Audio Component Outsourcing (Scenario)

question 14

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.
-Which of the following is TRUE with regard to the risks of global sourcing?

• A) Inadequate legal systems, red tape, convoluted tax systems, and complex business regulations complicate local operations in many countries.
• B) Firms that source from countries whose currencies are strengthening experience lower costs.
• C) Global sourcing weakens competition leading to a considerably risk-free international business environment.
• D) Environmental challenges exclude currency fluctuations, tariffs and other trade barriers, high energy and transportation costs.

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Definitions:

Adjustment

The process of adapting or becoming better suited to a new condition or environment.

Inevitable Decline

The unavoidable decrease or deterioration in capability or condition over time.

Life Processes

The series of biological actions and phenomena that are common to all living organisms, such as growth, reproduction, and metabolism.

Terminally Ill

A terminally ill person is diagnosed with a disease that is inevitably leading to death, usually within a short period.