Question

Assuming all other elements are the same, which of the following would most likely lead a global firm to purchase an item from an outside supplier?

A. There is proprietary technology involved in making the product that should not be shared with other parties.

B. Quality control is important to the global firm.

C. The global firm wants to have control over certain elements of the production process.

D. The product to be made is a nonessential item that has little effect on the global firm’s core competencies and customer expectations.

E. The global firm has excess capacity that otherwise would not be productively used.

Answer 1

Option D.

• The product to be made is a non-essential item that has little effect on the global firms core competencies and customer expectations. This would most likely lead a global firm to purchase an item from an outside supplier.
• When the products made by a global firm creates no impact on the whole firm and does not meet the customer expectations after being exposed to them, these firms are forced to bring back their customers expectations by purchasing from other outside suppliers.