufficient for competitive advantage.

Question 83

Given the position of the iPod in the growth stage of its life cycle, which of the following OM
Strategy/Issues should the makers of iPods be least concerned with at the current time?

Answer 83

cost cutting

Question 84

Which of these organizations is likely to have the most complex inventory decisions?
a. a marketing research firm
b. a stock brokerage firm
c. a management consulting firm
d. a computer manufacturing company
e. a high school

Answer 84

d. a computer manufacturing company

Question 85

The three steps of the operations manager’s job, in order, are
a. develop the strategy, establish the organizational structure, find the right staff
b. develop the strategy, find the right staff, establish the organizational structure
c. find the right staff, establish the organizational structure, develop the strategy
d. find the right staff, develop the strategy, establish the organizational structure
e. establish the organizational structure, find the right staff, develop the strategy

Answer 85

a. develop the strategy, establish the organizational structure, find the right staff

Question 86

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

Answer 86

d. supports the overall competitive strategy of the company

Question 87

Which of the international operations strategies involves high cost reductions and high local
responsiveness?

Answer 87

transnational strategy

Question 88

Which of the international operations strategies involves low cost reductions and low local
responsiveness?

Answer 88

international strategy

Question 89

Which of the international operations strategies uses import/export or licensing of existing
products?

Answer 89

international strategy

Question 90

Which of the international operations strategies uses the existing domestic model globally?

Answer 90

multidomestic strategy

Question 91

The acronym MNC stands for

Answer 91

Multinational Corporation

Question 92

Caterpillar and Texas Instruments are two firms that have benefited from the use of

Answer 92

the global strategy option.

Question 93

Which of the following are examples of transnational firms?
a. Nestlé
b. Asea Brown Boveri
c. Reuters
d. Citicorp
e. All of the above are transnationals.

Answer 93

e. All of the above are transnationals.

Question 94

Boeing found its Dreamliner 787 partners in _____________________ countries.

Answer 94

over a dozen

Question 95

________ are Mexican factories located along the U.S.-Mexico border that receive preferential
tariff treatment.

Answer 95

Maquiladoras

Question 96

_______ is a free trade agreement among Canada, Mexico, and the United States.

Answer 96

NAFTA–North American Free Trade Agreement

Question 97

_____________________ and __________________ are two issues where significant cultural
differences are large and progress toward global uniformity has been slow.

Answer 97

Bribery, protection of intellectual property

Question 98

An organization that has worked to achieve global uniformity in cultural and ethical issues such as
bribery, child labor, and environmental regulations is _________________________.

Answer 98

the World Trade Organization

Question 99

In goods producing organizations, ________,_________, and ________ may be inventoried.

Answer 99

raw materials, work-in-process, and finished goods

Question 100

Strategy is not static, but dynamic because of changes in the ________________ and
__________________.

Answer 100

organization, environment

Question 101

__________________ is the stage in product life cycle at which it is a poor time to change quality.

Answer 101

Maturity

Question 102

The ______ is how an organization expects to achieve its missions and goals.

Answer 102

strategy

Question 103

The creation of a unique advantage over competitors is called a ________.

Answer 103

competitive advantage

Question 104

Service organizations can immerse the consumer in the service, or have the consumer become a
participant in the service, as they practice ________.

Answer 104

experience differentiation

Question 105

Competitive advantage in operations can be achieved by ______, ______, and/or ________.

Answer 105

differentiation, low cost, response

Question 106

A(n) ________ is a firm that has extensive involvement in international business, owning or controlling facilities in more than one country.

Answer 106

MNC–multinational corporation

Question 107

The ________ strategy utilizes a standardized product across countries.

Answer 107

global

Question 108

The _______ strategy uses exports and licenses to penetrate globally.

Answer 108

international

Question 109

The ________ strategy uses subsidiaries, franchises, or joint ventures with substantial
independence.

Answer 109

multidomestic

Question 110

The ________ strategy describes a condition in which material, people, and ideas cross or
transgress national boundaries.

Answer 110

transnational