When General Motors Considers Making Its Own Automotive Parts,Delphi Automotive

question 87

Multiple Choice

When General Motors considers making its own automotive parts,Delphi Automotive Supply Company would be concerned with the

• A) bargaining power of suppliers.
• B) bargaining power of buyers.
• C) rivalry among existing competitors.
• D) threat of substitutes.
• E) threat of new entrants.

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Definitions:

Joint Process Costs

Costs incurred during a production process that yields multiple products simultaneously until the point of separation where products can be identified individually.

Make or Buy Decision

A decision-making process where a business evaluates the cost benefits of manufacturing a product in-house versus purchasing it from an external supplier.

Fixed Overhead

Costs that do not vary with production volume, such as rent, salaries, and insurance, required to operate a business regardless of production levels.

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.