Audio Component Outsourcing (Scenario)

question 84

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.
-Global sourcing becomes a catalyst to overhaul organizational processes and company operations and increases the firm's overall competitive advantages by ________.

• A) encouraging firms to train unskilled labor through extensive training programs
• B) allowing firms to free expensive analysts, engineers, and managers from routine tasks to spend more time on high-value-adding activities
• C) relaxing quality standards
• D) installing a system of rewards to motivate employees

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Definitions:

International Trade

The exchange of goods and services between countries, which can increase market competition and lead to better product diversity and lower prices.

World Price

The global market price of a good or service when it is traded internationally.

Free Trade

The economic policy of not discriminating against imports from and exports to foreign jurisdictions, allowing goods to move across borders without regulatory or tariff barriers.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, underpinning the rationale for international trade.