In Which of the Following Cases Is Outsourcing Likely to Be

question 31

Multiple Choice

In which of the following cases is outsourcing likely to be the best solution to the firm's data processing needs?

• A) Sad Clown Pajamas produces and wholesales clothing products to retailers worldwide. Eighty percent of its sales orders are taken during the months of October and November. Sad Clown requires a system that will manage online ordering and fulfillment.
• B) Modest Expectations Investment Services manages highly diverse portfolios and provides personal services to high income investors worldwide. The firm needs a system that will pull together selected investment data from a large variety of sources and allow account managers to prepare customized reports for customers.
• C) J.D. Yacht is in the business of buying businesses, managing them for no more than two years, and then selling them at a profit. The firm requires a flexible system that will allow them to effectively manage the various types of businesses it controls.
• D) Halide Construction, LLC, manages the design and construction of desalinization plants and requires a system that will allow it to manage the process from bid to billing.

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Definitions:

Welfare Loss

A decrease in economic efficiency that occurs when there is an optimal allocation of resources that is not achieved due to various reasons such as externalities or market failure.

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that categorizes human needs into a five-level model, ranging from basic physiological needs to self-actualization.

ERG Theory

A motivational theory developed by Clayton Alderfer that categorizes human needs into three groups: Existence, Relatedness, and Growth.

Two-Factor Theory

A psychological theory proposed by Herzberg that suggests there are two sets of factors affecting people's work motivation and satisfaction: hygiene factors and motivators.