Please answer the four multiple choice that go along with this short case study. Thank you.

Read the case and answer the questions that follow.

One of the most dramatic stories of the last 30 years has been the rise of China as a global manufacturing hub. By 2018, China accounted for 28.4 percent of global manufacturing output. The United States was in second place with a 16.6 percent share (as recently as 2009, the United States led China in manufacturing output). The United States was followed by Japan (7.2 percent share) and Germany (5.8 percent share). Chinas growth was powered by surging international trade. In 1995, the value of Chinas imports and exports of goods totaled $280.9 billion, or 3 percent of global trade. By 2018, Chinas total trade in goods had jumped to $4.6 trillion, or 12.4 percent of global trade. The U.S. was the worlds second-largest trader at 11.5 percent of total trade, followed by Germany at 7.7 percent. By 2019, China accounted for 13.5 percent of global exports, way ahead of the United States and Germany, which had a little over 8 percent each.

Chinas export-led manufacturing growth has made the Chinese economy the second largest in the world behind the United States. Chinas growth has been based on a number of factors. Initially, low labor costs and a large and relatively educated population were important. More recently, Chinas world-class logistics network, decades of manufacturing experience, and tight clusters of primary producers and networks of suppliers have made China an attractive location in which to manufacture products for export to the rest of the world. China has become a global center for making everything from Apple smartphones and Lenovo computers to Nike shoes and toys for Hasbro and Mattel.

Since 2017, however, China has been hit by two events that have led many companies to question their dependence on the country as a manufacturing hub. The first was the trade war between the United States and China initiated by President Donald Trump. Trumps goal was to reduce Americas large trade deficit with China. The Trump administration started placing targeted tariffs on Chinese products such as steel, washing machines, and solar panels in early 2018. Then in September 2018, the administration slapped a 10 percent tariff on $200 billion of Chinese imports into the United States. This was followed by additional 10 percent tariffs on another $300 billion of imports in August 2019, along with threats to increase those tariffs to 25 percent if China did not accede to U.S. demands.

Faced with a growing trade war between the two countries, many American importers who had long relied upon China to source products started to look around for other opportunities. The idea was to diversify their supply sources, thereby reducing their dependence upon China. However, that strategy was not always easy to execute. A case in point is MGA Entertainment, an American toy company whose brands include LOL Surprise, Little Tikes, and Bratz. MGAs CEO, Isaac Larian, notes that his company is dependent upon China in a major way. There is no way you can pick that up and go to another country. Larian notes that MGA cannot find affordable labor for a factory in the U.S. state of Ohio, while other locations such as India or Vietnam lack the workforce and infrastructure of China. In his view, no other country can do what China does.

Other companies have made more determined attempts to diversify their supply chain as a hedge against trade wars. For example, the Hong Kongbased, high-end apparel company, Lever Style, has quickly been moving production from China to Vietnam and other Southeast Asian countries. In 2016, China accounted the lions share of Levers production, but by 2020, Vietnam accounted for more than half, with China second.

The risks associated with sourcing most production from China were further highlighted in early 2020 when the SARS-CoV-2 virus responsible for the COVID-19 disease swept through Chinas Hubei Province; much of the country was put on lockdown to try and contain the spread of the deadly virus. With factories closing for a month or more, many firms that depended heavily on China found themselves facing a massive problem. MGAs Larian notes that In four decades doing business in China, the coronavirus is the worst thing to happen. Typically, toy companies start ramping up production for their Christmas season in the spring, but with many Chinese factories closed, MGA faces major disruptions to its supply chain. Just how serious this might be can be gleaned from the dramatic drop in shipping from China during February 2020. Container traffic arriving daily at U.S. ports from China fell from 32,550 on February 4, 2020, to just 2,784 on February 26, suggesting a cataclysmic collapse in trade. As the director of one company that had already moved significant production out of China noted, The coronavirus confirmed that we were too reliant on one country and that moving was the right thing to do.

Q 1:

Many U.S. companies that rely on China for production are rethinking their production strategies. The integration and coordination of logistics, purchasing, operations, and market channel activities from raw materials to the end customer is known as

Multiple Choice

• outsourcing.

• global distribution strategy.

• supply chain management.

• global production strategy.

• international logistics.

Q 2:

China has emerged as an important global manufacturing hub because its economic, political, and cultural conditionsincluding relative factor costsare conducive to the performance of those activities. Which best characterizes China as a desirable location for manufacturing?

Multiple Choice

• efficiency factors

• technological factors

• geographic factors

• production factors

• country factors

Q 3:

While many U.S. companies are rethinking their dependence on China as a manufacturing location, MGA Entertainment, despite heavily relying on China for production, says that shifting its production would not be easy. Which of the following does not favor concentrated production in a single location?

Multiple Choice

• substantial differences in factor costs

• high product value-to-weight ratio

• volatile exchange rates

• high fixed costs

• few trade barriers

Q 4:

For companies using a(n) __________ inventory system, the closure of plants in China during the COVID-19 pandemic caused significant production problems because the companies lacked a buffer stock.

Multiple Choice

• just -in-time (JIT)

• Six Sigma

• ISO-9000

• global distribution center

• mass customization