Which of the following is true with regard to strategies for minimizing the risks of global sourcing?
A)To ensure the success of sourcing ventures, the focal firm must exercise great care to identify and screen potential suppliers and then monitor the activities of those suppliers from which it sources.
B)To maximize returns and minimize risks, management should outsource core business operations.
C)Because production quality in an emerging market rarely varies over time, managers at the focal firm are not obliged to closely monitor manufacturing processes.
D)Firms must refrain from maintaining their own sourcing operations abroad in order to trim costs and minimize risks stemming from frequent currency fluctuations.

Question

Quizplus · Accepted Answer

To minimize the risks of global sourcing, firms must exercise great care in identifying and screening potential suppliers, as well as monitoring their activities. Close monitoring and communication are essential for ensuring that suppliers adhere to quality and ethical standards, and for identifying and addressing vulnerabilities in the supply chain. Outsourcing core business operations (B) can increase risk exposure, since these functions are crucial to firm performance and require specialized knowledge and control. Quality and manufacturing processes in emerging markets can vary considerably (C), and must be closely monitored and managed to ensure consistent quality, avoid costly recalls or product failures, and address any ethical or compliance issues. Finally, maintaining sourcing operations abroad can be an effective strategy for managing costs and risks, provided that firms have the necessary management infrastructure and expertise to handle currency fluctuations and other challenges (D).

Which of the Following Is True with Regard to Strategies