Chapter 2

Question 1

Reasons to Globalize:

Answer 1

• Reduce costs.
• Improve supply chain.
• Provide better goods and services.
• Understand markets.
• Learn to improve operations.
• Attract and retain global talent.

Question 2

Reduce Costs:

Answer 2

• Foreign locations with lower wage rates can lower direct and indirects taxes.

Question 3

Improve supply chain:

Answer 3

• Locating facilities closer to unique resources.

Question 4

Provide better goods and services:

Answer 4

• Objective and subjective characteristics of goods and services.

Question 5

Understand markets:

Answer 5

• Interacting with foreign customers/ suppliers can lead to new opportunities.

Question 6

Learn to improve operations:

Answer 6

• Remain open to the free flow of ideas.

Question 7

Attract and retain global talent:

Answer 7

• Offer better employment opportunities.

Question 8

Cultural and Ethical problems:

Answer 8

• Cultures can be quite different.
• Attitudes can be different towards:
  > Punctuality.
  > Environment.
  > Religion.
  > Child labor.

Question 9

Mission

Answer 9

Tell an organization where it is going.

• Organizations purpose for being.
• Answers to “what do we provide socially?”.
• Provides boundaries and focus.

Question 10

Strategy:

Answer 10

Tells the organization how to get there.

• Action plan to achieve mission.
• Functional areas have strategies.
• Strategies exploit opportunities and strengths and avoid weakness.

Question 11

Strategies for Competitive Advantage:

Answer 11

• Differentiation.
• Cost leadership- Cheaper.
• Quick response- Responsive.

Question 12

OM contribution to improve ROI

Answer 12

• High quality product.
• High capacity utilization.
• High operating efficiency.
• Low investment.
• Low direct cost per unit.

Question 13

Elaborating the OM Strategy:

Answer 13

One must understand:

• Strengths/ weaknesses of competitors.
• Current/ prospective environmental, technological, legal and economic issues.
• Product life cycle.
• Resources available within the firm and the OM function.
• Integration of OM strategy with company’s strategy + other functional areas.

Question 14

Product life cycle:

Answer 14

• Introduction: best period to increase market share.
• Growth: practical to change price or quality image.
• Maturity: poor time to change image, price or quality.
• Decline: cost control critical.