Global Sourcing Business Strategies Quiz Questions

1.

The procurement of products or services from independent suppliers or company-owned subsidiaries located abroad for consumption in the home country or third country.

A.

Global Sourcing
B.

Global Procurement
C.

Global Purchasing
D.

All of the above

Correct Answer
D. All of the above

Explanation
The given correct answer is "All of the above". This is because all three terms - global sourcing, global procurement, and global purchasing - refer to the process of acquiring products or services from suppliers or subsidiaries located abroad for consumption in the home country or a third country. Therefore, all three terms can be used interchangeably to describe this practice.

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2.

Valued-added activity conducted in house is:

A.

Captive Sourcing
B.

Externalization
C.

Internalization
D.

Outsourcing
E.

None of the above

Correct Answer
C. Internalization

Explanation
Internalization refers to the practice of conducting valued-added activities within the organization itself, rather than outsourcing them to external parties. This allows the organization to have more control over the process and ensure that it aligns with its goals and objectives. By internalizing these activities, the organization can also leverage its own resources and capabilities to achieve greater efficiency and effectiveness. This approach is often preferred when the organization has the necessary expertise and resources to handle the activities internally.

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3.

Externalization is considered:

A.

Back-office activities
B.

Contract Manufacturing
C.

Value-added activity conducted by independent supplier
D.

Importing of goods and services

Correct Answer
C. Value-added activity conducted by independent supplier

Explanation
Externalization refers to the practice of outsourcing certain activities or functions to external suppliers or service providers. It involves transferring tasks or processes that were previously conducted internally to an independent supplier. In this context, externalization is considered a value-added activity because it brings additional benefits or advantages to the organization. By outsourcing certain functions, the organization can focus on its core competencies and strategic activities, while the independent supplier brings specialized expertise and resources to enhance the overall value of the organization's operations.

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4.

An arrangement in which the focal firms contracts with an independent supplier to manufacture products according to well defined specifications:

A.

Captive Sourcing
B.

Product design
C.

Contract Manufacturing
D.

Offshoring
E.

Global Sourcing

Correct Answer
C. Contract Manufacturing

Explanation
Contract manufacturing refers to an arrangement where a focal firm outsources the manufacturing of its products to an independent supplier. This supplier is responsible for producing the products according to the specifications provided by the focal firm. This arrangement allows the focal firm to focus on other aspects of its business while leveraging the expertise and resources of the supplier for manufacturing. It is a commonly used strategy to reduce costs, improve efficiency, and gain access to specialized manufacturing capabilities.

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5.

Jobs that are NOT easy to offshore include:

A.

Large scale manufacturing industries
B.

Auto, Service (highly labor intensive), Information-based industries
C.

Doctor, dentist, lawyer
D.

Software preparation industry

Correct Answer
C. Doctor, dentist, lawyer

Explanation
Jobs that require a physical presence and direct interaction with clients or patients, such as doctors, dentists, and lawyers, are not easy to offshore. These professions involve providing personalized services and require face-to-face consultations, examinations, and treatments. Offshoring these jobs would be challenging as it would be difficult for the professionals to physically be present in another country to deliver their services. Additionally, the legal and regulatory requirements of these professions may also vary across countries, making it more complex to offshore them.

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6.

Benefits of global sourcing include:

A.

Cost efficiency
B.

Access to qualified personnel abroad
C.

Increase speed to market
D.

Access to new markets
E.

All of the above

Correct Answer
E. All of the above

Explanation
Global sourcing refers to the practice of obtaining goods or services from different countries to take advantage of cost savings, skilled labor, and market opportunities. The benefits of global sourcing mentioned in the options are all valid. Cost efficiency is achieved by finding cheaper suppliers or production locations. Access to qualified personnel abroad allows companies to tap into a larger talent pool and benefit from specialized skills. Increase speed to market is possible by leveraging different time zones and 24/7 operations. Access to new markets enables companies to expand their customer base and increase sales. Therefore, the correct answer is "All of the above."

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7.

Captive sourcing is:

A.

Internal upstream business functions
B.

Geographic arrangement of locations
C.

Sourcing from the firms own production facilities located abroad
D.

Focal firm contract with independent supplier to manufacture products
E.

None of the above

Correct Answer
C. Sourcing from the firms own production facilities located abroad

Explanation
Captive sourcing refers to the practice of sourcing goods or services from a company's own production facilities located abroad. This means that the company owns and operates these facilities, allowing them to have more control over the production process and potentially reduce costs. It is different from sourcing from independent suppliers or outsourcing to other companies.

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8.

One of the major challenges of global sourcing is:

A.

Partner selection
B.

Exchange rates
C.

Increased complexity of worldwide network
D.

Constraint ability to safeguard intellectual assets

Correct Answer
B. Exchange rates

Explanation
Global sourcing refers to the practice of procuring goods or services from different countries to take advantage of cost savings, expertise, or resources. One of the major challenges of global sourcing is exchange rates. Fluctuations in exchange rates can significantly impact the cost of sourcing, as they determine the conversion rate between currencies. A strong domestic currency can make imports more expensive, while a weak domestic currency can make exports more attractive. Therefore, managing and predicting exchange rate fluctuations is crucial for companies engaged in global sourcing to ensure profitability and competitiveness.

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