Which of the Following Statements About Outsourcing the Performance of Value

question 40

Multiple Choice

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

• A) Outsourcing support services often has the disadvantage of raising fixed and variable costs.
• 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 supplier scan 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.

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Definitions:

Inspection Cost

Expenses incurred to ensure products meet quality standards, including costs of labor, equipment, and facilities used in inspection.

Overhead Cost

Expenses related to the day-to-day running of a business that cannot be directly tied to a specific product or service, such as rent, utilities, and administrative salaries.

Machine Hours

This is a measure of the amount of time a machine is operated and is often used in the allocation of manufacturing overhead to products based on usage.

High-low Method

A method employed in managerial accounting that estimates variable and fixed costs by analyzing the most and least active periods.