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CIPS Exam L6M9 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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Isadora
3 months ago
I think both reasons are valid, it just depends on the company's goals.
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Cletus
3 months ago
Yes, that's true. Lowering costs can improve profitability.
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Cordell
3 months ago
But what about decreasing fixed costs? Wouldn't that be a good reason too?
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Isadora
3 months ago
I agree with Cletus, accessing new markets can help the company grow.
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Audrie
3 months ago
Ooh, emerging markets! That could be a game-changer. Gotta keep those options open.
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Alfred
2 months ago
D) To avoid the inefficiency trap
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Dorothy
2 months ago
B) To decrease fixed costs
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Isadora
3 months ago
A) To gain better access to emerging markets
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Josephine
3 months 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
3 months ago
Avoiding the inefficiency trap is key. Gotta stay ahead of the game, you know?
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Naomi
2 months ago
D) To avoid the inefficiency trap
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Willie
3 months ago
C) To please shareholders
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Lisbeth
3 months ago
B) To decrease fixed costs
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Lacresha
3 months ago
A) To gain better access to emerging markets
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Cletus
3 months ago
I think the reason could be to gain better access to emerging markets.
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Socorro
3 months 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
3 months ago
B) To decrease fixed costs
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Arlette
3 months ago
A) To gain better access to emerging markets
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