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White Moon Ltd, a manufacturing organisation, is considering outsourcing transportation. What would be a reason for doing this?
Suggested Answer: B
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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)
31 comments · newest first
RO
Ronna
11 months ago
Wait, is it really that effective for avoiding inefficiencies?
ID
Idella
11 months ago
I heard it helps with market access too.
BU
Bulah
12 months ago
But what about quality control? Seems risky.
FR
France
12 months ago
Totally agree, it makes financial sense!
ER
Erick
1 year ago
Outsourcing can really cut down on fixed costs.
MA
Man
1 year ago
I keep mixing up the reasons for outsourcing. Pleasing shareholders seems less likely, but I can't recall why exactly.
CA
Carey
1 year ago
I practiced a similar question about outsourcing last week, and I think avoiding inefficiency was one of the options.
KE
Keva
1 year ago
I'm not entirely sure, but I feel like gaining access to emerging markets could be a valid reason too.
LE
Lewis
1 year ago
I remember we discussed outsourcing in class, and I think decreasing fixed costs was a big reason mentioned.
JE
Jestine
1 year 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.
RE
Reuben
1 year 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.
BE
Beatriz
1 year 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.
LE
Lenora
1 year 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.
IS
Isadora
2 years ago
I think both reasons are valid, it just depends on the company's goals.
CL
Cletus
2 years ago
Yes, that's true. Lowering costs can improve profitability.
CO
Cordell
2 years ago
But what about decreasing fixed costs? Wouldn't that be a good reason too?
IS
Isadora
2 years ago
I agree with Cletus, accessing new markets can help the company grow.
AU
Audrie
2 years ago
Ooh, emerging markets! That could be a game-changer. Gotta keep those options open.
AL
Alfred
2 years ago
D) To avoid the inefficiency trap
DO
Dorothy
2 years ago
B) To decrease fixed costs
IS
Isadora
2 years ago
A) To gain better access to emerging markets
JO
Josephine
2 years ago
Pleasing shareholders? Pfft, I think they should be focusing on what's best for the business, not just the investors.
MA
Maybelle
2 years ago
Avoiding the inefficiency trap is key. Gotta stay ahead of the game, you know?
NA
Naomi
2 years ago
D) To avoid the inefficiency trap
WI
Willie
2 years ago
C) To please shareholders
LI
Lisbeth
2 years ago
B) To decrease fixed costs
LA
Lacresha
2 years ago
A) To gain better access to emerging markets
CL
Cletus
2 years ago
I think the reason could be to gain better access to emerging markets.
SO
Socorro
2 years ago
Outsourcing transportation could definitely help White Moon Ltd decrease their fixed costs. That's a smart move in my book!
CA
Cammy
2 years ago
B) To decrease fixed costs
AR
Arlette
2 years ago
A) To gain better access to emerging markets