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IB Work Book Chapter 8
International Business I (Đại học Kinh tế Quốc dân)
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CHAPTER 8
Global Operations and Supply Chain Management
Section 1 – Term matching
1. Outsourcing A. system in which the entire organization is managed so that it
E excels on all dimensions of product and services that are
important to the customer.
2. Supply chain B. relocating some or all of a business’s activities or processes to a
management foreign location.
G
3. Offshoring C. an entire manufacturing system with unbalanced operations that
B emphasizes total system performance.
4. Just-in-time D. arrangement in which facilities are established to manufacture
J inputs used in the production of a firm’s final products.
5. Total quality E. hiring others to perform some of noncore activities and decision
management making in a company’s value chain, rather than having the company
A and its employees continue to perform those activities.
6. Logistics F. the transportation and distribution of goods and services.
F
7. Wholly owned G. the process of coordinating and integrating the flow of
subsidiaries materials, information, finances, and services within and among
I companies in the value chain from suppliers to the ultimate
consumer.
8. Letter of credit H. operation in a manufacturing system whose output sets the limit
M for the entire system’s output.
8. Quality control I. a company whose common stock is 100% owned by another
circle company, the parent company.
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K
10. Synchronous J. a balanced system in which there is little or no delay time and idle
manufacturing in-process and finished goods inventory.
C
11. Bottleneck K. small work group that meets periodically to discuss ways to
H improve its functional areas and the quality of the product.
12. Mass customization L. the use of flexible, usually computer-aided, manufacturing
L systems to produce and deliver customized products and services for
different customers worldwide.
13. Backward vertical M. a letter from a bank guaranteeing that a buyer's payment to a
integration seller will be received on time and for the correct amount.
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Section 2 – Gap filling
1. Design
2. Products
3. Adapted
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4. On-the-wall approach
5. Sequential steps
6. Cross-functional participation
7. Wholly owned subsidiary
8. Low-cost labor
9. Higher quality
10. Components
11. Oversea independent contractor
12. Overseas joint venture
Section 3 – Mutiple choice questions
1. The most important reason for sourcing globally is ______________.
A. to obtain foreign products that are not available locally
B. the firm's worldwide operation and attitude
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C. to obtain advanced technology from foreign sources
D. to obtain lower prices from foreign sources
2. Which of the following arrangements can provide a firm with foreign products?
A. Wholly owned subsidiary
B. Overseas venture
C. In-bond plant contractor
D. All of the above
3. There is a strong relationship between global sourcing and ______________.
A. ownership of foreign sources
B. a firm's total profit
C. a firm's global success
D. none of the above
4. International freight, insurance and packing can add as much as ______________ to the
quoted price of an imported product.
A. 6 to 8 percent
B. 8 to 10 percent
C. 10 to 12 percent
D. 12 to 14 percent
5. To lower manufacturing costs, the principal goal of Japanese firms is to ______________.
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A. eliminate inventories
B. reduce the process time
C. lower labor costs
D. reduce inventory costs
6. ______________ has become a global center for high-technology businesses in recent years.
A. China
B. Indonesia
C. Vietnam
D. India
7. ______________, the most comprehensive of standards applies to industries involved in the
design, development, manufacturing, installation and servicing of products and services.
A. ISO 9001
B. ANSI/AQC90
C. ISO 9000
D. ISO 14000
8. Manufacturing rationalization is the ______________.
A. concentration of production at one central location
B. division of production among a number of producing units
C. allocation of labor costs based on product quality
D. location of production facilities in countries that have the most favorable export laws
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9. Generally, it is easier for international corporations to standardize the concepts of total quality
management and synchronous manufacturing in their overseas affiliates than it is to standardize
the actual manufacturing facilities. Environmental forces that contribute to this include
______________.
A. legal forces
B. financial forces
C. political forces
D. all of the above
10. Production methods that are between capital-intensive and labor-intensive methods are
called ______________.
A. mid-range technologies
B. appropriate technologies
C. intermediate technologies
D. none of the above
11. "A network of manufacturers and service providers that work together to convert and move
goods from the raw materials stage through to the end user" is the definition of
______________.
A. Supply chain
B. Operations management
C. Service operations
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D. Operations function
12. A ______________ encompasses all activities associated with the flow and transformation of
goods from the raw material stage, through to the end user, as well as the associated information
flows.
A. production line
B. supply chain
C. marketing channel
D. warehouse
13. A supply chain is a sequence of firms that perform activities required ______________.
A. to find products that are similar
B. to facilitate wholesalers inventory selections
C. to create and deliver goods to consumers
D. to support the acquisition of raw materials
14. A supply chain is essentially a sequence of linked ______________.
A. customer and prospects
B. supplier and manufacturer
C. suppliers and customers
D. warehousing and wholesaling units
15. The sequence of a typical manufacturing supply chain is ______________.
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A. Storage – supplier – manufacturing - storage – distributor – retailer – customer
B. Supplier – storage – manufacturing – storage – distributor – retailer – customer
C. Supplier – storage – manufacturing – distributor – storage – retailer – customer
D. Supplier – storage – manufacturing – storage – retailer – distributor – customer
16. An organization's supply chain can be viewed from a system's perspective that starts with the
acquisition of resources which are then transformed into products or services. Simply, put the
sequence is represented ______________.
A. Inputs - process – outputs
B. Inputs - outputs – process
C. Sourcing - input - process – outputs
D. Process - inputs – outputs
17. Process of managing upstream and downstream of final goods, flow of raw materials and
information about resellers and final consumers is classified as ______________.
A. marketing logistics network
B. supply chain management
C. delivery network
D. physical distribution network
18. Which of the following is true for supply chain management?
A. The physical material moves in the direction of the end of chain
B. Flow of cash backwards through the chain
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C. Exchange of information moves in both the direction
D. All of the above
19. Which of the following are not key attributes of supply chain management?
A. inventory control
B. leveraging (power to influence) technology
C. customer power
D. all are key attributes.
20. Positive long-term relationships between supply chain participants refer to
______________.
A. co-opetitions
B. tailored logistics
C. partnerships
D. supply chain management
21. The supply chain function works with marketing to manage the movement of physical goods
throughout the supply chain. This supply chain activity is ______________.
A. Capacity Planning
B. Purchasing
C. Logistics
D. Forecasting
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22. Logistics is the part of a supply chain involved with the forward and reverse flow
of ______________.
A. goods
B. services
C. cash
D. all of the above
23. Logistics is an integral part of supply chain management. Which explanation best represents
outbound logistics?
A. A supply chain that emphasizes distribution of a product to passive customers
B. An emphasis on using the supply chain to deliver value to customers who are actively
involved in product and service specification
C. The management of material resources entering an organization from its suppliers and other
partners
D. The management of resources supplied from an organization to its customers and
intermediaries
24. The physical characteristics of a product will often dictate what ______________.
A. types of sales can be made
B. types of instructions needed
C. geographic regions will be included
D. kinds of transportation can be used
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25. Dramatic cost savings are possible when efficient transportation systems and information
technology can be substituted for ______________ costs.
A. Advertising
B. personal selling
C. publicity
D. inventory
26. Zero defects in manufacturing is ______________.
A. is a relevant goal only in electronic assembly
B. is readily achievable in all areas
C. is the goal of TQM
D. is an unobtainable and misleading idea
Section 4 – T/F + explanation
1. The "over-the-wall" approach to product design is sequential in nature, and its initial step is
the product's designs are prepared by the designers. T
2. The rate at which developing nations shift to more sophisticated processes is often slower than
for the initial emergence of these processes in a developed country. F
3. Firms increasingly are using indirect procurement systems to ensure that all the costs
associated with foreign sourcing are fully recognized when they make purchasing decisions. F
4. To avoid an increase in price because the home currency has lost value, an American importer
should require exporters to quote in their currency. F
5. Many U.S. manufacturers copied parts of the just-in-time system without realizing it is a
total system. T
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6. Supply chain management is the management of processes used to design, supply, product,
and deliver valuable goods and services to customers. False: This is the definition of operations
management.
7. The supply chain concept originated in logistics literature. T
8. Supply management plays a major role in improving the “bottom line” by driving sales up
and costs down. T
9. Efficiency means doing the right things to create the most value for the company. False:
Doing something at the lowest possible cost
10. Effectiveness means doing the right things to create the most value for the company. T
11. Just in time (JIT) production was a major breakthrough in manufacturing
philosophy pioneered by the United States./ False: Japan
12. Strategic sourcing is the development and management of supplier relationships to acquire
goods and services in a way that aids in achieving the immediate needs of the business. T
13. Exporting is the act of moving some of a firm's internal activities and decision responsibility
to outside providers. T/ False: Outsourcing, not exporting
14. Outsourcing allows a firm to achieve an improved focus on its core competencies. T
Section 5 – Short-answered questions
1. What are the differences between Supply Chain and Value Chain?
2. Read the information and Draw a figure to describe the supply chain of the PhoneCorporation
and Motokiason.
The PhoneCorporation has 25 stores which are called the PhoneShop throughout the country
where customers can buy their mobile phones. In the coming years, the company wants to
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expand its business to the rest of Europe and it might be expected that the volume will double.
Usually, in a supply chain of mobile phones, phones are transported from factories to a
wholesaler. This wholesaler distribute the phones to various retailers. However, the
PhoneCorporation preferred to be no longer dependent on the wholesaler. Furthermore, one of
the major suppliers (Motokiason) figured out that a lot of information was if all contacts go
through a wholesaler. Therefore, both companies agreed to eliminate the wholesaler and have
direct contact with each other. Motokiason takes care of all logistics activities of their phones.
The transport and distribution of the mobile phones is outsourced to a third party logistics
provider, Mobile Express. The PhoneShops can check electronically on the website of the central
office of PhoneCorporation on the assortment of Motokiason and place their orders once a week.
The central office of the PhoneCorporation submits the orders to the factory of Motokiason in the
south of Sweden near the port of Goteborg. There is one transport per week with mobile phones
from Sweden to the distribution center of Mobile Express. In the distribution center the mobile
phones are sorted over the various PhoneShops. Delivery vans transport the mobile phones to the
PhoneShops. Transportation requests for various PhoneShops are not combined into one trip.
From an environmental point of view customers are encouraged to return their used and broken
phones to the PhoneShops. There is one central depot in the Netherlands, namely in Nijmegen,
where returned mobile phones are collected. Mobile Express also needs to manage the flow of
returned mobile phone from the PhoneShops to this central depot. At this depot phones are sorted
by brand and once a week delivery vans of Mobile Express need to transport the returned mobile
phones of Motokiason from the central depot back to the distribution center of Mobile Express.
3. Read the information and Draw a figure to describe the supply chain of Grainger.
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W.W. Grainger, Inc. is a leading supplier of maintenance, repair, and operating motors to
businesses and institution all over the world. Grainger works with over 250 suppliers in the
China and Taiwan region. These suppliers produce motors to Grainger’s specifications and ship
to the United States using ocean freight carriers from four major ports in China and Taiwan. The
contracts that Grainger has with Chinese and Taiwanese suppliers currently specify that the
suppliers owns the motors and is responsible for all costs incurred until the motors are delivered
to the shipping port. Grainger works with a freight forwarding company that coordinates all
shipments from Asian suppliers.
Currently, suppliers first trip motors on pallets to consolidation centers operated by the freight
forwarding company at the port locations. At the consolidation centers, motors are packed in 40-
foor containers. From any port location in China or Taiwan, containers are shipped to U.S entry
ports in either Seattle or Los Angeles. After passing through customs, the containers are shipped
by rail to Grainger’s central distribution center in Kansas City. The containers are unloaded and
quality is checked in Kansas city. From there, individual items are sent to regional warehouses in
nine U.S. locations, a Canada site, and Mexico.
4. Read the information and Draw a figure to describe the supply chain of Pepe.
Pepe began to produce and sell denim jeans in the early 1970s in the United Kingdom and has
achieved enormous growth. Pepe’s success was the result of a unique approach in a product
market dominated by strong brands and limited variety. Pepe is convinced that a good
relationship with the independent retailers is vital to its success. The Pepe’s representatives meet
with each independent retailer three to four times each year in order to present the new
collections and to take sales orders. Because the number of accounts for each representative is so
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large, contact is often achieved by holding a presentation in a hotel for several retailers. The
representatives take orders from retailers for six-month delivery. After Pepe receives an order,
the retailer has only one week in which to cancel because of the need to place immediate firm
orders in Hong Kong to meet the delivery date. The company has had a long-standing policy of
not holding any inventory of jeans in the United Kingdom. After an order is taken and confirmed,
the rest of the process up to delivery is administered from the Pepe office in Willesden. The
status of orders can be checked from a Web site maintained by Pepe. The actual orders are sent to
a sourcing agent in Hongkong who arranges for manufacturing the jeans by two contract
manufacturers in Mainland China. After fabrication, the contract manufacturer will transport the
jeans to the warehouse of the sourcing agent. Then, the agent will directly ship the completed
jeans to the retailer. Pepe works closely with the Hongkong sourcing agent to ensure that the
jeans are made properly and that the material used is of the highest quality.
5. Read the information and Draw a figure to describe the supply chain of Pro Fishing.
A fishing boat manufacturer, Pro Fishing, is having many problems with critical globally sourced
parts. Pro Fishing has two manufacturing facilities in the United States. The firm’s reliance on
efficient global supply chain operations is increasing as the manufacturer is sourcing more and
more parts overseas, including critical components. The component is manufactured overseas in
China by a supplier, Manufacturing Inc. The Manufacturing Inc production schedule is based on
orders sent via fax from the Pro Fishing warehouse. They operate on a 90-60-30 day forecast
along with a weekly order. Upon completion of the component, Manufacturing Inc, sends the
component via truck to the Shanghai Port where it is loaded onto a ship heading to the United
States. Upon arrival in the United States, the component is unloaded to a Pro Fishing distribution
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center at port after customs inspect. From there, the component is trucked to the Pro Fishing
warehouse in Chicago where the 6-week inventory buffer has been mandated. From the
warehouse, the components are trucked to plants in the United States triggered by electronic
orders from each of the Pro Fishing plants. Further, the component produced by Manufacturing
Inc. is made up of two main raw materials from two suppliers: one from China and the other
from the United States. It is interesting to note that Manufacturing Inc. uses these suppliers due
to Pro Fishing’s strict supplier qualification requirements.
6. Read the information and Draw a figure to describe the supply chain of Zara.
Zara is one of Spain’s most successful and most dynamic apparel companies, producing
fashionable clothing that appeals to an international target market of those between the ages of
18 and 35. Zara’s international market positioning places it in direct competition with some of
the most advanced operations in the business, including Italian fashion giant Benetton and Us-
based Gap and the Limited. Zara’s headquarters are located in La Coruna (North-West of Spain).
The headquarters hosts 3 different departments: the Design department, the Purchasing
department, and the Production Planning and Control department.
The whole process of supplying goods to the stores begins with cross-functional teams working
within Zara’s Design department at the company’s headquarters. The designs reflect the latest in
international fashion trends, with inspiration collected through agents of Zara visiting fashion
shows, university campuses, pubs and clubs, plus any other venues or events deemed relevant to
the lifestyles of the target customers. These agents share their findings from their visits to the
Design team. The team’s understanding of fashion trends is further guided by regular inflows of
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electronic point of sale (EPOS) data from all of the company’s stores around the world. New
items can be designed in 4-6 weeks, and existing items can be modified in 2 weeks.
The Purchasing department of Zara orders large quantities of a few types of fabric (just four or
five types, but they can change from year to year). The Purchasing department places electronic
orders of raw fabric to the suppliers that are located in Italy, Spain, Portugal and Greece. The
suppliers, after confirming acceptance of the order electronically, deliver (within 5 days) the
fabrics to the Zara Distribution Center, known as “The Cube”, that is located in Zaragoza (North-
East of Spain). Inbound logistics from suppliers are mostly by truck. The level of raw materials
stored in “The Cube” is continuously and automatically controlled by the Purchasing department
through an inventory management software developed by Zara. Thanks to this software, the
Purchasing department can decide remotely when to place an order to the suppliers of the fabrics
and communicate to “The Cube” the scheduling of the expected inbound deliveries from
suppliers.
The Cube is 464,500 meters square (5 million feet square), and highly automated with
underground monorail links to 11 Zara’s own factories. These 11 factories produce around 60%
of the overall finished goods of Zara, while the remaining 40% is produces by low-cost
manufacturing centers in the Far East. All materials pass through “The Cube” and are delivered
to the manufacturing centers (Zara’s own factories and Far East factories) from “The Cube”. In a
similar way, all finished goods are sent back to “The Cube” and all finished goods are delivered
to the stores from “The Cube”. Deliveries to the stores are made by truck (European stores) and
by plane (rest of the world) in just a few days (between 1 and 3 working days).
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Stores place orders to the Production Planning and Control department twice a week and this
drives the production scheduling of finished goods. The production scheduling is shared via
intranet and extranet with the manufacturing centers (who have to confirm acceptance of the
order and communicate delivery times) and with “The Cube” (for inbound and outbound
logistics planning). Stores take deliveries twice per week. Items are shipped and arrive at stores
already on hangers and with tags and prices on them. So items come off delivery trucks and go
directly onto the sales floor. Thanks to the frequency of the orders from the stores, the accuracy
of the forecasts and the agility of the supply chain. Zara’s stores have less than 5 percent of
inventory unsold compared to industry averages of 17 – 20 percent. This means that stores do not
need to send back unsold products to “The Cube” but rather use discount strategies to keep
inventories at the locations close to zero.
Section 6 – Case study
Whirlpool Cleans Up Its Supply Chain
Case problem: Drivers for and methods to optimize the supply chain
Company introduction: Whirlpool Corporation is a leader of the $100 billion global home
appliance industry. Ranked sixth in the electronics industry list of FORTUNE magazine’s
"World’s Most Admired Companies" , Whirlpool Corporation is a Fortune 500 company and the
world's leading manufacturer and marketer of major home appliances. Annual sales are
approximately $19 billion, and there are 70,000 employees, with 69 manufacturing and
technology research centres around the world. Founded in 1911, the company markets
Whirlpool, Maytag, KitchenAid, Jenn‐Air, Amana, Brastemp, Consul, Bauknecht and other
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