Test Bank Chapter 18 Implementing the strategic response

Chapter 19

Test Bank

Type: true-false

Title: Chapter 19 Question 01

1) The strength of the global factory as an organizational form lies in its ability to extend fundamental economic principles of specialization, coordination, and integration.

a. True

Feedback: The statement is true. The effectiveness of the global factory results from its ability to extend and refine these well-established principles and not from unique technologies or processes unavailable to others.

A-head reference: 19.1 Introduction

b. False

Type: true-false

Title: Chapter 19 Question 02

2) Global factory model dominates industries like technology, service and banking.

a. True

b. False

Feedback: Global factory is an evolutionary form of international business that has come to dominate industries such as clothing, footwear, consumer electronics, automobiles, and generic pharmaceuticals, and which appears poised to disrupt a number of other sectors.

A-head reference: 19.1 Introduction

Type: true-false

Title: Chapter 19 Question 03

3) For the global factory, the combination of extreme specialization, externalization, and coordinative capability brings massive competitive advantage.

a. True

Feedback: For the global factory, this combination of extreme specialization, externalization, and coordinative capability brings massive competitive advantage. Such factories have access to the world’s best specialists—suppliers, assemblers, and facilitators—and their bargaining strength ensures that they enjoy favourable commercial terms.

A-head reference: 19.1 Introduction

b. False

Type: true-false

Title: Chapter 19 Question 04

4) Lead firms are those that orchestrate the GVC

a. True

Feedback: True: The ability to access the resources (plant, equipment, know-how, and relationships) of others reduces the capital expenditures and risk exposure that lead firms would need to assume if they undertook these activities themselves (internally).

A-head reference: 19.1 Introduction

b. False

Type: true-false

Title: Chapter 19 Question 05

5) GVC coordination can be explained by the resource-based view (Barney, 1991)

a. True

b. False

Feedback: The statement is false. This capability goes beyond traditional concepts of firm advantage, such as the resource-based view (Barney, 1991).

A-head reference: 19.2 The competitive advantages of the global factory

Type: true-false

Title: Chapter 19 Question 06

6) Coordination skills are a source of sustainable competitive advantage

a. True

Feedback: The sustainable nature of coordination skills results from the considerable time and investment that lead firms commit to creating such capability and the difficulty for competitors to emulate such facilities.

A-head reference: 19.2 The competitive advantages of the global factory

b. False

Type: true-false

Title: Chapter 19 Question 07

7) An organization with a competitive advantage built around coordination skills will always enjoy a sustainable edge.

a. True

b. False

Feedback: The statement is unlikely to be true. While coordination skills are highly valuable and may be difficult to emulate, it is not inevitable that they will always be enjoyed by the same organization or that they will be deployed in the same ways.

A-head reference: 19.2 The competitive advantages of the global factory

Type: true-false

Title: Chapter 19 Question 08

8) The global factory is a contributor to, but not a beneficiary, of globalization.

a. True

b. False

Feedback: The statement is incorrect because the global factory both contributes to, and benefits from, globalization. It benefits from the increased ease of locating and coordinating activities in a global world and the opportunities provided by high growth emerging markets, for example.

A-head reference: 19.3 Management challenges facing the global factory

Type: true-false

Title: Chapter 19 Question 09

9) A key defining characteristic of the global factory is its ability to achieve simultaneous, low-cost, high quality and flexibility.

a. True

Feedback: This is an argument made consistently in this book that the global factory is an important form of organization in global production systems because it appears able to overcome or minimize the traditional trade-offs in areas such as cost vs differentiation, efficiency vs local responsiveness and equilibrium vs disequilibrium.

A-head reference: 19.3 Management challenges facing the global factory

b. False

Type: true-false

Title: Chapter 19 Question 10

10) Anti-globalization is now so strong that globalization seems to be in reverse.

a. True

b. False

Feedback: Anti-globalization has triggered a rethink of the recent globalization wave and may have slowed it, but it is not in reverse. Opposition is selective and some areas of globalization, such as business internationalization global growth are strong. Similarly, support for globalization is higher in Asia than in parts of North America or Europe at the moment.

A-head reference: 19.5 Further research and the global factory

Type: true-false

Title: Chapter 19 Question 11

11) The coexistence of global economic processes and largely national political structures are incongruent in an era of globalization.

a. True

Feedback: There is truth in this statement as more and more problems are not susceptible to solution at the national level. These include issues such as climate change, pollution, inequality, migration and cross-border crime. While regional and international institutions may be a response to such problems they are not always effective.

A-head reference: 19.4 Some ‘grand challenges’ for the global factory

b. False

Type: true-false

Title: Chapter 19 Question 12

12) Global business and international trade are interchangeable terms.

a. True

b. False

Feedback: The statement is false since global business consists of business transactions between parties from more than one country. International trade includes just importing and exporting activities which is only one part of global business activity.

A-head reference: 19.1 Introduction &19.4 Some ‘grand challenges’ for the global factory

Type: true-false

Title: Chapter 19 Question 13

13) Globalization would be more acceptable if losers from the process (unemployed workers, displaced firms and depressed areas) received more support for adjustment.

a. True

Feedback: A forceful criticism of current globalization is that beneficiaries do nothing to compensate losers with the result of widening inequality. A number of governments are now considering new policy initiatives such as universal incomes.

A-head reference: 19.5 Further research and the global factory

b. False

Type: true-false

Title: Chapter 19 Question 14

14) The locational advantages of global factory systems will not be affected by new additive technologies such as 3D manufacturing.

a. True

b. False

Feedback: The statement is false. Such technologies are likely to be pervasive and will certainly affect the economics of location. For the global factory they may mean new locations will emerge, a higher level of fine-slicing and the utilization of more discrete locations may occur, and suppliers (who make their own location decisions) may rethink their optimal locations.

A-head reference: 19.5 Further research and the global factory

Type: multiple choice question

Title: Chapter 19 Question 15

15) The global factory system is likely to impact

Feedback: how the global factory system is likely to impact economic development and inequality. While there has been some analysis of likely impacts (Buckley, 2009; Baldwin, 2013), the complexity of possible impacts makes this a significant research area. While the growth of global value chains has, in one sense, made it easier for enterprises and countries to participate in these activities—it is easier to join a chain than to build one (Baldwin, 2013)—the form and terms of such involvement are likely to vary considerably.

A-head reference: 19.5 Further research and the global factory

a. economic development and inequality

b. exchange of things of value

c. complexity

d. a cross-border alliance

Type: multiple choice question

Title: Chapter 19 Question 16

16) A _______ describes a value chain.

Feedback: The correct answer is d, all the steps involved in discerning and responding to customer needs forms a value chain.

A-head reference: 19.5 Further research and the global factory

a. line of exclusive products endorsed by celebrity designers

b. process involved in creating high quality products at lowest cost

c. budgetary approach to maximizing value from expenditures

d. series of steps that involve understanding and responding to customer wants

Type: multiple choice question

Title: Chapter 19 Question 17

17) The supporting activities of the value chain model are:

Feedback: The correct response is c, as these are all the supporting activities of the value chain model. Other responses mix primary and secondary activities.

A-head reference: 19.5 Further research and the global factory

a. Inbound logistics, outbound logistics, marketing and sales, procurement.

b. Infrastructure of the firm, human resources department, technology department, procurement.

c. Infrastructure of the firm, human resources department, technology department, marketing and sales.

d. Infrastructure of the firm, service, technology department, procurement.

Type: multiple response question

Title: Chapter 19 Question 18

18) Fine-slicing will tend to reinforce existing locational advantage because

Feedback: Fine-slicing means that some locations will be denied the higher value stages of the global value chain, such as R&D and marketing, and could be confined to the less profitable stages of assembly. This will tend to reinforce existing locational advantage (or disadvantage) and could make upgrading more difficult (Humphrey and Schmitz, 2002). Locations enjoying particularly attractive advantages, such as highly skilled workers, high-quality infrastructure, strong educational institutions, and global connectivity, may be better able to attract and retain higher value activities.

A-head reference: 19.5 Further research and the global factory

a. Some locations are ignored

b. Some locations could be confined to the less profitable stages of assembly.

c. Some locations will be denied the higher value stages of the global value chain, such as R&D and marketing

d. Some locations do not have valuable information

Type: multiple choice question

Title: Chapter 19 Question 19

19) The extent of CSR of a lead firm within a global value chain should be limited to activities _______

Feedback: This is a highly contentious issue but can be clarified through logical reasoning. A. implies a legal definition of CSR which is increasingly seen as overly restrictive. B. is unrealistic as socially irresponsible activities are just, if not more likely, to occur in loss making activities which should also be considered. D. provides an unhelpful restriction as irresponsible actions can occur in areas other than labour-related such as resource use, pollution, or fraudulent activities. The most plausible, but not universally accepted, response is C, because a lead firm is coordinating a disparate value chain, it should be aware of, and hence responsible for, all activities along that chain.

A-head reference: 19.4 Some ‘grand challenges’ for the global factory

a. that it owns.

b. that are profitable.

c. that it impacts both directly and indirectly in its decision-making.

d. that are associated with possible labour exploitation.

Type: multiple choice question

Title: Chapter 19 Question 20

20) The likelihood of increased government involvement in economic affairs is seen

Feedback: A second grand challenge is the likelihood of increased government involvement in economic affairs, a marked change from the pro-liberalisation of the past three decades. The COVID-9 pandemic response has highlighted the role of the state not only in macro-economic management and recovery, but increasingly micro-policy involvement, in directing businesses into the production of personal protective equipment and ventilators, for example. Growing public acceptance of the role of state could see greater regulation of business in a number of areas including technological protection, a reconsideration of so-called strategic sectors, fairer taxation, and responses to ‘unfair’ competition. Such a trend could be exacerbated by the continuing rise and hegemonic challenge of China, with its businesses enjoying what neoliberalists see as unwarranted advantages.

A-head reference: 19.4 Some ‘grand challenges’ for the global factory

a. As unfair

b. With growing public acceptance after COVID19

c. As welcome

d. With indifference