Question 1

Outsourcing is:&#10;A)a low risk venture because global suppliers have almost unlimited capabilities.&#10;B)a low risk venture because the costs of reversing the decision are low.&#10;C)a moderate risk venture because it is easy to determine core competencies.&#10;D)a high risk venture because the costs of reversing the decision are often high.&#10;E)a high risk venture because the decision makers' reputations are at stake.

Accepted Answer

Outsourcing is a high risk venture because the costs of reversing the decision are often high. Once a company outsources a business function and creates relationships with suppliers, it can be difficult and costly to bring that function back in-house or switch to a new supplier. Additionally, outsourcing can also pose risks to a company's reputation if suppliers do not perform well or if outsourcing leads to negative public perception.

Question 2

In the outsourcing decisions in many organizations,supply has had:&#10;A)no involvement.&#10;B)virtually no involvement.&#10;C)relatively moderate involvement.&#10;D)extensive involvement.&#10;E)a leadership role.

Accepted Answer

C

Question 3

When a team decides that a task or function currently performed by company employees is a noncore competency,the team is likely to recommend:&#10;A)insourcing.&#10;B)continuing to make.&#10;C)privatizing.&#10;D)outsourcing.&#10;E)continuing to buy.

Accepted Answer

When a task or function is deemed a noncore competency, the team is likely to recommend outsourcing, which means to hire an external company to handle that specific task or function. This allows the company to focus on their core competencies and lower costs by letting the external company handle tasks that may be more efficiently and effectively completed by them.

Question 4

One of the most fundamental and critical decisions in any organization is,should we:&#10;A)make or buy the needed good or service?&#10;B)have a single source or multiple sources for a specific purchase?&#10;C)order small quantities to avoid carrying costs or large quantities for volume discounts?&#10;D)source locally or globally?&#10;E)form a strategic partnership with a single source or split the order to foster competition?

Accepted Answer

The make-or-buy decision is fundamental as it determines whether an organization will produce goods or services internally or purchase them from external suppliers, impacting cost, control, and strategic direction.

Question 5

Privatization is:&#10;A)a term used in the private sector for a make decision.&#10;B)the term for outsourcing used in the public sector.&#10;C)used interchangeably with outsourcing in both the public and private sectors.&#10;D)the term used when entire operations are outsourced.&#10;E)the term used when entire operations are insourced.

Accepted Answer

Privatization refers to the process of transferring ownership of a business, enterprise, agency, public service, or public property from the public sector (government) to the private sector, either to a business that operates for profit or to a nonprofit organization. It contrasts with outsourcing, where only specific tasks or functions are contracted out, not the entire operation.

Question 6

Noncore competencies of an organization are typically:&#10;A)the first things to be outsourced to access supplier expertise.&#10;B)the same for companies in the same industry.&#10;C)dependent on the staff performing the tasks.&#10;D)seldom outsourced because they contribute to competitive advantage.&#10;E)flexible and easily changed depending on who is in charge.

Accepted Answer

Noncore competencies are tasks or activities that are not essential to the core operations of the organization. These tasks can be outsourced to access supplier expertise because they are not critical to the competitive advantage of the organization. By outsourcing noncore competencies, organizations can focus on their core competencies and improve their competitive advantage.

Question 7

Outsourcing of services is:&#10;A)unrealistic because of the difficulty in measuring service providers' performance.&#10;B)realistic because of the ease in measuring service providers' performance.&#10;C)increasing because it is easy to define service requirements and measure quality.&#10;D)decreasing because buyers are dissatisfied with most third party service providers.&#10;E)realistic if service requirements and quality expectations can be clearly defined.

Accepted Answer

The statement suggests that outsourcing is realistic if service requirements and quality expectations can be clearly defined. This aligns with option E, which states that outsourcing is realistic if service requirements and quality expectations can be clearly defined.

Question 8

Subcontracting refers to the practice of:&#10;A)an organization hiring a contractor to perform a task it has been doing in house.&#10;B)an organization hiring substitute labor to cover for a supplier's labor shortage.&#10;C)a prime contractor bidding on another contractor's incomplete jobs.&#10;D)a prime contractor bidding out part of a job to another contractor.&#10;E)a prime contractor hiring substitute labor during a strike.

Accepted Answer

Subcontracting refers to a prime contractor hiring another contractor to perform part of a job that it was contracted to do. This is often done when the prime contractor does not have the expertise or resources to complete a specific aspect of the project.

Question 9

The logistics activities most frequently outsourced are:&#10;A)core competencies of the buying organization.&#10;B)transactional,operational and repetitive.&#10;C)analytical,strategic,and non-repetitive.&#10;D)both strategic and operational.&#10;E)analytical,strategic and repetitive.

Accepted Answer

The activities that are most frequently outsourced in logistics are transactional, operational, and repetitive tasks such as transportation, warehousing, and inventory management. These activities are not considered core competencies of the buying organization and can be effectively handled by a third-party logistics provider (3PL). Outsourcing analytical and strategic activities that require specific expertise and knowledge is less common.

Question 10

Make or buy and insourcing or outsourcing decisions are:&#10;A)routine decisions with low levels of uncertainty.&#10;B)routine decisions with high levels of certainty.&#10;C)key strategic decisions.&#10;D)key operational decisions.&#10;E)key tactical decisions.

Accepted Answer

Make or buy and insourcing or outsourcing decisions are key strategic decisions that involve evaluating the core competencies of the organization, evaluating the costs and benefits of each option, and aligning the decision with the overall business strategy. These decisions can have a significant impact on the competitiveness and profitability of the organization and require careful consideration and analysis.

Deck 5: Make or Buy, Insourcing, and Outsourcing