Outsourcing Critics Contend That Shifting Responsibility for Performing Value Chain

question 92

Multiple Choice

Outsourcing critics contend that shifting responsibility for performing value chain activities to outside specialists:

• A) has the disadvantage of raising fixed costs and reducing variable costs and makes it harder to develop distinctive competencies.
• B) can hollow out a company's knowledge base and capabilities,leaving it at the mercy of outsider suppliers,and short of the resource strengths to be a master of its own destiny.
• C) results in less organizational flexibility and leads to sometimes exorbitant costs in collaborating with outside suppliers and strategic partners.
• D) slows down decision making on key strategic issues because outside suppliers have to be consulted first.
• E) lowers the morale of company employees,dampens a company's ability to implement best practices,and results in greater bureaucracy and slower decision making.

---

Definitions:

Comparative Advantage

A principle that holds that each party should produce the goods or services for which it has the lowest opportunity cost relative to others.

Trade Restriction

Measures implemented by governments to control the amount of trade across borders, including tariffs, quotas, and non-tariff barriers.

Production Relationships

The correlations between input factors and the resulting output in the production process of goods or services.

Production Possibilities Frontier

A graph showing all the possible highest production levels for two or more products, given certain inputs.