Certified Production & Operations Manager (POM) Practice Exam

Which of the following does NOT represent a valid reason for globalizing operations?

1. Access to new markets

2. Cost reduction

3. Reduce responsiveness

4. Achieve economies of scale

The correct answer is: Reduce responsiveness

The reason labeled as not valid for globalizing operations is a decrease in responsiveness. In fact, companies often aim to increase their responsiveness to customers and markets as they globalize. By moving operations to different regions, businesses typically try to become more sensitive and responsive to local customer needs, preferences, and market conditions. This responsiveness can involve customizing products, improving service levels, or adapting marketing strategies to better fit local tastes and requirements. In contrast, accessing new markets, reducing costs, and achieving economies of scale are all strategic benefits commonly sought after through globalization. Access to new markets allows companies to expand their customer base and tap into potential revenue streams. Cost reduction can come from various factors, such as lower labor costs or more efficient production processes in different countries. Achieving economies of scale is about increasing production to reduce per-unit costs, which can be facilitated through global operations that allow for larger output across international boundaries. Thus, the focus on reducing responsiveness stands out as a strategy that contradicts the typical motivations behind globalization in business operations.