A Disadvantage of the "Few Suppliers" Sourcing Strategy Is

question 22

Multiple Choice

A disadvantage of the "few suppliers" sourcing strategy is:

• A) the risk of not being ready for technological change.
• B) the lack of cost savings for customers and suppliers.
• C) possible violations of the Sherman Antitrust Act.
• D) the high cost of changing partners.
• E) the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer.

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Definitions:

Profit

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Contango

A situation in futures trading where the future price of a commodity is higher than the spot price, often indicating expectations of rising prices.

Natural Hedgers

Entities or individuals who inherently have an opposite risk exposure compared to their needed market position, allowing them to hedge their risks without having to use derivative products.

Backwardation

Backwardation is a market condition in which futures prices are lower in the distant delivery months than in the near delivery months, often indicating a shortage of the commodity in the spot market.