Question

When is outsourcing NOT beneficial?a) when internal control over a particular activity is deemed essential b) when it improves organizational flexibility and speeds time to marketc) when it reduces the company's risk exposure to changing technology and/or buyer preferencesd) when it allows a company to concentrate on its core businesse) when an activity can be performed better or more cheaply by outside specialists

Answer 1

Answer: Option A

Explanation: Outsourcing can be defined as a situation in which a company hires another company for performing some activities that are non core for the hiring companies.

For, example a company having business of making soft drink might outsource its advertising activity.

One problem with outsourcing is that it leads to no internal control of the hiring company's management on that particular activity, leading to high probability of fraud or failure.

Thus, if an activity needs internal control it should not be outsourced.