Strategic Management:

Use the video transcript to answer the questions.

Video Transcript:

>> On the outskirts of Beijing, you'll find hundreds of factories. Serving thousands of American entrepreneurs.

>> Trust me, we didn't wake up one morning deciding that we wanted to go 8,000 miles away and for me to disappear 75 to 100 days away from my family.

>> CEO of the Texas based Tula Automotive Group. His company employs about 100 people back home. But has access to an entire assembly line of workers in China.

>> We work together and they also invest a lot into the factory.

>> The CEO's Chinese partner owns ten manufacturing plants like this one all over China. The former teacher now employs over 15,000 people from technicians to engineers.

>> We need to use the skilled people and the experienced people to work here. Otherwise the quality will be a problem.

>> What would it cost you to before a vehicle like that in the United States versus doing it here?

>> There's not any real price advantage to us. But it's because our volume and our size is such that we cannot justify the manufacturing construction.

>> So, really, this is a matter of infrastructure for you.

>> It's a matter of access to manufacturing. I cannot personally afford to build a manufacturing facility.

>> Parts arrive from all over the world, some made in America, to be assembled at this factory in China. It's a fairly common practice. And during our visit, Hummers were seen coming down a line opposite Tula's car.

>> And that takes a certain risk off your shoulders.

>> No doubt about it. And very, very scalable. So then we can focus on what we do best which is developing the brand and the channel.

>> That channel or workflow allows Tula to manufacture the amount he needs and to ship to locations where his cars are sold. Like this dealership outside Orlando, Florida. Sales for Tula's electric vehicles have been brisk. Though he says his company is still too small to move manufacturing to the United States. But maintains the ideas are completely home grown.

>> Would you call yourself an American company?

>> Oh, absolutely. An American company that owns the brand and channel is, to me, far more important than just having 20 people turn wrenches somewhere in Arkansas.

Questions:

Which of the following most describes a limitation of Tula Automotive's international expansion of its manufacturing?

a.Cultural differences of Chinese manufacturing versus American manufacturing practices.

b.Access to raw materials within China is limited.

c.The farther geographically the operations are dispersed, there are higher costs of coordination between units and the distribution of the products.

d.Trade barriers exist between China and the U.S., making it more expensive to manufacture in China and import to the U.S.

The partnership between Tula Automotive and the Chinese manufacturing plant can best be described as a(n):

a.acquisition.

b.exporting.

c.licensing.

d.strategic alliance.