Scenario: Audio Component Outsourcing

question 44

Multiple Choice

Scenario: Audio Component Outsourcing
Echo Corporation 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 outsourcing. Echo managers are attempting to convince Nathan Douglas, the firm's founder and CEO, that outsourcing would enable the firm to be more competitive without sacrificing quality.
-Which of the following should most likely be considered in making the decision to outsource some of Echo's manufacturing activities?

• A) Do purchasing components present the lowest cost option for Echo?
• B) Would Echo engineers be willing to relocate to a foreign nation?
• C) Is Echo prepared to cover moving expenses for its managerial talent?
• D) Can Echo find employees for a customer service center in the U.S.?

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Definitions:

Plowshares

Metal blades fitted to a plow, used in farming to cut through the soil.

Comparative Advantage

The ability of an entity to produce goods or services at a lower opportunity cost than other entities, leading to more efficient economic exchanges.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs and production technology.

Master Wood-carver

An highly skilled artisan specialized in crafting artistic designs and sculptures through the carving of wood.