Audio Component Outsourcing (Scenario)

question 20

Multiple Choice

Audio Component Outsourcing (Scenario)
Echo Corp., a company based in Boston, manufactures high-quality audio components, such as speakers, amplifiers, and receivers for home entertainment systems. Echo has been losing market share in recent years due to the competitive pricing of other audio component manufacturers that engage in global sourcing. Echo managers are attempting to convince Nathan Douglas, the firm's founder and CEO, that global sourcing would enable the firm to be more competitive without sacrificing quality.
-The strategic view of global sourcing suggests that ________.

• A) just as firms achieve gains in efficiency, productivity, quality, and revenues by leveraging offshore talent, they also obtain the means to turn around failing businesses, speed up innovation, restructure operations, and fund otherwise-unaffordable development projects
• B) firms that procure supplies from foreign subsidiaries are more likely than not to lose ground to competitors who primarily bank on their own resources
• C) a strong legal environment is not the prerequisite for increasing efficiencies by relocating strategic operations abroad
• D) the firms' innovative activities tend to make mature products obsolete over time

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Definitions:

Beginning Inventory

The value of a company's stock of goods at the start of an accounting period, before any purchases or sales have occurred.

Desired Ending Inventory

The amount of inventory a business plans to have on hand at the end of a period to ensure operations run smoothly and meet customer demand.

Direct Materials

Raw materials that can be directly attributed to the production of goods.

Sales Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.