It is most appropriate for a firm to contract out manufacturing when
A) individual manufacturers have few firm-specific skills that contribute to the value of their product.
B) the value of the host country currency is expected to appreciate.
C) supplier switching costs are correspondingly high.
D) firm-specific technology and expertise add significant value to the product.
E) the currency used for pricing a product is anticipated to stay weak in the long run.

Question

Quizplus · Accepted Answer

Contracting out manufacturing is most appropriate when individual manufacturers have few firm-specific skills that contribute to the value of their product, as it allows the firm to focus on its core competencies and reduce costs.

It Is Most Appropriate for a Firm to Contract Out