Q&A Hero

Q: ________ involves reducing the number of variations in materials and components as an aid to cost management.

Q: A potential buyer for Teresas business has mentioned a leveraged buyout, which involves a high level of _____ financing. a. debt b. equity c. strategic d. unsecured

Q: ________ involves delaying any modifications or customization to the product as long as possible in the production process.

Q: The value of a business is determined by a. what the owner believes the business is worth. b. what a valuation formula determines its worth is to the owner. c. what a valuation formula determines its worth is to the buyer. d. what a buyer with the cash is prepared to pay.

Q: Local optimization, incentives, and large lots all contribute to ________ about what is really occurring in the supply chain.

Q: Having publicly traded stock can be beneficial to owners in that a public market offers a. greater liquidity. b. protection against an unwanted harvest. c. insight into how to improve the performance of the firm. d. a justification for refusing requests for ESOP options.

Q: TAL Apparel's management of its supply chain for Stafford shirts sold in JCPenney in an example of which of the following? A) blanket orders B) standardization C) postponement D) lot size reduction E) single-stage control of replenishment

Q: When is the right time to begin thinking about an exit strategy? a. When the owner wants to retire b. When a willing buyer expresses an interest c. When declining health forces the owner to leave active management d. When the money is first investedint he business

Q: A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing which of the following? A) postponement B) drop shipping C) channel assembly D) passing the buck E) float reduction

Q: The effects of the harvesting process include a. a reduction in time and energy. b. an increased managerial focus. c. an increase in momentum. d. poor performance.

Q: Which of the following is an advantage of the postponement technique? A) reduction in automation B) early customization of the product C) better quality of the product D) reduction in training costs E) reduction in inventory investment

Q: An employee stock ownership plan represents a. a good way for a business founder to build his/her position in the company. b. an opportunity for employees to acquire an ownership interest in their company. c. a harvest method of choice. d. an effort to ease investor concerns.

Q: All EXCEPT which of the following are "opportunities" in managing the integrated supply chain? A) postponement B) drop shipping C) blanket orders D) standardization E) line balancing

Q: Two years ago, Harold inherited $30,000 and decided to open a coffee shop in his hometown instead of buying stock in Ford Motor Company. The rate of return he could have earned on his investment in Ford stock represents his a. lost profit. b. opportunity cost of funds. c. investment opportunity. d. potential profit.

Q: Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of which of the following? A) vendor-managed inventory B) standardization C) backward integration D) postponement E) timely customization

Q: A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing which of the following? A) postponement B) cross-docking C) channel assembly D) drop shipping E) float reduction

Q: Pat, owner of Pats Welding, LLC, would like to let someone else run the day to day operations while he continues to draw an income from the business. Because the business is an LLC, Pat will not have to be concerned about: a. a reduction in the value of the company. b. seller financing. c. paying a brokerage fee. d. double taxation on his income.

Q: Drop shipping: A) is equivalent to cross-docking. B) is the opposite of a blanket order. C) means the supplier will ship directly to the end consumer, rather than to the seller. D) is the same thing as keiretsu. E) is a good reason to find a new firm to ship your products.

Q: After harvesting, many entrepreneurs who remain with their firm as an employee experience _________ conflicts. a. financial b. practical c. cultural d. tactical

Q: Which of the following is NOT an opportunity for effective management in the supply chain? A) accurate "pull" data B) vendor-managed inventory C) postponement D) local optimization E) CPFR

Q: Uncertainties accompanying an impending sale of a business often a. lead to lower employee morale. b. attract the attention of the Securities and Exchange Commission. c. cause the deal to fall through. d. increase costs from added legal services.

Q: A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following? A) double marginalization B) the bullwhip effect C) CPFR D) postponement E) vendor-managed inventory

Q: Eleanor has money to invest and is considering buying a company. When comparing her alternatives, her ________ on any investment is the rate of return that she could earn on a similar investment a. projected future value b. sunk cost c. present value d. opportunity cost

Q: The bullwhip effect: A) occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers. B) results in increasing fluctuations at each step of the sequence. C) increases the costs associated with inventory in the supply chain. D) occurs because of distortions in information in the supply chain. E) All of the above are true.

Q: Jack is a professional who assists in the buying and selling of businesses. Jack is: a. a stock broker. b. an investment broker. c. a real estate broker. d. a business broker.

Q: Local optimization is a supply-chain complication best described as: A) optimizing one's local area without full knowledge of supply chain needs. B) obtaining very high production efficiency in a decentralized supply chain. C) the prerequisite of global optimization. D) the result of supply chains built on suppliers with compatible corporate cultures. E) the opposite of the bullwhip effect.

Q: Sylvia, the owner of a clothing boutique, has agreed to sell her business to one of her buyers. This transaction would likely be described as a sale to a(n) _____ buyer. a. competing b. employee c. financial d. strategic

Q: What is the practice of keeping a product generic as long as possible before customizing? A) postponement B) keiretsu C) vendor-managed inventory D) forward integration E) backward integration

Q: Vasily is selling his business. As a harvesting owner we would expect him to prefer _____ over _____. a. cash, stock b. debt, equity c. equity, debt d. stock, cash

Q: A blanket order is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

Q: The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.

Q: Harvey has invested all of his money in his thriving business. He would like to recoup some of investment, but not completely sell off his business. This might be a good time for him to consider selling stock to the public in a(n): a. ESOP b. IPO c. MBO d. LBO

Q: The availability of a companys exit options is an important determinant of the appeal of the firm to a. suppliers. b. investors. c. employees. d. management.

Q: As Jacob considers exiting or harvesting, he is concerned with which of the following? a. merely selling and leaving a business b. the creation of future options c. the establishment of a benchmark for firm risk d. capturing future profitability

Q: Drop shipping results in time and shipping cost savings.

Q: Post-harvest entrepreneurs may become disillusioned when they realize their sense of identity a. was associated with the quest for wealth. b. derived from interactions with employees. c. was intertwined with their business. d. does not return after joining in social or charitable work.

Q: The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.

Q: Russell has sold his small variety store to a large retail chain but has agreed to stay on and manage the store. Russell should expect a. freedom from responsibility. b. a feeling of elation with her new wealth. c. greater independence. d. culture conflict.

Q: Identify some technological advances that can serve to improve logistics management and also improve shipping security.

Q: The harvesting of a business should cause the entrepreneur to ask for advice from the experts who helped build the company. a. True b. False Indicate the answer choice that best completes the statement or answers the question.

Q: Identify the nine major categories of supply chain risk.

Q: The build-up leveraged buyout is typically used in industries that are dominated by large firms. a. True b. False

Q: ________ describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.

Q: More recently, the bust-up leveraged buyout was replaced with the build-up leveraged buyout. a. True b. False

Q: Which of the following devices represents an opportunity for technology to improve security of container shipments? A) devices that identify truck and container location B) devices that sense motion C) devices that measure radiation or temperature D) devices that can communicate the breaking of a container lock or seal E) all of the above

Q: A management buyout can contribute significantly to a firms operating performance. a. True b. False

Q: Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver? A) use multiple suppliers B) effective contracts with penalties C) subcontractors on retainer D) require overnight delivery E) pre-planning

Q: With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)? A) 1 B) 2 C) 3 D) equal to the total number of components E) equal to the number of countries to which the final product is sold

Q: Harvesting owners can be paid in cash or in stock of the acquiring firm, with stock generally being preferred over cash. a. True b. False

Q: Entrepreneurs frequently do not appreciate the difficulty of selling or exiting a business. a. True b. False

Q: Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other? A) outsourcing B) dual-sourcing C) cross-sourcing D) backup-sourcing E) parallel-sourcing

Q: Owing to the formulas that guide practice, business valuation has become an exact science. a. True b. False

Q: Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.

Q: Despite the dot.com bubble, in 2002 and 2003 the number of IPOs dropped slightly, but the total dollars raised increased. a. True b. False

Q: Cross-sourcing describes the practice of having two suppliers provide every component.

Q: Opportunity cost of funds is the rate of return that an investor can earn on another investment of similar risk. a. True b. False

Q: The new model of a tight, fast, low-inventory supply chain, operating across political and cultural boundaries, has reduced the overall level of supply chain risk.

Q: A strategic buyer is most interested in the stand-alone, cash-generating potential of a business. a. True b. False

Q: Use of a diversified supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories.

Q: For value-creating firms, owners who decide to harvest by withdrawing cash flows should accelerate the process as much as possible for a company with growth needs. a. True b. False

Q: How are outsourcing and vertical integration related? Can a single firm successfully do both?

Q: A financial buyer of a small business is most interested in the firm as a stand-alone, cash-generating business. a. True b. False

Q: One of the drawbacks of harvesting by withdrawing cash flows slowly is that the owner must seek out a buyer for the eventual sale of the business. a. True b. False

Q: What is a keiretsu?

Q: Entrepreneurs often do not make good employees at their former company. a. True b. False

Q: Identify the advantages and disadvantages of using the "few suppliers" sourcing strategy.

Q: Identify and describe briefly the six sourcing strategies.

Q: Entrepreneurs who accept stock in payment for the sale of their businesses are usually pleased with the results because they escape a significant tax burden. a. True b. False

Q: The sale of a firm is solely about determining the value of a company. a. True b. False

Q: Virtual companies are also known as ________ .

Q: ________ rely on a variety of supplier relationships to provide services on demand.

Q: Many entrepreneurs, grateful for their past success, feel the need to give something back to society after selling their company. a. True b. False

Q: ESOPs may require educating the buyer about the companys operations for continued company growth. a. True b. False

Q: ________ is a Japanese term that describes suppliers who become part of a company coalition.

Q: For the entrepreneur who is simply tired of the day-to-day operations of the business, slowly withdrawing cash flows over time may require too much patience. a. True b. False

Q: ________ is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor.

Q: Entrepreneurs should think very carefully about their motives for exiting a business and what they plan to do after the harvest. a. True b. False

Q: Which of the following best describes Vizio's sourcing strategy? A) few suppliers B) keiretsu C) joint venture D) vertical integration E) virtual company

Q: When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following? A) keiretsu B) virtual companies C) joint venture D) vertical integration E) few suppliers

Q: The boost to employee motivation and effort that results from an ESOP will vary significantly from firm to firm. a. True b. False