CHAPTER 10 SUPPLY CHAIN STRATEGY Review and Discussion Questions 2. With so much productive capacity and room for expansion in the United States, why would a company based in the United States choose to purchase items from foreign firm? Discuss the pros and cons. The use of foreign firms can provide a U.S. firm more alternatives in selecting a supplier. The pros are more choices, potentially reduced costs in the areas of materials, transportation, production, and distribution, and potentially moving closer to a foreign market. The cons are the distance is generally increased, communications problems are increased due to distance, culture, and technology. There may be problems with customs, government regulations, political stability, etc. 3. Describe the differences between functional and innovative products. Functional products are staples that people buy in a wide range of retail outlets. Typically, they do not change much over time, have low profit margins, stable predictable demand and
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