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Western Governor's University Global Business (FVC1) Introduction to Global Business, 1e
Terms in this set (105)
multi-currency
a property of ERP systems to handle multiple currencies
multi-national
a property of ERP systems to handle the accounting standards of multiple countries
multi-language
a property of ERP systems to simultaneously operate in multiple languages
enterprise resource planning (ERP) systems
software packages designed to integrate the majority of a firm's business processes, execute all transactions related to the firm's business processes being integrated, store each piece of data only once in an enterprise-wide database, allow access to data and information in real time, and operate in a client-server environment, traditional or web-based.
internetworking
the linking of separate networks into an interconnected network, where each network retains its own identity
telecommunications networks
collections of computer hardware and software arranged to transmit information from one place to another
supply-chain management
the management of all activities in the supply chain, in order to minimize the total cost of the supply chain, and to maximize the value of the product to the end user
supply chain
all activities associated with the flow and transformation of goods and services from the raw materials stage to the end user, together with the corresponding flows of monetary funds and information
location decision
determining if products made in-house will be produced in one or more facilities, and if these facilities should be located in one or more countries
dual sourcing
when components and raw materials are produced in-house and purchased from suppliers
insourcing
when the firm has been buying goods and services from suppliers, and then decides to make these goods and services in-house
hollow corporation
a company that only completes product design and outsources all other production process functions
offshoring
when a firm and the supplier are located in different countries
global outsourcing(offshoring)
when the firm doing the outsourcing and the supplier that will provide the outsourced goods and services are located in different countries; also called offshoring
domestic outsourcing
when the firm doing the outsourcing and the supplier that will provide the outsourced goods and services are located in the same country
outsourcing
when a firm has been making goods and services in-house, and then decides to buy these goods and services from suppliers
global production
when a firm globally produces goods and services
global procurement
when a firm buys components and raw materials globally
make-or-buy decision (sourcing decision)
determining which components and raw materials should be produced in-house and which should be acquired from suppliers; also called the sourcing decision
operations management
the management of the direct resources that are involved in the production system of a business organization
production stages
steps in the production process
raw materials
materials used to produce components
components
goods and services that integrate a product
production facility
the site where production takes place
service system
a production system in which services dominate the value of the product
manufacturing system
a production system in which goods dominate the value of the product
production system
the system that businesses use to produce products
PRODUCTION SYSTEM MODEL
SUPPLIERS-INPUTS-PRODUCTION PROCESS-OUTPUTS-CUSTOMERS
the inputs may include
materials, land, labor, machines and equipment, energy, and information.
The outputs represent
the desired goods and services.
And the production process may consist of one or more transformations which could be:
physical, as in manufacturing;
locational, as in transportation;
informational, as in consulting;
psychological, as in entertainment;
physiological, as in health care;
exchange, as in retailing;
storage, as in warehousing.
Advantages of global procurement
does not need to invest the money that is associated with making.
can focus upon the production stages and components with
the most value added.
can maximize its flexibility by allocating its orders among the suppliers in a dynamic way.
has access to more suppliers, and these global suppliers usually can provide lower costs than domestic suppliers.
if global suppliers are selling to many companies in the same industry but in different countries, these suppliers can achieve economies of scale and lower costs.
Disadvantages of Global Procurement
relying upon suppliers on important dimensions such as quality, delivery, and cost.
may also need to compete for the attention of suppliers.
the profits that the company could earn by producing the goods and services in-house now go to the suppliers.
can also carry the risk of suppliers providing those same goods and services to the competition
Advantages of Making
COST
CONTROL
OVER QUALITY
ALLOWS THE COMPANY MORE CONTROL OVER DELIVERIES
IT SECURES THE SUPPLY SOURCE
AFFORDS COMPLETE PROTECTION OF THE INTELLECTUAL PROPERTY
Disadvantages of Making
Requires the company to have expertise in the production of the component or raw materials that will be made.
The company may be missing out on the technological advances that the suppliers may have
The people producing the
component or raw material, sometimes called internal suppliers, may not have the incentive to improve their product since they do not face competition.
The firm may not be able to gain the economies of scale that can be gained by a supplier that is able to pool the activity of a large number of firms.
By making, a firm could increase the complexity of its production process, and this could prove detrimental.
the firm would incur both fixed and variable costs, while when buying, the
firm would only incur variable costs.
the minimum efficient scale
the point at which unit costs stabilize.
When demand is equal or lower than the minimum efficient scale
one production facility location is preferred.
When demand is higher than the minimum efficient scale
several production facilities are economically feasible.
value-to-weight ratio
Goods with high value-to-weight ratios are expensive but do not weigh very much like microchips and jewelry.
Goods with low value-to-weight ratios are cement and oil
Transportation costs will constitute a higher percentage of total unit costs for goods with a low value-to-weight ratio,
the way to go in this situation is to have many production facilities in order to be close to the places where the components are needed.
Goods with high value-to-weight ratios
favor a single location to use the advantages of centralized production.
ERP systems aim to
Store
all information in a single database
Represent each business function by a module
Design the system as a collection of business processes, and not functions.
A computer manufacturer determining the cost implications of manufacturing the chassis for their desktop computers, or purchasing them from an outside vendor is an example of a(n) __________.
make or buy decision
When a company buys globally, it is said that the company is practicing global production.
false
Which of the following is a disadvantage of global procurement?
quality control
Because your focus will be on product design, and you will be outsourcing the majority of your production process, you could be termed a(n) __________.
hollow corporation
Which of the following is a common activity that many companies outsource, and that your company could outsource as well?
customer service
Because the supplier who manufactures the voice activated sensor is the only one who makes that component, what risk do you face as a customer?
as the volume increase the supplier may increase their prices.
If you discover quality issues with the supplier of the voice activated sensors, which of the following would be the best option for your company moving forward?
manufacture the sensors yourself in America
Using the minimum efficient scale, at what point should a company consider using multiple production facilities?
when the demand is higher that the minimum efficient scale.
Considering the value-to-weight ratio, which of the following companies would be most likely to benefit from multiple production facilities?
oil company
The production process may consist of one or more transformations: physical, locational, informational, psychological, physiological, exchange, or storage
TRUE
The make-or-buy decision involves determining which components and raw materials should be produced in-house and which components and raw materials should be acquired from suppliers.
TRUE
Determining if products made in-house will be produced in one or more facilities, and if these facilities should be located in one or more countries is called a location decision.
TRUE
The system that businesses use to produce products is known as a(n) ________ system.
PRODUCTION
________ include(s) automobiles, airplanes, and computers.
GOODS
In the production systems model, ________ may include materials, land, labor, machines and equipment.
INPUTS
Materials used to produce components are called ________.
RAW MATERIALS
When a firm buys components and raw materials globally, it is called ________.
GLOBAL PROCUREMENT
When the firm doing the outsourcing and the supplier that will provide the outsourced goods and services are located in the same country, it is called ________.
DOMESTIC OUTSOURCING
According to one estimate, ________ percent of a typical American manufacturing company's value-added in production and operations came from outside sources.
60
Determining if products made in-house will be produced in one or more facilities, and if these facilities should be located in one or more countries, is called a(n) ________ decision.
LOCATION
The linking of separate networks into an interconnected network, where each network retains its own identity is known as ________.
INTERNETWORKING
________ refers to the property of ERP systems to handle the accounting standards of multiple countries.
MULTI NATIONAL
Ardella Enterprises acknowledges the importance of its supply chain. It knows that the company's operations would not be as successful if the supply chain was less effective. Which one of the following is not related to a company's supply chain and its functions?
Management of the supply chain requires adherence to stiff environmental standards
As the Jenkins and Jones Corporation continues to grow, it will face the need to make more and more strategic decisions. Which one of the following best describes the corporation if it decides to make purchase globally versus domestically?
Global procurement
As the Jenkins and Jones Corporation continues to grow and expand, one of the strategic decisions it must face is that of location of its facilities. Which one of the following does not relate to the problem of location?
Number of Internet users
When the goods dominate the value of a product, it is typically called a manufacturing system.
true
The activities in operations management can be grouped into four business functions: procurement, production, logistics, and research and development.
true
Boeing buying from thousands of suppliers in more than 100 countries, but only having production facilities in the U.S. is an example of global procurement and domestic production
true
One advantage of global procurement is that the firm can maximize its flexibility by allocating its orders among suppliers in a dynamic way and the firm has access to more suppliers that can generally provide lower costs than domestic suppliers.
true
When the demand is equal or lower than the minimum efficient scale, multiple production facility locations are preferred.
false
When considering the one-versus-many location for production facilities for components and raw materials some of the most important considerations are: fixed costs, minimum efficient scale and its comparison to demand, and the value-to-weight ratio.
true
The three major considerations for deciding the location of production facilities for products are: does the product serve the needs of all customers around the world, proximity to market and proximity to suppliers, and the effect on product's image being produced in that location.
true
All activities performed typically by business organizations such as suppliers, manufacturers, distributors, and retailer that involve the flow and transformation of goods and services is referred to as a supply chain.
true
Software packages designed to integrate the majority of a firm's business processes, execute all transactions related to the firm's business processes being integrated, store each piece of data only once in an enterprise-wide database, allow access to data and information in real time, and operate in a client-server environment, traditional or web-based are called enterprise resource planning systems.
true
A production system in which services dominate the value of the product is known as a(n) _____ system.
service
The production systems of Honda Motor Company, the Boeing Company, and Toshiba Corporation, would be called _____ systems.
manufacturing
The production systems of the Fred Hutchinson Cancer Research Center, the Walt Disney Company, and the consulting firm Accenture, would be called _____ systems.
service
In the production system model, _____ represent the desired goods and services.
outputs
Goods and services that integrate a product are called _____.
components
Steps in the production process are called _____.
production stages
Most of the activities in operations management can be grouped into ____ business functions.
4
Most of the activities in operations management can be grouped into the following business functions EXCEPT:
selling
Of the following, which is NOT an advantage of global procurement?
The firm does not rely upon suppliers on important dimensions such as quality, delivery, and cost
Of the following, which is NOT a disadvantage of global procurement?
The firm has to invest the money that is associated with making products
When a firm has been making goods and services in-house, and then decides to buy these goods and services from suppliers, it is called _____
outsourcing
When a firm has been making goods and services in-house, and then decides to buy these goods and services from suppliers, it is called _____
offshoring
Of the following, which is NOT an advantage of making?
People producing the component or raw material have the incentive to improve their product.
Of the following, which is NOT a disadvantage of making?
The firm has less control over quality
Of the following, which is NOT a consideration for the one-versus-many production facilities decision?
the local culture
The management of all activities in the supply chain, in order to minimize the total cost of the supply chain, and to maximize the value of the product to the end user is known as _____.
supply chain management
The supply chains of global businesses such as Boeing, Ford, United Airlines, and the pharmaceutical companies Merck and Pfizer are known as _____ supply chains.
global
Collections of computer hardware and software arranged to transmit information from one place to another are known as _____.
telecommunication networks
Software packages designed to integrate the majority of a firm's business processes, execute all transactions related to the firm's business processes being integrated, store each piece of data only once in an enterprise-wide database, allow access to data and information in real time, and operate in a client-server environment are called_____
enterprise resource planning systems
_____ refers to the property of ERP systems to simultaneously operate in multiple languages.
Multi-language
Ford's ERP system follows the American accounting standards in its U.S. subsidiaries, and follows the Mexican accounting standards in its Mexico subsidiaries. This ERP system is _____.
multi-national
The production process may consist of one or more transformations which could be all of the following EXCEPT:
esteem
______ is responsible for the acquisition of goods and services in the production process.
Procurement
Which of these is responsible for the transformations required by the production process?
Production
Which of these is responsible for the movement of materials in the production process?
Logistics
______ is responsible for the design of new products in the production process.
Research and development
______ refers to the management of the direct resources that are involved in the production system of a business organization.
Operations management
Toddler Toys operates a massive research and development facility in Missouri, USA. The company designs its toys in the United States but outsources all other production process functions. Toddler Toys can be described as a
hollow corporation.
Microchips and jewelry are examples of goods with
high value-to-weight ratio
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