Final answer:
The Japanese term 'kaizen' refers to 'continuous improvement' and involves all aspects and levels of a business. It's about making regular small changes to improve efficiency and reduce waste. This philosophy can lead to changes such as a new production possibilities frontier schedule signaling improved capabilities.
Step-by-step explanation:
The term kaizen refers to the philosophy or practice focusing on continuous improvement in all aspects of life. In a business context, kaizen applies to activities that continuously improve all functions and involve all employees from the CEO to the assembly line workers. It also applies to processes, such as purchasing and logistics, that cross organizational boundaries into the supply chain.
In the context of the given question, 'The Japanese use the term kaizen when referring to________.', the correct answer would be C) continuous improvement. Kaizen is all about making small changes on a regular basis to improve productivity, safety, and effectiveness, while reducing waste.
An example of kaizen could include setting a new production possibilities frontier schedule with improved technology and resources, indicating a shift in capability due to continuous improvement efforts.