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Question 141 - CSCP discussion

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A company that sells direct to industrial and commercial businesses has become successful by being responsive to the needs of its customers. The company currently produces in each country all of the products it sells in that country. Several countries in which the company operates have negotiated an agreement to establish a trading bloc. Which of the following actions by the company would be most appropriate if the agreement is implemented?

A.
Consolidate production outside the trading bloc to reduce total costs.
Answers
A.
Consolidate production outside the trading bloc to reduce total costs.
B.
Consolidate production within the trading bloc to reduce tariffs paid.
Answers
B.
Consolidate production within the trading bloc to reduce tariffs paid.
C.
Outsource the production of products with low sales volumes to reallocate capacity.
Answers
C.
Outsource the production of products with low sales volumes to reallocate capacity.
D.
Reassign products so that each is produced in a single facility within the trading bloc to get economies of scale.
Answers
D.
Reassign products so that each is produced in a single facility within the trading bloc to get economies of scale.
Suggested answer: D

Explanation:

When countries form a trading bloc, they eliminate tariffs and other trade barriers among member countries, facilitating easier and cost-effective movement of goods. For the company, consolidating production within the trading bloc allows for greater economies of scale. By producing each product in a single facility, the company can optimize production efficiency, reduce per-unit costs, and improve consistency in quality. This approach also simplifies supply chain management by reducing complexity and leveraging the benefits of larger production runs.

Reference:

'International Logistics: The Management of International Trade Operations' by Pierre A. David

'Global Logistics and Supply Chain Management' by John Mangan and Chandra Lalwani

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asked 16/09/2024
Maxim Shpakov
41 questions
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