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CIPS L6M9 Exam - Topic 2 Question 4 Discussion

Actual exam question for CIPS's L6M9 exam
Question #: 4
Topic #: 2
[All L6M9 Questions]

White Moon Ltd, a manufacturing organisation, is considering outsourcing transportation. What would be a reason for doing this?

Show Suggested Answer Hide Answer
Suggested Answer: B

Outsourcing replaces fixed costs with variable costs---companies only pay for what they use, rather than maintaining their own fleet.

Option A is incorrect because gaining market access is a benefit of offshoring, not outsourcing.

Option C is incorrect as there is no mention of shareholders in the scenario.

Option D is incorrect since the inefficiency trap relates to offshoring.

(LO 1.2, See p.44)


by Eric at Mar 09, 2025, 10:35 AM

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Ronna
6 months ago
Wait, is it really that effective for avoiding inefficiencies?
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Idella
6 months ago
I heard it helps with market access too.
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Bulah
6 months ago
But what about quality control? Seems risky.
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France
7 months ago
Totally agree, it makes financial sense!
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Erick
7 months ago
Outsourcing can really cut down on fixed costs.
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Man
7 months ago
I keep mixing up the reasons for outsourcing. Pleasing shareholders seems less likely, but I can't recall why exactly.
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Carey
7 months ago
I practiced a similar question about outsourcing last week, and I think avoiding inefficiency was one of the options.
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Keva
7 months ago
I'm not entirely sure, but I feel like gaining access to emerging markets could be a valid reason too.
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Lewis
8 months ago
I remember we discussed outsourcing in class, and I think decreasing fixed costs was a big reason mentioned.
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Jestine
8 months ago
I'm a little confused by the options here. Pleasing shareholders doesn't seem like a direct reason for outsourcing. I'll need to carefully consider the differences between the answers to pick the best one.
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Reuben
8 months ago
Okay, I've got this. Outsourcing transportation would allow the company to focus on its core manufacturing business and potentially gain access to more efficient logistics providers. The cost savings are an obvious benefit too.
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Beatriz
8 months ago
Hmm, I'm a bit unsure about this one. I know outsourcing can help with costs, but I'm not sure if that's the only reason a company would do it. I'll need to think through the potential strategic benefits as well.
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Lenora
8 months ago
This seems like a straightforward question about the reasons for outsourcing transportation. I'll focus on identifying the key benefits, like reducing fixed costs and potentially gaining access to new markets.
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Isadora
1 year ago
I think both reasons are valid, it just depends on the company's goals.
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Cletus
1 year ago
Yes, that's true. Lowering costs can improve profitability.
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Cordell
1 year ago
But what about decreasing fixed costs? Wouldn't that be a good reason too?
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Isadora
1 year ago
I agree with Cletus, accessing new markets can help the company grow.
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Audrie
1 year ago
Ooh, emerging markets! That could be a game-changer. Gotta keep those options open.
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Alfred
1 year ago
D) To avoid the inefficiency trap
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Dorothy
1 year ago
B) To decrease fixed costs
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Isadora
1 year ago
A) To gain better access to emerging markets
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Josephine
1 year ago
Pleasing shareholders? Pfft, I think they should be focusing on what's best for the business, not just the investors.
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Maybelle
1 year ago
Avoiding the inefficiency trap is key. Gotta stay ahead of the game, you know?
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Naomi
1 year ago
D) To avoid the inefficiency trap
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Willie
1 year ago
C) To please shareholders
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Lisbeth
1 year ago
B) To decrease fixed costs
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Lacresha
1 year ago
A) To gain better access to emerging markets
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Cletus
1 year ago
I think the reason could be to gain better access to emerging markets.
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Socorro
1 year ago
Outsourcing transportation could definitely help White Moon Ltd decrease their fixed costs. That's a smart move in my book!
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Cammy
1 year ago
B) To decrease fixed costs
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Arlette
1 year ago
A) To gain better access to emerging markets
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