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How do firms decide whether or not to outsource? In a short essay, describe the factors that contribute to the decision to internalize or externalize business activities.

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Managers must decide between internaliza...

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Back-office activities consist of downstream, customer-related services.

A) True
B) False

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Exporting and importing collectively refers to international trade.

A) True
B) False

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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?


A) Who will be responsible for training suppliers in foreign locations?
B) Can different value-adding activities be effectively configured across the world?
C) Would the HR department of Fun Play be able to ensure smooth repatriation for managers after they complete their assignments abroad?
D) What are the odds in favor of Fun Play's dominating the children's toy segment in its home country?

E) A) and C)
F) C) and D)

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In a short essay, describe three key drivers responsible for the recent growth of global sourcing.

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The growth of global sourcing has been d...

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Which of the following is a characteristic of direct exporting?


A) exporter uses few corporate resources and personnel
B) exporter develops a closer relationship with foreign buyers
C) exporter contracts with domestic intermediaries
D) exporter delegates responsibility of finding buyers

E) B) and D)
F) A) and D)

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Which of the following is an advantage of exporting?


A) It allows focal firms to attain maximum control by establishing ownership of key assets in the foreign market.
B) It is a high-control strategy that requires substantial resource commitment when compared to equity joint ventures.
C) It minimizes exposure to tariffs and other trade barriers, as well as fluctuations in exchange rates.
D) It increases overall sales volume, improves market share, and reduces per-unit costs of manufacturing.

E) A) and D)
F) A) and C)

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Firms usually internalize those value-chain activities they consider part of their core competencies.

A) True
B) False

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Which of the following is most likely to occur if a U.S. firm outsources some of its business operations to a Japanese company, and the Japanese yen strengthens against the dollar?


A) The probability of intellectual property laws being enforced would significantly decrease in Japan.
B) The U.S. company will experience additional cost savings in using the services of the Japanese company.
C) Outsourcing business operations to Japan would become less expensive.
D) The U.S. company will experience higher costs in using the services of the Japanese company.

E) A) and B)
F) A) and C)

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Which of the following is true with regard to the risks of global sourcing?


A) Inadequate legal systems, red tape, convoluted tax systems, and complex business regulations complicate local operations in many countries.
B) Firms that source from countries whose currencies are strengthening experience lower costs.
C) Global sourcing weakens competition leading to a considerably risk-free international business environment.
D) Environmental challenges exclude currency fluctuations, tariffs and other trade barriers, high energy and transportation costs.

E) A) and B)
F) A) and C)

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In a short essay, explain how global sourcing can affect home-country employees.

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Global sourcing can leave employees caug...

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Transformational outsourcing suggests that just as the firm achieves gains in efficiency, productivity, quality, and revenues by leveraging offshore talent, it also obtains the means to turn around failing businesses, speed up innovation, restructure operations, and fund otherwise-unaffordable development projects.

A) True
B) False

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


A) high-value-adding activities that contribute more productively to increasing company performance
B) services related to critical, long-term research projects and product development
C) routine tasks that do not relate to the firm's primary service or product
D) functions related to the firm's core competencies and strategic assets

E) A) and D)
F) B) and C)

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Which of the following would be most important to determine in deciding whether to outsource some of Echo's value-chain activities?


A) What are the long-term strategic goals and objectives of Echo?
B) Do engineers working in Echo have the ability to speak one or more European languages?
C) Are Echo employees generally afforded a high degree of workplace freedom?
D) Does Echo intend to increase its annual budget for innovation?

E) All of the above
F) A) and B)

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Critics of global sourcing maintain that it ________.


A) leads to reduced national competitiveness
B) results in job losses in host countries
C) enhances standards of living
D) causes production to drop drastically

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

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________ refers to sourcing from the firm's own production facilities.


A) Captive sourcing
B) Crowdsourcing
C) Business process outsourcing
D) Externalization

E) A) and D)
F) B) and D)

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

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Direct and indirect exporting are not mu...

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Which of the following services cannot be exported?


A) insurance services
B) education
C) pure services
D) construction

E) C) and D)
F) All of the above

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Global sourcing becomes a catalyst to overhaul organizational processes and company operations and increases the firm's overall competitive advantages by ________.


A) encouraging firms to train unskilled labor through extensive training programs
B) allowing firms to free expensive analysts, engineers, and managers from routine tasks to spend more time on high-value-adding activities
C) relaxing quality standards
D) installing a system of rewards to motivate employees

E) B) and D)
F) A) and C)

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Compared to other entry strategies, exporting minimizes risk and maximizes flexibility.

A) True
B) False

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