Which of the Following Is a Disadvantage of Outsourcing Production

question 116

Multiple Choice

Which of the following is a disadvantage of outsourcing production to independent suppliers?

• A) It makes it necessary for firms to invest in specialized assets.
• B) It reduces the strategic flexibility of a firm by limiting its ability to adapt during changes in exchange rates.
• C) It increases the risk of suppliers expropriating a firm's proprietary product technology for their own use.
• D) It increases the bureaucratic inefficiencies and costs associated with transfer pricing decisions.
• E) It makes it difficult to achieve coordination in an organization by increasing the number of subunits in it.

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Definitions:

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