CHAPTER 2

Question 1

Domestic business operations decide to change to some form of international operations for six main reasons

Answer 1

1. Improve supply chain
2. Reduce costs and exchange rate risks
3. Improve operations
4. Understand markets
5. Improve products
6. Attract and retain global talent

Question 2

Mexican factories located along the U.S.–Mexico border receive preferential tariff treatment.

Answer 2

Maquiladoras

Question 3

An international organization that promotes
world trade by lowering barriers to the free flow of goods across borders

Answer 3

World Trade Organization (WTO)

Question 4

A free trade agreement between Canada, Mexico, and the United States.

Answer 4

NAFTA

Question 5

A European trade group that has 28 member states

Answer 5

European Union (EU)

Question 6

The purpose or rationale for an organization’s existence.

Answer 6

Mission

Question 7

—How an organization expects to achieve its missions and goals.

Answer 7

Strategy

Question 8

three strategic approaches to competitive advantage are:

Answer 8

1. Differentiation
2. Cost leadership
3. Response

Question 9

The creation of a unique advantage over competitors.

Answer 9

Competitive advantage

Question 10

Distinguishing the offerings of an organization in a way that the
customer perceives as adding value

Answer 10

Differentiation

Question 11

Engaging the customer with a product through imaginative use of the five senses, so the customer “experiences” the product.

Answer 11

Experience differentiation

Question 12

Achieving maximum value, as perceived by the customer.

Answer 12

Low-cost leadership

Question 13

A set of values related to rapid, flexible, and reliable performance.

Answer 13

Response

Question 14

A view in which managers evaluate the resources at their disposal and manage or alter them to achieve competitive advantage

Answer 14

Resources view

Question 15

A way to identify the elements in the product/service chain
that uniquely add value

Answer 15

Value-chain analysis

Question 16

A way to analyze the five forces in the competitive environment

Answer 16

Five forces model —

Question 17

Five forces model are:

Answer 17

1) immediate rivals
(2) potential entrants
(3) customers
(4) suppliers
(5) substitute products.

Question 18

Company strategy: Best period to increase market share, R&D engineering is critical. OM strategy: Product design and development critical, frequent
product and process design changes, short production runs, high production costs,
limited models, and attention to quality.

Answer 18

Introduction

Question 19

Company strategy: Practical to change price or quality image, strengthen
niche. OM strategy: Forecasting critical, product and process reliability, competitive
product improvements and options, increase capacity, shift toward product focus,
enhance distribution.

Answer 19

Growth

Question 20

Company strategy: Poor time to change image or price or quality,
competitive costs become critical, defend the market position. OM strategy: Standardization, less rapid product changes (more minor changes), optimum capacity,
increasing stability of the process, long production runs, product improvement and cost-cutting.

Answer 20

Maturity

Question 21

Company strategy: Cost control is critical. OM strategy: Little product differentiation, cost minimization, overcapacity in the industry, prune line to eliminate
items not returning good margin, reduce capacity

Answer 21

Decline

Question 22

A method of determining internal strengths and weaknesses and
external opportunities and threats.

Answer 22

SWOT analysis

Question 23

Activities or factors that are key to achieving competitive advantage.

Answer 23

Key success factors (KSFs)

Question 24

A set of unique skills, talents, and activities that a firm does
particularly well. A core competence may be a combination of KSFs.

Answer 24

Core competencies

Question 25

A graphical link of competitive advantage, KSFs, and supporting
activities.

Answer 25

Activity map

Question 26

Procuring from external sources services or products that are normally part of an organization

Answer 26

Outsourcing

Question 27

The theory which states that countries benefit
from specializing in (and exporting) products and services in which they have relative advantage and importing goods in which they have a relative disadvantage.
Perhaps half of all outsourcing agreements fail because of inappropriate planning and
analysis

Answer 27

Theory of comparative advantage

Question 28

Potential risks of outsourcing include

Answer 28

-A drop in quality or customer service
- Political backlash that results from outsourcing to foreign countries
- Negative impact on employees
-Potential future competition
- Increased logistics and inventory costs

Question 29

—A firm that engages in cross-border transactions.

Answer 29

International Business

Question 30

A firm that has extensive involvement in international business, owning or controlling facilities in more than one country.
The four operations strategies for approaching global opportunities can be classified
according to local responsiveness and cost reduction.

Answer 30

Multinational corporation (MNC)

Question 31

A strategy in which global markets are penetrated using
exports and licenses with little local responsiveness.

Answer 31

International strategy

Question 32

A strategy in which operating decisions are decentralized to
each country to enhance local responsiveness.

Answer 32

Multidomestic strategy

Question 33

A strategy in which operating decisions are centralized and headquarters coordinates the standardization and learning between facilities

Answer 33

Global strategy

Question 34

A strategy that combines the benefits of global-scale efficiencies with the benefits of local responsiveness. These firms transgress national
boundaries.

Answer 34

Transnational strategy