Outsourcing critics contend that shifting responsibility for performing value chain activities to outside specialists:
A) has the disadvantage of raising fixed costs and reducing variable costs and makes it harder to develop distinctive competencies.
B) can hollow out a company's knowledge base and capabilities,leaving it at the mercy of outsider suppliers,and short of the resource strengths to be a master of its own destiny.
C) results in less organizational flexibility and leads to sometimes exorbitant costs in collaborating with outside suppliers and strategic partners.
D) slows down decision making on key strategic issues because outside suppliers have to be consulted first.
E) lowers the morale of company employees,dampens a company's ability to implement best practices,and results in greater bureaucracy and slower decision making.

Question

Quizplus · Accepted Answer

Critics of outsourcing argue that by relying on outside specialists, a company may lose its internal knowledge and capabilities, which can create a long-term disadvantage. Outsourcing can lead to a reduction in a company's ability to develop core competencies, which are crucial for sustained competitive advantage. Additionally, outsourcing can lead to a loss of control over critical aspects of the value chain, potentially leading to a situation where a company is "at the mercy" of its suppliers. This can result in increased costs, reduced flexibility in decision-making, and the inability to implement best practices. Therefore, choice B is the best answer.

Outsourcing Critics Contend That Shifting Responsibility for Performing Value Chain