As a Hedge Against Adverse Movements in Factor Costs and Exchange

question 62

Multiple Choice

As a hedge against adverse movements in factor costs and exchange rates,many firms will:

• A)outsource only to countries that have high labor costs,because they tend to be most stable.
• B)avoid outsourcing altogether.
• C)source the same products from suppliers based in two countries.
• D)change sources every month.

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Definitions:

Rational

Based on or in accordance with reason or logic; capable of making sensible or logical decisions.

Antecedent

A preceding event, condition, or cause that logically goes before something else.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Cohesiveness

The property of a group that affectively binds people, as group members, to one another and to the group as a whole, giving the group a sense of solidarity and oneness.