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:

Labor Earnings

Income received by workers for their labor services, including wages, salaries, and other forms of compensation.

Government Policy

Actions or inactions chosen by government officials to address specific public issues, ranging from economic regulations to social welfare programs.

Natural Rate

Often refers to the natural rate of unemployment, which is the level of unemployment consistent with a stable rate of inflation, or the equilibrium rate unaffected by short-term fluctuations.

Fully Employed

Refers to a situation where all available labor resources are being used in the most economically efficient way.