An effective business strategy to reduce economic exposure is to contract out high-value-added manufacturing.

Question

Quizplus · Accepted Answer

Another way of building strategic flexibility and reducing economic exposure involves contracting out manufacturing. This allows a company to shift suppliers from country to country. However, this kind of strategy may work only for low-value-added manufacturing (e.g., textiles) in which the individual manufacturers have few if any firm-specific skills that contribute to the value of the product.

An Effective Business Strategy to Reduce Economic Exposure Is to Contract