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Chapter 14 and 15
Global Supply Management
93. When
there is a large number of common requirements across facilities or
business
units, and the supply base is dispersed geographically, an appropriate global
sourcing structure is:
a. a global commodity management
organization.
b. regional purchasing offices that manage
the region’s spend for every commodity.
c. a centralized international purchasing
office equidistant from key suppliers.
d. a centrally managed global sourcing
office located in the corporate headquarters.
e. a decentralized structure where
purchasing managers are at each facility.
94. A
foreign trade zone (FTZ) in the U. S.:
1. facilitates rapid calculation of import
duties.
2. facilitates rapid calculation and
payment of import duties.
3. creates and maintains jobs in the
United States that might have gone offshore.
4. is completely different in purpose from
a maquiladora in Mexico.
a. must use only goods made in the U. S.
according to the Buy America Act.
95. When
sourcing internationally:
a. the buyer should learn about the
culture, customs, norms, taboos, and history of the supplier’s country.
b. the need for personal space is
generally the same in most regions of the world.
c. the global availability and use of
email, fax, and phone has largely eliminated communication barriers.
d. differing cultural and social norms
will have little impact since most businesspeople are accustomed to working
with North Americans.
1. the buyer should immediately establish
an informal first-name basis with the supplier’s representatives.
96. The
United Nations Convention for the International Sale of Goods (CISG):
1. is automatically applied if both
nations have adopted the CISG, unless another body of law is agreed upon in the
contract.
2. is automatically applied if both
nations have adopted the CISG, and there can be no exceptions.
3. replaces the UCC as the worldwide body
of law governing international trade.
4. should always be the preference for a
buyer from the United States.
5. always puts the United States buyer at
an advantage.
97.
Which of the following would encourage countertrade?
1. excess foreign exchange.
2. readily available credit.
3. a strong base of suppliers.
4. the need to develop export markets for
new products.
5. a well-developed domestic economy.
98. In
international buying, the entity that makes a contract with the buyer and then
buys the product in its name from the foreign supplier, takes title, delivers
to the place agreed on with the buyer, and then bills the buyer for the agreed-on
price, is a(n):
a. import broker.
b. sales agent.
c. import merchant.
d. trading company.
e. foreign import agent.
99. The
Foreign Corrupt Practices Act (FCPA):
a. allows payment to facilitate the
performance of normal duties.
b. attempts to persuade other nations to
adopt U.S. rules regarding payments to officials.
c. allows U.S. firms to prosecute foreign
nationals on bribery charges.
d. allows U.S. firms to make payments to
facilitate normal duties and to make payments to obtain special advantages.
e. allows foreign nationals to offer payments to U.S.
government officials to expedite trade agreements.
100.
When comparing the total cost of ownership from an international supplier to
that of a domestic supplier, the international supplier’s:
a. lower labor costs are easily eroded by
additional shipping and insurance costs.
b. price will be higher if the U.S. dollar
is strengthening on the exchange rate.
c. lower labor costs offset the high cost
of inefficient equipment and processes.
d. lower labor rates must be considered in
the context of productivity and quality.
e. prices are carefully controlled by the
U.S. government to prevent dumping.
101. The
most-cited reason for international trade is:
1. better quality.
2. better overall value.
3. more advanced technology.
4. lower total costs.
5. lower price.
102.
When dealing with an international supplier, a knowledgeable buyer:
a. normally will attempt to negotiate a
cost-plus-incentive-fee contract.
b. will attempt to price in Euro Dollars.
c. will normally price in the currency of
the seller's country.
d. will always state the price in U.S.
dollars.
e. may decide to deal in international
currency options.
True and False
1. The
NAFTA, the EU, ASEAN and the WTO are all examples of Free Trade Agreements
which were designed to facilitate trade between and among member countries.
2. The
governing convention on shipping terms and responsibilities involved in
international transportation is called ITAPS (International Transport and Payment
Specifications.)
3. Even
though the economy of Mexico relies heavily on the jobs generated by
maquiladoras, the government of Mexico has not set wage rates equal to those of
India and China.
4.
Countertrade historically has been very uncommon in the sale by U.S. firms of
armaments to other nations, but very common in civilian procurement projects.
5. When
one condition of the countertrade agreement is that government and/or
military-related exports be purchased, this is a swap trade arrangement.
6. The
primary reasons for using a foreign trade zone (FTZ) are (1) to avoid,
postpone, or reduce duties on imported goods, and (2) to create economic
benefits for the local community through job creation.
7. A
temporary importation bond (TIB) allows certain classes of merchandise, to be
imported into the U. S. with the net effect that no duty is paid on the
merchandise,
provided
it is reexported.
8. Three
approaches to global sourcing are to establish (1) global purchasing offices,
(2) International Commodity Organizations (ICOs), or (3) Regional Purchasing
Offices (RPOs).
9. It is
rare for international trade disputes to be settled through international
arbitration partly because the costs of arbitration exceed the costs of
litigation.
10. The
growth in international trade has come from an increase in the international
sale of services as well as goods.
CHAPTER 15
Legal and Ethics
103.
When it comes to product liability, supply management:
a. lowers risk by ensuring that suppliers
deliver defect-free goods.
b. has little or no role since this is
essentially a legal action.
c. has responsibility only to the internal
customer, not the final customer.
d. is liable depending on the type of
warranty agreed to in the contract.
e. is responsible for establishing the
cost of the actual damage.
104. The
authority that is necessary, usual, and proper to carry through to completion
the express authority conferred, is called:
a. apparent authority.
b. implied authority.
c. express authority.
d. direct authority.
e. performance authority.
105.
Which of the following is a factor in determining the validity of a contract?
a. incompetent parties.
b. offer and acceptance.
c. employment in the purchasing
department.
d. amount over $500.
e. due process.
106. The
Sarbanes-Oxley Act:
a. has no impact on the supply management
process.
b. requires the Chief Purchasing Officer
to sign off on every contract.
c. requires listing off-balance sheet
items such as long-term purchase agreements.
d. requires supply management to report
directly to the Chief Financial Officer.
e. affects internal accounting procedures
of privately-held companies.
107. The
legal authority of a salesperson normally is:
a. the same as that of a buyer.
b. to make legally-binding contracts for
$500 or less.
c. to make legally binding contracts for
sales over $5,000.
d. to solicit orders and get ratification
and acceptance from his or her employer.
e. based on the length of time the
salesperson has been employed.
108. When
the goods fit the ordinary purpose for which goods of that description are used
in the trade, there is a(n):
a. implied warranty of merchantability.
b. express warranty.
c. warranty of title.
d. implied warranty of fitness for a
particular purpose.
e. implicit warranty.
109.
Corporate social responsibility:
a. is another name for ethics.
b. is another name for supplier diversity
programs.
c. requires sacrificing financial gain for
the greater good of the community.
d. refers to individual, not corporate,
decisions and actions.
e. extends beyond ethics to include
community, environment, and human rights.
110.
Commercial bribery:
a. usually involves only one company
offering bribes.
b. may become an industry practice.
c. is outlawed in very few countries.
d. is outlawed throughout the West, but
not in Asia.
e. legal rulings rest on the doctrine of
promissory estoppel.
111. In
a contractual dispute between buyer and seller, the process of elevating the
discussion from buyer and sales representative up through the organization and
out to an unbiased referee is called:
a. arbitration.
b. mediation.
c. internal escalation.
d. negotiation.
e. adjudication.
112. If
a termination for convenience clause is
included in a services contract:
a. its validity depends on whether the
contract is in the private or public sector.
b. it is easy to determine if it is
exercised in bad faith or an abuse of discretion.
c. if exercised in bad faith, it may mean
the termination is a breach of contract.
d. specifically identifies events that
will trigger termination.
e. it defines what constitutes sufficient
cause to terminate.
True and False
1. In
many organizations, standards of conduct for purchasing personnel stress the
need to avoid all appearances of impropriety.
2.
Normally, if an offer to buy or sell is made, the contract is completed once
the legal documents are in the hands of both parties.
3. If a
supplier fails to deliver goods which meet the contract agreement, one of the
buyer's options is to reject the whole shipment.
4.
Reciprocity, the practice of requiring a supplier to purchase a set amount from
the buying firm, is legal domestically, but not internationally.
5. The
Uniform Commercial Code (UCC) covers the purchase of goods and services, if the
goods portion of the contract is more than 50 percent of the contract value.
6.
Mediation and arbitration are examples of alternative legal means of settling
disputes.
7. When
an employee who is not a legal agent of the company agrees to buy something
from a salesperson and the item is received and the company pays the invoice,
the employee is exercising implied authority.
8.
Payment made to a supplier does not automatically constitute an acceptance of
the goods.
9. In
the U. S., product liability is generally considered a strict liability offense
which means that the defendant is liable when it is shown that the product was
defective.
10.
Under the Uniform Commercial Code, when the buyer has examined the goods as
fully as he or she has desired, there is a warranty with regard to defects
which an examination ought to have revealed to him or her.
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