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Chapter
16 Outline
Critical Discussion Questions
- An electronics firm is considering how best to supply
the world market for microprocessors used in consumer and industrial
electronic products. A manufacturing plant costs approximately $500
million to construct and requires a highly skilled work force. The total
value of the world market for this product over the next 10 years is
estimated to be between $10 and $15 billion. The tariffs prevailing
in this industry are currently low. Should the firm adopt a concentrated
or decentralized manufacturing strategy? What kind of location(s) should
the firm favor for its plant(s)?
- A chemical firm is considering how best to supply the
world market for sulfuric acid. A manufacturing plant costs approximately
$20 million to construct and requires a moderately skilled work force.
The total value of the world market for this product over the next 10
years is estimated to be between $20 and $30 billion. The tariffs prevailing
in this industry are moderate. Should the firm favor concentrated manufacturing
or decentralized manufacturing? What kind of location(s) should the
firm seek for its plant(s)?
- A firm must decide whether to make a component part in-house
or to contract it out to an independent supplier. Manufacturing the
part requires a nonrecoverable investment in specialized assets. The
most efficient suppliers are located in countries with currencies that
many foreign exchange analysts expect to appreciate substantially over
the next decade. What are the pros and cons of (a) manufacturing the
component in-house and (b) outsourcing manufacture to an independent
supplier? Which option would you recommend? Why?
- Explain how an efficient materials management function
can help an international business compete more effectively in the global
marketplace.
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