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Exam 13: Exporting and Global Sourcing

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Question 21

True/False

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The Internet provides the means to sell products directly to customers rather than going through traditional wholesale and retail channels.

A) True
B) False

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Question 22

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When outsourcing, managers can minimize the risk of creating employee tension by ________.

A) increasing the number of junior managers for foreign assignments
B) increasing the annual training budget
C) sending domestic managers to foreign countries for training
D) reaching a consensus of managers and labor

E) None of the above
F) A) and D)

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Question 23

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Audio Component Outsourcing (Scenario) Echo Corp., a company based in Boston, manufactures high-quality audio components, such as speakers, amplifiers, and receivers for home entertainment systems. Echo has been losing market share in recent years due to the competitive pricing of other audio component manufacturers that engage in global sourcing. Echo managers are attempting to convince Nathan Douglas, the firm's founder and CEO, that global sourcing would enable the firm to be more competitive without sacrificing quality. -Which of the following is a major challenge often faced by focal firms that engage in global sourcing?

Organic Towel Exports (Scenario) The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the company's website. Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada, for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels. -Which of the following most likely supports OTC exporting their towels to Earth Waves?

The likelihood of a firm internalizing research and development instead of outsourcing it is high.

Offshoring is common in the service sector, including banking, software code writing, legal services, and customer-service activities.

Industries that benefit the most from global sourcing are characterized by low labor intensity in product and service production.

Business activities that would most likely be offshored are characterized by ________.

Which of the following activities is highly important to firms as a strategic asset?

Which of the following services CANNOT be exported?

Fun Play Global Sourcing (Scenario) Fun Play Inc., a company manufacturing toys for children, has decided to outsource some of its value-chain activities. However, the firm has no experience with global sourcing and has hired a consulting firm to assist its managers. The consulting firm has been assigned the task of determining which activities should be outsourced and where the outsourced activities should be located. -Which of the following would most likely be considered by the consultants while deciding whether to keep each value-adding activity in the home country or locate it in a foreign country?

Which of the following activities is applicable to the final stage of exporting?

The likelihood of internalizing ________ rather than outsourcing it is considerably high.

Contract manufacturing is an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications.

Which of the following documents is the contract between the shipping company and the exporter?

The likelihood of a firm internalizing marketing and branding instead of outsourcing it is high.

Most companies cite cost cutting as the main reason for global sourcing.

Indirect exporting is exporting that is accomplished by contracting with intermediaries located in the home or domestic market.

Which of the following is a characteristic of direct exporting?

In a short essay, explain the factors involved in a firm's decision to use indirect exporting or direct exporting.