A) What is one benefit of outsourcing? Increases control Reduced logistics Decre
ID: 470227 • Letter: A
Question
A) What is one benefit of outsourcing?
Increases control
Reduced logistics
Decreased responsibility
Converts fixed costs into variable costs
Increases costs
B) Which of the following is not a reason for outsourcing?
Reduce costs
Gain access to needed skills
Better quality control
Focus on core business
Flexibility
C) When a firm uses this approach to globalization they are attempting to boost revenue and market share by maximizing its local presence in a country.
Adaptation
Aggregation
Annexation
Arbitrage
Animation
D) Which of the following would not be a goal of outsourcing?
To reduce costs and improve functionality
To improve flexibility
To focus on core strategies
Increasing control of production quality
To improve competitiveness
E) What effect on productivity do most IT organizations experience during the first year of an off shoring agreement?
No change
20% increase in productivity
20% decrease in productivity
100% increase in productivity
100% decrease in productivity
F) Which of the following is not a benefit of the globalization of industries?
Broader access to services
Reduced competition
Wider access to investment funds
Broader access to manufactured goods
Production of goods worldwide
G) When a firm locates a production facility in a country, provides employement, and participates in community activities, what advantage might the company achieve?
Minimize labor costs
Save on taxes
Exploit local resources
Reduce transportation expenses
Allow the company to transform from a "foreign" firm to a local firm
H) Which of the following business process activities is least likely to be outsourced?
Payroll
Accounts payable
Benefits administration
Research and development
Insurance
Explanation / Answer
A) converts fixed costs into variable costs.
Explanation: by outsourcing, firms do not have to make an upfront capital investment to set up production facility. They just have to pay per unit variable cost to the outsourced firm.
B) Better quality control
Explanation: by outsourcing, firms do not have a direct managerial control on quality aspects. However quality measures are governed by agreed specifications.
C) Adaptation
Explanation: Adaptation seeks to boost revenue and market share by maximising their local relevance.
D) Increasing control of production quality
Explanation: As explained in part B
E) 20% decline in productivity
Explanation: The decline in productivity is largely because of time lost in transferring technical and business knowledge
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