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.

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Definitions:

Cost of Goods Sold

The total cost of materials and labor needed to produce the goods or services sold by a company.

LIFO Inventory Method

An accounting method where the last items of inventory purchased are the first ones used or sold, affecting the cost of goods sold and ending inventory values.

FIFO Inventory Method

A method of accounting for inventory that assumes the first items placed in inventory are the first sold.

Balance Sheet

A document that provides a snapshot of a corporation's assets, debts, and shareholder's equity at a given point in time.