Scenario: Audio Component Outsourcing
Echo Corporation manufactures high-quality audio components, such as speakers, amplifiers, and receivers, for home entertainment systems. Echo has been losing market share in recent years due to the competitive pricing of other audio component manufacturers that engage in outsourcing. Echo managers are attempting to convince Nathan Douglas, the firm's founder and CEO, that outsourcing would enable the firm to be more competitive without sacrificing quality.
-Which of the following should most likely be considered in making the decision to outsource some of Echo's manufacturing activities?
A) Do purchasing components present the lowest cost option for Echo?
B) Would Echo engineers be willing to relocate to a foreign nation?
C) Is Echo prepared to cover moving expenses for its managerial talent?
D) Can Echo find employees for a customer service center in the U.S.?

Question

Quizplus · Accepted Answer

The most important factor in deciding to outsource is whether it presents the lowest cost option for Echo. This is because the main reason for outsourcing is to reduce costs while maintaining quality. Other factors such as relocating engineers, covering moving expenses for managerial talent, and finding employees for customer service centers are important but are secondary considerations.