BMGT375 EXAM 1 - CH. 2 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
What does Zara control most of? - CORRECT ANSWER - Its SUPPLY CHAIN,
including sourcing, design, production, and distribution.
-Half of its merchandise is made in Spain and Portugal (cheaper than western europe)
How does Zara have a very efficient and lean production process? - CORRECT
ANSWER - Carries LITTLE INVENTORY of expensive items, excess of INexpensive
items.
What is a BUSINESS STRATEGY? - CORRECT ANSWER - A plan for the company
that clearly DEFINES the company's long-term GOALS, HOWit plans to achieve these goals,
and the WAYthe company plans to DIFFERENTIATE itself from its competitors.
What is a SUPPLY CHAIN STRATEGY? - CORRECT ANSWER - A long-range plan
for the DESIGN and ongoing MANAGEMENT of all supply chain decisions that SUPPORT the
business strategy.
How should the design of the supply chain differ? - CORRECT ANSWER - Based on how
the company intends to COMPETE in the marketplace. In order to maintain competitiveness
companies must design their supply chains to be aligned with their business STRATEGY, to
satisfy the NEEDS of the customers, take ADVANTAGE of the company's strengths, and remain
adaptive.
What is Zara's business strategy? - CORRECT ANSWER - To PRODUCE and DELIVER
look-alikes of the latest fashion trends to customers at an affordable price.
How is Zara vertically integrated and why? - CORRECT ANSWER - Business strategy <-
----> Supply Chain strategy
To gain SPEED, FLEXIBILITY, and control of product DESIGN AND DELIVERY.
,How should the supply chain NOT be designed and how SHOULD IT BE designed? -
CORRECT ANSWER - Should NOT be designed to merely mimic its competitors or
solely focus on cost cutting efforts. The supply chain should be designed and positioned to
SUPPORT the strategic direction of the firm, giving it a competitive advantage in the
marketplace.
What is included in the business strategy? - CORRECT ANSWER - -Marketing
-Operations
-Distribution
-Purchasing
-Finance
At the most basic level, corporate success in the marketplace can result from what TWO
ASPECTS? - CORRECT ANSWER - 1.) Cost or productivity advantage
2.) VALUE advantage
Where does advantage come from in COST OR PRODUCTIVITY advantage? - CORRECT
ANSWER - OFFERING lowest cost product or service
Where does advantage come from in the value advantage? - CORRECT ANSWER -
Providing a product with the GREATEST perceived DIFFERENTIAL VALUE compared with
its competitors.
What evidence is there to suggest that a LARGE VOLUME can contribute greatly to a cost
advantage? - CORRECT ANSWER - One factor contributing to this are economies of
scale that enable the company to spread its fixed costs over a greater volume.
What is the EXPERIENCE CURVE (another factor contributing to the fact that a large volume
can contribute to a cost advantage)? - CORRECT ANSWER - Derived from the traditional
concept of the learning curve. The learning curve tells us that with experience workers become
MORE SKILLED in processes and tasks and do them more efficiently.
, How are ORGANIZATIONAL costs REDUCED? - CORRECT ANSWER - Due to
experience and learning effects that result from processing a higher volume. This is the
experience curve, which describes the relationship between UNIT COSTS and CUMULATIVE
VOLUME, where the cost per unit of a product decreases with increased volume.
What is the only way to gain cost reductions, and compete on a cost-productivity advantage? -
CORRECT ANSWER - INCREASE sales VOLUME.
What is another way to gain cost reductions, and compete on a cost-productivity advantage? -
CORRECT ANSWER - THROUGH an efficient supply chain network.
-Can INCREASE efficiency and improve productivity, REDUCING OVERALL cost per unit.
What did Sam Walton of Wal-Mart develop? - CORRECT ANSWER - The LOW-COST
responsive retail strategy that is supported by a supply chain strategy of not buying from
distributors but rather directly from manufacturers of a broad range of merchandise.
What partnership illustrated to other companies the power of integrating with key suppliers? -
CORRECT ANSWER - PROCTER AND GAMBLE and Wal-Mart
What strategy has wal-mart used to cut inventory costs and maintain cost position? - CORRECT
ANSWER - TECHNOLOGY, such as RFID
What are the intangible reasons to buy a product? - CORRECT ANSWER - Image and
reputation
-Performance values
-Benefits
What happens when a product is viewed as a commodity? - CORRECT ANSWER - It is
typically bought on the spot market for the lowest price. (not different from competitors)
ACTUAL Exam Questions and CORRECT
Answers
What does Zara control most of? - CORRECT ANSWER - Its SUPPLY CHAIN,
including sourcing, design, production, and distribution.
-Half of its merchandise is made in Spain and Portugal (cheaper than western europe)
How does Zara have a very efficient and lean production process? - CORRECT
ANSWER - Carries LITTLE INVENTORY of expensive items, excess of INexpensive
items.
What is a BUSINESS STRATEGY? - CORRECT ANSWER - A plan for the company
that clearly DEFINES the company's long-term GOALS, HOWit plans to achieve these goals,
and the WAYthe company plans to DIFFERENTIATE itself from its competitors.
What is a SUPPLY CHAIN STRATEGY? - CORRECT ANSWER - A long-range plan
for the DESIGN and ongoing MANAGEMENT of all supply chain decisions that SUPPORT the
business strategy.
How should the design of the supply chain differ? - CORRECT ANSWER - Based on how
the company intends to COMPETE in the marketplace. In order to maintain competitiveness
companies must design their supply chains to be aligned with their business STRATEGY, to
satisfy the NEEDS of the customers, take ADVANTAGE of the company's strengths, and remain
adaptive.
What is Zara's business strategy? - CORRECT ANSWER - To PRODUCE and DELIVER
look-alikes of the latest fashion trends to customers at an affordable price.
How is Zara vertically integrated and why? - CORRECT ANSWER - Business strategy <-
----> Supply Chain strategy
To gain SPEED, FLEXIBILITY, and control of product DESIGN AND DELIVERY.
,How should the supply chain NOT be designed and how SHOULD IT BE designed? -
CORRECT ANSWER - Should NOT be designed to merely mimic its competitors or
solely focus on cost cutting efforts. The supply chain should be designed and positioned to
SUPPORT the strategic direction of the firm, giving it a competitive advantage in the
marketplace.
What is included in the business strategy? - CORRECT ANSWER - -Marketing
-Operations
-Distribution
-Purchasing
-Finance
At the most basic level, corporate success in the marketplace can result from what TWO
ASPECTS? - CORRECT ANSWER - 1.) Cost or productivity advantage
2.) VALUE advantage
Where does advantage come from in COST OR PRODUCTIVITY advantage? - CORRECT
ANSWER - OFFERING lowest cost product or service
Where does advantage come from in the value advantage? - CORRECT ANSWER -
Providing a product with the GREATEST perceived DIFFERENTIAL VALUE compared with
its competitors.
What evidence is there to suggest that a LARGE VOLUME can contribute greatly to a cost
advantage? - CORRECT ANSWER - One factor contributing to this are economies of
scale that enable the company to spread its fixed costs over a greater volume.
What is the EXPERIENCE CURVE (another factor contributing to the fact that a large volume
can contribute to a cost advantage)? - CORRECT ANSWER - Derived from the traditional
concept of the learning curve. The learning curve tells us that with experience workers become
MORE SKILLED in processes and tasks and do them more efficiently.
, How are ORGANIZATIONAL costs REDUCED? - CORRECT ANSWER - Due to
experience and learning effects that result from processing a higher volume. This is the
experience curve, which describes the relationship between UNIT COSTS and CUMULATIVE
VOLUME, where the cost per unit of a product decreases with increased volume.
What is the only way to gain cost reductions, and compete on a cost-productivity advantage? -
CORRECT ANSWER - INCREASE sales VOLUME.
What is another way to gain cost reductions, and compete on a cost-productivity advantage? -
CORRECT ANSWER - THROUGH an efficient supply chain network.
-Can INCREASE efficiency and improve productivity, REDUCING OVERALL cost per unit.
What did Sam Walton of Wal-Mart develop? - CORRECT ANSWER - The LOW-COST
responsive retail strategy that is supported by a supply chain strategy of not buying from
distributors but rather directly from manufacturers of a broad range of merchandise.
What partnership illustrated to other companies the power of integrating with key suppliers? -
CORRECT ANSWER - PROCTER AND GAMBLE and Wal-Mart
What strategy has wal-mart used to cut inventory costs and maintain cost position? - CORRECT
ANSWER - TECHNOLOGY, such as RFID
What are the intangible reasons to buy a product? - CORRECT ANSWER - Image and
reputation
-Performance values
-Benefits
What happens when a product is viewed as a commodity? - CORRECT ANSWER - It is
typically bought on the spot market for the lowest price. (not different from competitors)
