Most firms outsource value chain activities with the primary motive of reducing costs.

Question

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Outsourcing value chain activities can often lead to cost savings for a firm, as the outsourced activities may be performed more efficiently or at a lower cost by external suppliers. However, cost reduction is not always the primary motivation for outsourcing – some firms may outsource in order to access specialized expertise or technology, or to focus on core activities and outsource non-core activities.

Most Firms Outsource Value Chain Activities with the Primary Motive