Exam 7: Vertical Integration and Outsourcing

North Road LLC, an apparel company, found that its fashion supplies and accessories section was not generating much profit. Thus, the company contracted this section of its business to another company that designs and manufactures these products in a better way. The management of North Road realized that the employees of North Road could use the time to focus on other aspects that bring profit to the company. This scenario best illustrates _________.

Which of the following is a disadvantage of outsourcing?

Green Solutions Corp. is a washing machine manufacturing company. When it initially started out, it had held contracts with a supplier who provided the company with finished washing machine parts. However, Green Solutions later started manufacturing the parts by itself and assembling its products within the company without having to seek supplier intervention. This scenario best exemplifies _________.

Saturn LLC., a computer manufacturer, uses outdated technology to build specialized graphic cards for its computers. The company finds it difficult to upgrade its graphic card building technology to a newer version. However, Sun Products Inc., one of its competitors, upgrades itself to the new version with lesser difficulty. In this scenario, Saturn LLC is facing a _________.

Which of the following scenarios supports the view that a company should engage in outsourcing?

Which of the following is a danger for vertically-specialized companies?

Which of the following best illustrates modular interdependence?

Which of the following scenarios best illustrates the concept of vertical integration?

In the context of coordination, what is modular interdependence?

Lupus LLC is a company that sells personalized gift items. It reduces the cost of employing professional artists, designers, photographers, salespeople, and retailers by letting its members and other people submit their ideas for designs, quotes, and phrases on its e-commerce website. Which of the following types of crowdsourcing does Lupus LLC use?

Which of the following scenarios illustrates the concept of outsourcing?

Apex Electronics LLC requires many teams to work together intensively and in tandem with each other in order to effectively produce its products. A high level of coordination between the working teams is essential for the company to maintain the high quality of its products. This type of interdependence can be best termed as _________.

Briefly state the difference between outsourcing and insourcing.

Identify an action managers could take to prevent a subcontractor from becoming a competitor.

As a danger of vertical integration, a(n)___ refers to the fact that the more different types of activities a firm needs to manage, the harder it is to be world class in all of those activities.

The process where a firm contracts out a business process or activity to an external supplier is known as _________.

Having more flexibility, or being less vertically integrated, is more valuable when _________.

In the context of the three Cs of vertical integration, some activities or tasks require more coordination than others to be successful because _________.

Which of the following statements is a characteristic of subcontractors?

Browns Inc., a well-established suitcase brand, started manufacturing its own suitcases. It added new features in its suitcases such as water-resistance and extra storage space. The initiation by Browns Inc. to manufacture its own suitcases best illustrates _________.