All of the Following Statements Are True About Outsourcing EXCEPT

question 88

Multiple Choice

All of the following statements are True about outsourcing EXCEPT:

• A) work is sent to another area of the organization to be completed by specialists.
• B) it allows the organization to focus on what it does best to achieve its competitive advantage.
• C) not outsourcing can sometimes increase an organization's costs depending on the nature of the task.
• D) these agencies are often the experts and can work more efficiently on a particular task.
• E) tasks that do not add strategic value can be outsourced.

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Definitions:

Cost Function

A mathematical relation that describes how the total cost of producing a good or service varies with the level of output.

Diseconomies of Scope

The phenomenon where a company’s costs increase as it produces more varied types of products or services, due to inefficiencies.

Returns to Scale

The rate at which output increases as inputs are increased proportionately.

Economies of Scope

Cost advantages companies experience when they increase the variety of products produced, as opposed to increasing the volume of a single product (economies of scale).