Chapter 8 Location Strategies True False

CHAPTER 8: LOCATION STRATEGIES TRUE/FALSE 1. FedEx chose Memphis, Tennessee, for its central location, or "hub," primarily because of the incentives offered by the city of Memphis and the state of Tennessee. False (Global company profile, easy) 2. Generally, the objective of the location decision is to maximize the firm's profit. False (The strategic importance of location, easy) 3. Lists have been developed that rank countries on issues such as “competitiveness” and “corruption.” True (Factors that affect location decisions, easy) 4. When innovation replaces cost as a firm's focus for location decisions, the presence of other stateof-the-art firms is a plus, not a negative, for the firm's competitiveness. True (The strategic importance of location, moderate) 5. The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit. True (Factors that affect location decisions, moderate) 6. For a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion. False (Factors that affect location decisions, moderate) 7. Unfavorable exchange rates can offset other savings in a location decision. True (Factors that affect location decisions, moderate) 8. An example of an intangible cost, as it relates to location decisions, is the quality of education. True (Factors that affect location decisions, moderate) 9. In location decisions, intangible costs are easier to measure than tangible costs. False (Factors that affect location decisions, moderate) 10. Location decisions are based on many things, including costs, revenues, incentives, attitudes, and intangibles, but not on ethical considerations. False (Factors that influence location decisions, easy) {AACSB: Ethical Reasoning} 11. Manufacturers may want to locate close to their customers, if the transportation of finished goods is expensive or difficult. True (Factors that affect location decisions, moderate) 12. One reason for a firm locating near its competitors is the presence of a major resource it needs. True (Factors that affect location decisions, moderate) 13. The graphic approach to location break-even analysis displays the range of volume over which each location is preferable. True (Methods of evaluating location alternatives, moderate) 189 14. The factor-rating method can consider both tangible and intangible costs. True (Methods of evaluating location alternatives, moderate) 15. The center-of-gravity method finds the location of a centralized facility, such as a distribution center, that will maximize the organization's revenue. False (Methods of evaluating location alternatives, moderate) 16. The transportation model calculates an optimal shipping system between a central facility and several outlying customers. False (Methods of evaluating location alternatives, moderate) 17. Service firms choose locations based, in part, on the revenue potential of a site. True (Service location strategy, moderate) 18. Starbucks Coffee's approach to choosing new café locations is largely based on executive intuition, not sophisticated models and site selection technology. False (Service location strategy, easy) 19. Labor cost and labor availability often drive the location decision in the call center industry. True (Service location strategy, moderate) 20. The location decisions of goods-producing firms will generally pay more attention to parking, access, and traffic counts than will service location decisions. False (Service location strategy, moderate) 21. Industrial location decisions often assume that costs are relatively constant for a given area. False (Service location strategy, moderate) 22. Starbucks Coffee's use of geocoded demographic and consumer data in site selection decisions is an example of the use of a Geographic Information System, or GIS. True (Service location strategy, moderate) 190