4. Most firms inthe apparel and footwear indistries choose to outsource producti

Question

4. Most firms inthe apparel and footwear indistries choose to outsource production to countries whrere labor is abundant (primary, Southeast Asia and the Carib bean)-but those forms do not intergrate with their suppliers there. On the other hand, firms in many capital -intensice industries choose to intergrate with their suppliers.

What could be some differences between thte labor-intensive apparel and footwear industries on the one hand and capital-intensive industries on the other hand that would explain these choices?

A multinational may prefer to

A. outsource to an independent foreign firm it it is considered about property right in foreign countrieschich in smore likely to be the case in labor-intensive industries.

B. use a foreign aggliate in it has a proprietary rechnology that it is concerned about losing, which is more likey to be the case in capital-intensive industries

C. outsource to an independent foreign firm if if doubt the ability of other firms to produce ans efficiently as it could, which is more likely to be the case in labor-intensive industries.

D. Use a foreign affliate if it wants to benefit from economies of scale as a result of the affliate perforning narrow parts of the production process for many differen parent firms, which is more lokely to be the case in capital-intensive industries.

Explanation / Answer

A multinational may prefer to

D. Use a foreign affliate if it wants to benefit from economies of scale as a result of the affliate perforning narrow parts of the production process for many differen parent firms, which is more lokely to be the case in capital-intensive industries.

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