Which of the following is true of contract manufacturing?
A) It provides a chance to start faster but with more risks.
B) It involves decreased control over the manufacturing process.
C) It leads to an increase in potential profits on manufacturing.
D) It is the simplest way to enter a foreign market.
E) It involves entering a foreign market by exporting the surplus products.

Question

Quizplus · Accepted Answer

Contract manufacturing involves outsourcing the manufacturing process to a third-party. This means that the company has less control over the manufacturing process and quality control, leading to decreased control. The other options are not completely accurate - while contract manufacturing may provide a chance to start faster, it may also have fewer risks as the third-party manufacturer may be more experienced in the process. It may lead to an increase in potential profits, but it depends on the specific situation. Contract manufacturing is not necessarily the simplest way to enter a foreign market - there may be other options such as setting up a joint venture or acquiring a local company. Finally, contract manufacturing involves producing goods for a company, not exporting surplus products.

Which of the Following Is True of Contract Manufacturing