Test Bank for Purchasing Management

Which of the following discourages countertrade?

• Well-developed domestic economy

• Shortage of foreign exchange

• Shortage of available credit

• Desire to promote labor-intensive exports

• Need to develop export markets for new products

Maquiladoras in Mexico ________.

• cannot be owned by non-Mexicans

• are different from foreign trade zones

• are reconfiguring to focus on labor-intensive assembly

• are designed to take advantage of low Mexican labor costs

• are best suited to sophisticated manufacturing and product design

When purchasing from offshore suppliers, buyers might expect delays resulting from ________.

• transportation in the supplier’s country

• domestic customs clearance

• the time the goods are in port

• transportation in the supplier’s country and domestic customs clearance

• transportation in the supplier’s country, domestic customs clearance, and the time the goods are in port

Special economic zones of China (SEZs) ________.

• are located in Hong Kong

• allow foreign and domestic trade and investment to be conducted, with the authorization of the Chinese central government

• use tax and business incentives to attract foreign investment and technology as a means of supporting economic growth

• are located in Hong Kong and use tax and business incentives to attract foreign investment and technology as a means of supporting rapid economic growth

• are located in Hong Kong, use tax and business incentives to attract foreign investment and technology as a means of supporting rapid economic growth, and allow foreign and domestic trade and investment to be conducted, with the authorization of the Chinese central government

When comparing the total cost of ownership from an international supplier to that of a domestic supplier, the international supplier’s ________.

• lower labor costs are easily eroded by additional shipping and insurance costs

• lower labor costs offset the high cost of inefficient equipment and processes

• prices are carefully controlled by the U.S. government to prevent dumping

• lower labor rates must be considered in the context of productivity and quality

• price will be higher if the U.S. dollar is strengthening on the exchange rate

The structure of a global purchasing organization is influenced by ________.

• the location of the company’s operations

• the overall organizational structure

• the location of key suppliers

• the structure of the purchasing function

• the location of the company’s operations, the overall organizational structure, the location of key suppliers, and the structure of the purchasing function

The most-cited reason for international trade is ________.

• better quality

• better overall value

• more advanced technology

• lower total costs

• lower price

The United Nations' Convention for the International Sale of Goods (CISG) ________.

• gives legal advantages to less economically developed countries

• is an attempt to apply a set of uniform commercial laws to global trade in goods

• gives legal advantages to more economically developed countries

• allows multinational companies to circumvent long-standing trade practices

• replaces most regional trade treaties with a common body of law

Global supply activities can be coordinated through ________.

• regional purchasing offices

• a global commodity management organization

• international purchasing offices

• regional purchasing offices and a global commodity management organization

• regional purchasing offices, a global commodity management organization, and international purchasing offices

Compared to domestic sourcing, when sourcing offshore more lead time may be needed because of ________.

• inland transportation delays in the supplier’s country, delays in domestic customs, and delays in handling freight at ports

• inland transportation delays in the supplier’s country

• time needed to arrange payment documentation

• delays in domestic customs

• delays due to heightened security requirements at North American ports