Question

Outsourcing strategies: Select one: a. Carry the substantial risk of raising a company’s costs. b. Carry the substantial risk of making a company overly dependent on its suppliers. c. Involve farming out value chain activities presently performed in-house to outside specialists and strategic allies. d. Increase a company’s risk exposure to changing technology and/or changing buyer preferences.

Answer 1

Answer:

The correct answer is letter "C": Involve farming out value chain activities presently performed in-house to outside specialists and strategic allies.

Explanation:

Outsourcing refers to a practice that companies engage in to take their operations abroad to lower production costs and avoid being subject to stiff regulations that might harm their profits. Under this approach, firms value chain activities handled in their original country are taken to countries where the manufacturing and labor costs are much lower with and relatively similar qualified workforce and suppliers.  

Outsourcing might harm the employment rate in the domestic country of the company handling operations abroad but could benefit the outsourced nation by introducing job opportunities where there may not even be basic labor conditions.