Which One of the Following Statements About Outsourcing the Performance

question 20

Multiple Choice

Which one of the following statements about outsourcing the performance of value chain activities to outside specialists is false?

• A) Outsourcing support services often has cost-saving benefits but outsourcing primary value chain activities has the disadvantages of raising fixed costs,reducing variable costs,and making it harder to develop distinctive competencies.
• B) Outsourcing critics contend that shifting responsibility for performing value chain activities to outside specialists 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) Outsourcing the performance of certain value chain activities to able suppliers can add to a company's arsenal of capabilities and contribute to better strategy execution.
• D) The real debate surrounding outsourcing is not about whether too much outsourcing risks loss of control but about how to use outsourcing in a manner that produces greater competitiveness.
• E) Outsourcing can enable a company to heighten its strategic focus and concentrate its full energies and resources on even more competently performing those value chain activities that are at the core of its strategy and for which it can create unique value.

---

Definitions:

Negative Externality

An adverse effect on a third party not directly involved in a transaction, which results from economic activity without compensation.

Negative Externality

A cost suffered by a third party due to an economic transaction, without compensation.

After-Tax Equilibrium

The balance reached in the market after accounting for the effects of taxes.

Socially Optimal Quantity

The level of output or production that maximizes societal welfare, taking into account all external costs and benefits.