Scenario: Hafstrom Motors
Based in Kentucky, Hafstrom Motors has always used spare parts made in America for its automobiles. However, sales and profits have slumped over the past three years. A senior manager at the company comes up with new strategies for improving the firm's production activities.
-The senior manager argues that Hafstrom could reduce its costs significantly by purchasing parts from companies located overseas rather than producing its own parts.Which of the following is the senior manager advocating?
A) outsourcing
B) a greenfield investment
C) lean production
D) vertical integration

Question

Quizplus · Accepted Answer

The senior manager is proposing that Hafstrom Motors purchase parts from companies located overseas, which is an example of outsourcing. Outsourcing involves hiring another organization to perform a task that is normally done in-house, such as production of parts. This can often result in cost savings for the company. Greenfield investment refers to building a new facility from the ground up in a foreign location, while lean production is a method of minimizing waste in the production process. Vertical integration involves a company owning and controlling multiple stages of the supply chain.

Scenario: Hafstrom Motors Based in Kentucky, Hafstrom Motors Has Always Used Spare Parts