Question

Which one of the following is an advantage of having production facilities to manufacture athletic footwear in all four geographic regions? Increased ability to achieve a low production per pair cost advantage over rivals having production operations in only 1, 2, or 3 geographic regions Increased ability to achieve a higher S/Q rating on branded pairs at a lower cost than rivals having only 1, 2, or 3 plants Maximum ability to secure volume discounts on purchases of superior materials and thereby lower the company's costs of using superior materials in producing branded footwear Increased ability to reduce payments for import tariffs because when a company has production operations in all four geographic regions it typically needs to ship fewer pairs of footwear from production facilities in one region to distribution centers in a different region Increased ability to achieve lower reject rates and lower labor costs per pair produced than rivals having only 1, 2, or 3 plants

Answer 1

Solution:

Definitely, the major advantage of having a production facility to manufacture athletic footwear in all the four geographic areas is to reduce the payments for import tariffs paid while shipping the products overseas to other countries. Generally, the import tariffs are very high making the cost of product go higher and thus the need to sell the products at a higher price.

If the firm has a production facility in the geographical area to which it is catering to with its products then the firm is saving a lot on import tariffs and hence can reduce the cost of the production of the product and thus sell it for a lesser price and being competitive in the market.

This strategy of expanding production facilities to the target geographical area is a well-utilized strategy by many multinational companies in the world.

Hence, option 4 is the aptest choice.