Management textbook solutions set 2

Question:

Making the decision to purchase materials and supplies from another company is called:

A.Downsourcing

B.Outsourcing

C.Insourcing

D.Crossourcing

E.Upsourcing

Answer

• Outsourcing

Explanation:

This is called outsourcing. It happens when one company decides to higher another company to accomplish a certain task that would be done by firm's own employees. It is done for various reasons including to lower labor costs and inventory cost, to allow the firm concentrate of key tasks among others.

 

 

 

Question:

When an individual in a company bypasses the standard purchasing procedures and purchases from a non-qualified supplier, they are engaging in

A.Illegal Spending

B.Maverick Spending

C.Profit Leaking

D.Anti-Procurement

E.Passive Spending

Answer

• Maverick Spending

Explanation:

This is described as maverick spending. This can be intentional like when an individual decides not to follow procurement process and can also be accidental like due to miscommunication in the supply chain or a poor structured workflow. When this happens, there are various risks that the firm faces including lost value, inferior goods at higher prices, contract crises, transaction overload and excess vendors.

 

 

 

 

Question:

Within Kraljic's Portfolio Analysis, products that represent High Risk and High Value to the company are categorized as:

 

A.Leverage or Preferred

B.Dangerous

C.Bottleneck

D.Routine or Arms-Length

E.Critical or Strategic

Answer

• Critical or Strategic

Explanation:

In this concept, the term risk is use to describe chance of failure, nonacceptance in the marketplace, nonavailability of the source and failure in delivery. Items with low risk and low value are identified as generics. items with low risk and high value are identified as commodities. Items with high risk and low value are distinctives while those with high risk and high value are identified as criticals.

Criticals are the source of competitive advantage for the firm for example, a unique computer chip that gives the computer higher speed differentiating it from the competitors.

 

 

 

Question:

A company that decides to purchase a material from two different suppliers is practicing:

A.Twin Sourcing

B.Pair Sourcing

C.Dual Sourcing

D.Paired Sourcing

E.Tandem Sourcing

Answer

• Dual Sourcing

Explanation:

Dual sourcing is a strategy where the buying firm decides to use two suppliers who may have different or similar products. With dual sourcing, the firm can get extra capacity, flexibility in cost, quality control and also the ability to support different regions. Innovation and collaboration is also enhanced when a firm practices dual sourcing.

 

 

All of the following statements about management of a sole proprietorship is correct except

Multiple Choice

• The sole proprietor has sole discretion to bind the business.
• The sole proprietor has no oversight committees.
• The sole proprietor has a fiduciary duty to the employees.
• The sole proprietor may change to another form of entity at the sole proprietor's will.

 

Answer

• • The sole proprietor has a fiduciary duty to the employees.

Explanation:

The sole proprietor may decide to have employees, however, only the sole proprietor is personally liable for the business contracts has the ability to bind the business contractually. This type of business also does not have oversight committee. Sole proprietorship is considered the most flexible form of business as the sole proprietor may change the business to a corporation or partnership as he/she likes when the business begins to grow. The sole proprietor has all management duties and there are no fiduciary duties owed.

 

 

 

Question:

The class rate and the exception rate systems are the only two types of rate structures in the U.S.

Group of answer choices

 

True

False

 Answer

• False

Explanation:

There are three types of rates in the U.S. They are the class rate which is specifically applied for all products in any given points, the exception rate system that is designed for carriers in certain regions to depart from the product scale system under certain circumstances which are defined, and lastly the commodity rates which is the most common type and if present, takes precedence over the class and exception rates.

 

 

 

 

Question:

Which of the following is not a type of general rates in the U.S.:

Group of answer choices

 

1. Basic Rate
2. Exception Rates
3. Commodity Rates
4. All of the above

Answer

• Basic Rate

Explanation:

There are three general rates in the U.S. These are. Class rate which provide a rate for any commodity between any two points. Exception rate which is designed to allow carriers in certain regions depart from the product scale system for various reasons. Commodity rate which is applied on specific origin-destination shipping patterns for defined commodities. Basic rate is not among the three general rate types in the U.S so the correct answer is option a.

 

Reference

Transportation: A Global Supply Chain Perspective

By John J. Coyle, Robert A. Novack, Brian Gibson, Edward J. Bardi page 120

 

 

 

Question:

In the U.S., the class rate system provides a rate for any commodity between any two points.

Group of answer choices

 

True

False

Answer

• True

Explanation:

There are three general rates in the United States and includes class, exception, and commodity rate structure with each of them having specific purpose. Class rate in the U.S is constructed from a uniform distance system as well as classification system. Class rates is different from exception rate which allows carriers in certain regions to depart from the product scale system for various reasons because class rate is available in all regions and for all products between any two points.

 

Reference

Transportation: A Global Supply Chain Perspective

By John J. Coyle, Robert A. Novack, Brian Gibson, Edward J. Bardi page 120

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Question:

A commodities rate is offered for commodities that are moved regularly in large quantities.

Group of answer choices

 

True

False

Answer

• TRUE

Explanation:

Commodities rates are constructed on a variety of bases, though the most common one is a specific rate which is established on a specific commodity. It is offered for commodities which are moved in large quantity on regular basis. It also applies to commodities which are published publicly and often take precedence over exception rate instituted by a specific carrier or class rate between defined points.

 

 

 

 

Question:

The corporate governance structure of a company reflects the individual companies'

(A) cultural and economic system.

(B) Legal and business system.

(C) Social and regularory sysrem.

(D) All of the above.

 Answer

• (D) All of the above.

Explanation:

Corporate governance is influenced by various factors including the legal, economic, societal, political as well as historical factors. Corporate government system details the relationship between the organization, its board, management, shareholders and the other stakeholders and as seen in its structure, there is the society part which is shown by an organization's social responsibility, the shareholder part which includes the legal and business system.

 

 

Question:

1. The quality of the products determined at the stage of
2. Production.
3. Design.
4. Planning

Answer

• Design.

Explanation:

Product quality is defined as the sum of product design quality, manufacturing quality, maintaining and recycling. Product life cycle has four stages which are:

• design
• manufacturing
• maintenance

During the design process of the product, quality implies that the design specification should conform to the requirement of the customers. When the production process gets to the manufacturing stage, the manufacturing should conform to the design requirement.

 

 

 

 

Question:

1. Service organizations such as restraints, movie theaters, and banks focus on locating near :
2. Suppliers
3. Intersections
4. Roads.
5. Their customers
6. Potential workers.

 Answer

• Their customers

Explanation:

Service organizations earn revenue through providing intangible products and services, and are involved in retail, transport, distribution, food services and other popular services depending with market availability. Their main focus is the customer, because they rely on their contact with the customer in order to offer the services and hence they focus more on their customer when deciding their location.

 

 

 

Question:

Which of the following is an objective of the purchasing function?

 

1. A) purchasing the appropriate quantity
2. B) obtaining cash refunds
3. C) purchasing the highest quality
4. D) All of the above

Answer

• A) purchasing the appropriate quantity

Explanation:

Purchasing function responsibility includes buying materials of the right quality (not highest), in the appropriate quantity to avoid excessive buying, at the right time, at the right price and from the right source. Efficiency remains the main long-range goal of purchasing, which entails ensuring maximum returns in every dollar spent on goods and services. Purchasing does not require to always source for the highest quality, rather, the right quality depending on the purpose of the item.

 

 

 

Question:

Which of the following is an approach that attempts to emphasize for managers the fact that performance is multidimensional in nature and to teach those managers about the actual content of various performance dimensions?

 

1. Onboarding
2. Frame of reference training
3. The critical incident method
4. The forced-distribution method

Answer

• Frame of reference training

Explanation:

The method is frame of reference which considers managers performance as multidimensional in nature. This type of rater accuracy training method also trains managers with actual content of several performance dimensions. Among the most crucial things in any organization, is to improve the performance appraisal quality by demonstrating to the raters how and why they should consider it their own interests to do the best they can in appraising the performance of organization's employees.

 

Reference

HR3 By Angelo DeNisi, Ricky Griffin page 232

 

 

 

Question:

When the employee feels that the concerns of all stakeholders involved have been taken into account, the outcome fairness of a conflict can be termed as representative .A.True B.False

Answer

• True

Explanation:

In conflict management and fairness within organizations, outcome fairness is an important factor that helps determine outcome fairness of a conflict through the process known as procedural justice.

There are generally six main areas an employee can look at in order to determine the outcome fairness of a conflict. They include:

2. Bias suppression.
3. Information accuracy.

Looking at representativeness, this refers to the feeling by an employee, that all the concerns raised by stakeholders have been taken into account.

 

 

 

 

Question:

Different organizations have basic norms that govern which emotions should be displayed and which should be suppressed. What are these norms called?

Emotional dissonance

Display rules

House rules

Emotional regulation

Answer

• Display rules

Explanation:

Social situations activate what is known as impression-management motives, whereby employees are motivated to control their impressions in a manner that support their career goals. In an organization, display rules dictate that employees should suppress negative emotions that can affect their work and that of others within the organization. Employees are encouraged to remain professional and friendly to their colleagues. Display rules are enforced for the purpose of three objectives which are maintaining harmony, promoting employee well-being, and to please the customers.

 

 

Question:

True or False

As a callable bond holder, you would require a higher yield than a regular bond because you are required to sell the bond back to the issuer at the call price.

Answer

• TRUE

Explanation:

In callable bonds, the option to call is valuable to the issuers and costly to the investors. This is because the callable bond should have a higher equilibrium yields than non-callable bonds in order to compensate investors. The company issuing the callable bond has the power to redeem it, and by doing so, he/she deprives the bond holder of any possible additional interest payments he would have generated if the bond was held until it's maturity. Many issuers of callable bonds benefit by getting an opportunity to call the bonds when interest rates drop significantly, which helps the issuer redefine its debt and at a cheaper level.

 

 

 

Question:

Which of the following is NOT true regarding the process view of operations? Operations managers are responsible for the conversion process.

It is a basis for analyzing operations across the entire supply chain.

A sales office may be viewed as a production process.

All of these choices are true

Answer

• All of these choices are true

Explanation:

Operations managers are responsible for three stages of production which includes:

• Acquisition of inputs.
• Control of conversion processes.
• Disposal of goods and services.

It explains the processes along the entire supply chain, providing a basis on how to improve processes. According to the process view of operations, a sales office a sales office converts input in form of human resources to outputs which is in form of services so is a production process.

 

 

 

Question:

It is common practice to specify the procedure and results necessary to meet quality standards as part of the specification.

Group of answer choices

True

False

Answer

• True

Explanation:

There are various methods of item description including by brand, by specification, by engineering drawing, and by miscellaneous among others. On description by specification, it is recommended that one should specify the test procedure and results that are necessary to meet quality standards. This is part of the instructions for handling, labeling, transportation as well as disposal when adhering to environmental regulations.

 

 

Question:

Which one is NOT a benefit for firms to outsource their production to the suppliers?

It helps firms to produce at lower costs.

Firms do not need to invest so much in capacity.

The firms can lead innovation on the outsourced activities.

It helps firms focus on their core competency.

Answer

• Firms do not need to invest so much in capacity.

Explanation:

Suppliers are higher in the supply chain and by outsourcing, they also carry a part of market risk including demand changes. Innovation is expensive because it requires knowledge and new ideas which are hard to find. This is the reason why most companies decide to outsource innovation to increase product attractiveness, cut costs of production and access best talents. Outsourcing also decreases labor costs for the business and allowing it to better focus on core aspects of the business. Not investing in capacity is not a benefit of outsourcing to the company.

 

 

Question:

Transmission system for a significant portion of total costs for a car and there are only a few suppliers in market. Which is a proper procurement strategy for a car manufacturer?

Facilitating cost reduction through competition between resistance suppliers

Forming a strategic alliance with resistance suppliers

Online order placement to resistance suppliers without pre-approval process .

Carrying a high inventory level of resistances.

Answer

• Forming a strategic alliance with resistance suppliers

Explanation:

The highest percentage of supplier find it hard to produce a product that requires enormous amount of initial cost and as a result, only those who have economies of scale or enough capital are able to produce the transmission systems. In line with this, strategic alliances are common methods employed in markets when two or more partners or entities come together to share various parts of production process. By doing this, the suppliers can spread the cost and risk of producing transmission system which can effectively increase output, increase innovation, and increase production quantity.

 

 

Question:

Toyota decides to outsource 100% of car audio system to its suppliers. Which one is NOT a reason leading to its outsourcing decision?

A.Toyota wants to get the knowledge for making car audio systems.

B.Toyota wants to lead innovation on car audio systems .

C.Toyota wants to focus on its core competence.

D.Toyota wants to compete with its competitors on car audio systems.

Answer

• A.Toyota wants to get the knowledge for making car audio systems.

Explanation:

Outsourcing means that even though Toyota has the capacity and resources to produce the product, the company decides that production of car audio systems be done by an external entity which is this case is the suppliers. This is basically a way of spreading cost and risk associated with the market, encouraging innovation because the suppliers will definitely have different strategies and have to provide the best to retain the contracts, and also is a strategy to get an upper hand in competition for car audio systems market. However, since this is done by suppliers who are not part of Toyota, it is not a means of getting knowledge to make the audio systems because they already have that capacity.

 

Question:

In the context of brand loyalty, the portion of resources allocated to one brand from among the set of competing brands is called _____.

Select one:

1. segment share
2. retail share
3. market share
4. customer share

Answer

• customer share

Explanation:

It is called customer share or share of wallet. Business seek to maximize customer share, the dollars a customer spend on the brand rather than on the competitor brand. When the business manages to raise customer share, it is able to add more revenue, improve client retention, satisfy more customers and increase brand loyalty.

 

 

 

Question:

The foot-in-the-door technique is based on the reciprocity norm,which states that individuals are motivated to give back to those who have given them something.

Select one:

 

True

False

Answer

• False

Explanation:

The statement above describes what is called door-in-the-face technique

Foot-in-the-door technique is used by salespeople, by focusing on getting customers accepting a non-significant idea from the salesperson (foot-in the-door) before they get to listen to buy the product. The technique that states individuals are motivated to give back to those that have given them something is called door-in-the-face technique.

 

 

 

Question:

The purpose of the Ensuring Patient Access and Effective Drug Enforcement Act of 2016 is to:

Select one:

 

1. clarify standards to ensure prescription drugs are available to legitimate patients and not diverted to illicit use.
2. give marketers the right to choose the amount of packaging and content information to be printed on processed drugs.
3. protect public health by giving the Food and Drug Administration certain authority to regulate the tobacco industry.
4. ensure that no drug that has passed its expiry date is sold in the U.S. market and emphasize that such acts are punishable.

Answer

• clarify standards to ensure prescription drugs are available to legitimate patients and not diverted to illicit use.

Explanation:

In 2016, the senate passed unanimously the Ensuring Patient Access and Effective Drug Enforcement Act, which was designed to help ensure that prescription drugs would only be given to legit patients and those who deserved them, rather than those who wanted to abuse or rather for illicit use. The bill was authored by senators Orrin Hatch and Sheldon Whitehouse clarifying what kind of standards were needed by companies to protect these drugs.

 

Reference : https://www.whitehouse.senate.gov/news/release/hatch-and-whitehouses-ensuring-patient-access-and-effective-drug-enforcement-act-passes-senate

 

 

 

 

Question:

Which of the following is true of loyalty cards or programs?

Select one:

1. They do not work in a two-tiered pricing system.
2. They cannot tell much about customer groups' demographics.
3. They can be used to learn more about customer groups' shopping patterns.
4. They are most likely to change the loyalty of consumers with a strong economic orientation.

Answer

• They can be used to learn more about customer groups' shopping patterns.

Explanation:

There are several benefits a business gets by using loyalty programs. First, they increase the number of loyal customers, secondly, they increase sales, thirdly, they allow the business to collect information about the buying habits of the customers. For example, by using loyalty cards, the business can be able to tell what items to stock and how much to purchase, and also which items to offer discounts for. The business can also determine how frequent most customers shop at the premises as well as the average spend for each customer.

 

 

 

Question:

A few customers at Mackarel, a seafood restaurant, recently suffered from food poisoning and were hospitalized. One of those customers was so angry that he tried to burn the restaurant down. This action of the disgruntled customer is an example of _____.

 

1. retaliatory revenge
2. procedural justice
3. retributive justice
4. restorative revenge

Answer

• retaliatory revenge

Explanation:

This can best be classified as a purposeful retaliation in an attempt to seek justice. One of the customers who was angry, felt that the seafood restaurant was negligent, and conducted themselves in an unfair and unwarranted manner that he though should be punished by causing harm to their operations. This is retaliatory revenge.

 

 

 

Question:

Theodore Levitt's article "Marketing Myopia" brought about a new perspective that argued that businesses should define themselves in terms of the products that they make rather than in terms of the consumer needs they satisfy.

 

 

Select one:

True

False

Answers

• False

Explanation:

Ted Levitt (1960) urged marketers to correct their marketing myopia. He described it as a shortsightedness that caused many business to define themselves in terms of the products they provided rather than customer needs they were satisfying. According to Theodore, business can do better by focusing mainly on customer needs rather than products.

 

Reference

https://flora.insead.edu/fichiersti_wp/inseadwp2009/2009-08.pdf

 

 

 

 

Question:

It is when societal goals are out of reach given the accepted means of achieving them that deviance occurs.

Select one:

 

True

False

Answer

• TRUE

Explanation:

Many consumers have unfulfilled aspirations which impacts their misbehavior. These unfulfilled aspirations cause consumers to deviate. For example. in the U.S, societies prioritize getting possessions and achieving beyond what the rest might not have. When people fail to achieve this and realize the other society members are achieving them more easily, some of them turn to deviant actions in order to acquire them.

 

 

 

Question:

For functional types of services, hedonic value is more strongly related to customer share than is utilitarian value.

Select one:

 

 

True

False

Answer

• FALSE

Explanation:

For functional types of services which includes banking services, utilitarian value is more related to the customer share than is hedonic value. Hedonic value comes when someone gets satisfaction from the experience of consuming the service which is common in beauty, fashion, among other industries. On the other hand, a person will derive utilitarian value from is derived from functionality of the service like when in banking.

 

 

 

 

Question:

For experiential types of services, such as fashion shopping, utilitarian value is more strongly related to customer share.

Select one:

 

True

False

Answer

• False

Explanation:

• Hedonic value - Value is provided from experience and emotions associated with direct consumption.
• Utilitarian value - The value is from the functionality of the product consumed.
• Thus, we can conclude that utilitarian value that is gotten from functionality of the product is associated with functional types of jobs such as banking services.
• On the other hand, hedonic value is attributed to experiential types of jobs an example is fashion, beauty products etc.

 

 

 

 

Question:

When it comes to running shoes, Brian is completely devoted to Footfall, a sports shoe brand. He feels that the brand defines him. Brian's association with Footfall's running shoes is an example of _____.

Select one:

1. consumer commitment
2. customer share
3. consumer inertia
4. consumer switching

Answer

• consumer commitment

Explanation:

Customer's continuous obligation to purchase the same type of product or continued engagement to the same brand is called consumer commitment. This type of relationship is created when a consumer decides to maintain a relationship with the same firm or products. Every firm desires to create some trust between the consumers and its products, which determines how it will fair in the market among other competitors.