Question 1

Which of the following is TRUE with regard to global sourcing?
A) Global sourcing has declined significantly in the current phase of globalization.
B) Global sourcing is a low-control strategy in which the focal firm sources from independent suppliers through contractual agreements.
C) Global sourcing refers to the relocation of a business process or entire manufacturing facility to a foreign country.
D) Global sourcing does not represent the firm's initial involvement in international business.

Accepted Answer

Global sourcing typically involves the focal firm sourcing goods and services from suppliers around the world, often through contractual agreements rather than direct ownership or high-control mechanisms. This approach allows firms to leverage global efficiencies, such as lower labor costs or specialized expertise, without the need for direct investment in foreign operations.

Question 2

________ refers to sourcing from the firm's own production facilities.
A) Captive sourcing
B) Crowdsourcing
C) Business process outsourcing
D) Externalization

Accepted Answer

Captive sourcing refers to a strategy where a company uses its own production facilities to manufacture its products or components, rather than outsourcing those functions to external suppliers.

Question 3

The growth of global sourcing has been driven by ________.
A) the declining demand for highly skilled workers
B) the rapidly aging population in advanced economies
C) technological advances in communications
D) the rising costs of international business

Accepted Answer

Technological advances in communications have significantly facilitated global sourcing by making it easier for companies to coordinate and manage operations across different countries, thus driving its growth.

Question 4

The bill of lading is the "birth certificate" of the goods being shipped and indicates the country where they originate.

Accepted Answer

The bill of lading is a legal document between the shipper and carrier detailing the type, quantity, and destination of the goods being carried; it does not indicate the country of origin of the goods.

Question 5

The procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers is known as ________.
A) outsourcing
B) franchising
C) offshoring
D) licensing

Accepted Answer

Outsourcing refers to the practice of obtaining goods or services from an outside or foreign supplier, especially in place of an internal source. It involves the procurement of selected value-adding activities, such as the production of intermediate goods or finished products, from independent suppliers.

Question 6

Which of the following documents is the contract between the shipping company and the exporter?
A) pro forma invoice
B) bill of lading
C) export declaration
D) commercial invoice

Accepted Answer

The bill of lading is the contract between the shipping company and the exporter, serving as a receipt for shipped goods and a document of title.

Question 7

In a short essay, explain why most firms use exporting as part of their internationalization portfolio, and discuss how Incoterms have mitigated problems with logistics.

Accepted Answer

The answer of In a short essay, explain why most...

Question 8

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?
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?

Accepted Answer

Configuring different value-adding activities effectively across the world is crucial for global sourcing success, as it involves determining the most efficient and cost-effective locations for various operations.

Question 9

Incoterms are universally accepted terms of sale that specify how the buyer and the seller share the cost of freight and insurance in an international transaction and at which point the buyer takes title to the goods.

Accepted Answer

Incoterms (International Commercial Terms) are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) that are widely used in international commercial transactions. They clearly define the responsibilities of buyers and sellers for the delivery of goods under sales contracts, including the allocation of costs and risks between the parties, and at which point the buyer takes title to the goods.

Question 10

Incoterms were developed by the International Chamber of Commerce in order to ________.
A) provide permission to export
B) standardize the cost of shipping and insuring exported items
C) define how the buyer and seller share freight and insurance costs
D) reduce the costs of shipping and insuring exported products

Accepted Answer

Incoterms were developed to define how the buyer and seller share responsibilities, risks, and costs related to the transportation and delivery of goods, including freight and insurance costs.

Question 11

The exporter usually first issues a quotation or pro forma invoice upon request by potential customers.

Accepted Answer

A quotation or pro forma invoice is typically issued by the exporter in response to a request from a potential customer, outlining the products, prices, and terms under which the exporter can supply the goods.

Question 12

Contract manufacturing can best be defined as ________.
A) the outsourcing to independent suppliers of business service functions such as accounting, payroll, human resource functions, travel services, IT services, customer service, or technical support
B) the relocation of a business process or entire manufacturing facility to a foreign country
C) sourcing from the firm's own production facilities
D) an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications

Accepted Answer

Contract manufacturing involves a company hiring another company to produce goods on its behalf, typically to specific standards and specifications. This allows the hiring company to focus on other aspects of its business, such as design, branding, or sales, while leveraging the manufacturing capabilities of the contractor.

Question 13

Which of the following is the best example of a back-office BPO (Business Processing Outsourcing) activity?
A) customer service
B) billing
C) marketing
D) technical support

Accepted Answer

Billing is a classic example of a back-office BPO activity, focusing on internal business functions such as finance and accounting that do not directly involve customer interaction.

Question 14

Focal firms typically source from external suppliers for all of the following reasons EXCEPT ________.
A) the product or service obtained is non-core
B) the product can be purchased inexpensively
C) the supplier specializes in providing the product or service
D) the supplier offers the same product to competing firms

Accepted Answer

Focal firms source from external suppliers for reasons such as non-core activities (A), cost efficiency (B), and specialized capabilities (C). The fact that a supplier offers the same product to competing firms (D) is not a typical reason for sourcing decisions; it might even be a concern due to competitive reasons.

Question 15

If a computer contains a microprocessor from Costa Rica and a hard disk drive from the Philippines, the computer manufacturer, who is based in Texas and operates across Europe and West Asia, most likely uses ________ as an entry strategy.
A) exporting
B) franchising
C) global sourcing
D) licensing

Accepted Answer

Global sourcing is the practice of sourcing from the global market for goods and services across geopolitical boundaries. It aims to exploit global efficiencies in the delivery of a product or service. The scenario describes a company that sources components from different countries (Costa Rica and the Philippines), which is a characteristic of global sourcing.

Question 16

Trade fairs are not only excellent sites to meet potential intermediaries, they also provide the means to become familiar with key players in the local industry and to generally learn about the target market.

Accepted Answer

Trade fairs offer a unique platform for businesses to network with potential intermediaries, gain insights into the local industry, and learn about the target market, making them valuable for market research and business expansion efforts.

Question 17

Prox Inc. is a U.S.-based manufacturer of consumer electronics. It decides to export to Mexico and wants to protect its goods against damage, loss, and pilferage. Which of the following documents is applicable here?
A) insurance certificate
B) bill of lading
C) pro forma invoice
D) license

Accepted Answer

An insurance certificate is necessary for Prox Inc. to protect its goods against damage, loss, and pilferage during the export process to Mexico. This document serves as proof that the goods are insured under the specified conditions.

Question 18

Exporters usually purchase an insurance certificate to protect the exported goods against damage, loss, pilferage (theft), and, in some cases, delay.

Accepted Answer

Exporters often purchase insurance certificates as part of their risk management strategy to protect against potential losses or damages to goods during transit, including damage, loss, theft (pilferage), and sometimes delay, ensuring financial protection and stability in international trade.

Question 19

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 is most likely to be the consultants' utmost concern while deciding if clothing for Fun Play dolls needs to be outsourced?
A) Is doll clothing part of Fun Play's core competencies?
B) What kind of fabric is used for clothing Fun Play dolls?
C) Do the competitors of Fun Play outsource accounting activities abroad?
D) Does Fun Play intend to follow a strategy of product diversification in the near future?

Accepted Answer

The consultants' utmost concern would likely be whether doll clothing is part of Fun Play's core competencies, as this would determine the strategic importance of keeping this activity in-house or the potential benefits of outsourcing it.

Question 20

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.
-If Fun Play decides to source from its own wholly owned subsidiary, it would be engaging in ________.
A) offshoring
B) contract manufacturing
C) cause marketing
D) captive sourcing

Accepted Answer

Captive sourcing refers to a company outsourcing to its own wholly owned subsidiary, often in a different country, to take advantage of lower costs while maintaining control over its operations.

Quiz 13: Exporting and Global Sourcing

Which of the following is TRUE with regard to global sourcing?

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

The growth of global sourcing has been driven by ________.

The bill of lading is the "birth certificate" of the goods being shipped and indicates the country where they originate.

The procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers is known as ________.

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

In a short essay, explain why most firms use exporting as part of their internationalization portfolio, and discuss how Incoterms have mitigated problems with logistics.

Incoterms are universally accepted terms of sale that specify how the buyer and the seller share the cost of freight and insurance in an international transaction and at which point the buyer takes title to the goods.

Incoterms were developed by the International Chamber of Commerce in order to ________.

The exporter usually first issues a quotation or pro forma invoice upon request by potential customers.

Contract manufacturing can best be defined as ________.

Which of the following is the best example of a back-office BPO (Business Processing Outsourcing) activity?

Focal firms typically source from external suppliers for all of the following reasons EXCEPT ________.

If a computer contains a microprocessor from Costa Rica and a hard disk drive from the Philippines, the computer manufacturer, who is based in Texas and operates across Europe and West Asia, most likely uses ________ as an entry strategy.

Trade fairs are not only excellent sites to meet potential intermediaries, they also provide the means to become familiar with key players in the local industry and to generally learn about the target market.

Prox Inc. is a U.S.-based manufacturer of consumer electronics. It decides to export to Mexico and wants to protect its goods against damage, loss, and pilferage. Which of the following documents is applicable here?

Exporters usually purchase an insurance certificate to protect the exported goods against damage, loss, pilferage (theft), and, in some cases, delay.