Deck 5: Make or Buy, Insourcing, and Outsourcing

Question 1

Outsourcing is:

A)a low risk venture because global suppliers have almost unlimited capabilities.
B)a low risk venture because the costs of reversing the decision are low.
C)a moderate risk venture because it is easy to determine core competencies.
D)a high risk venture because the costs of reversing the decision are often high.
E)a high risk venture because the decision makers' reputations are at stake.

Answer 1

D

Question 2

In the outsourcing decisions in many organizations,supply has had:

A)no involvement.
B)virtually no involvement.
C)relatively moderate involvement.
D)extensive involvement.
E)a leadership role.

Answer 2

C

Question 3

When a team decides that a task or function currently performed by company employees is a noncore competency,the team is likely to recommend:

A)insourcing.
B)continuing to make.
C)privatizing.
D)outsourcing.
E)continuing to buy.

Answer 3

D

Question 4

One of the most fundamental and critical decisions in any organization is,should we:

A)make or buy the needed good or service?
B)have a single source or multiple sources for a specific purchase?
C)order small quantities to avoid carrying costs or large quantities for volume discounts?
D)source locally or globally?
E)form a strategic partnership with a single source or split the order to foster competition?

Question 5

Privatization is:

A)a term used in the private sector for a make decision.
B)the term for outsourcing used in the public sector.
C)used interchangeably with outsourcing in both the public and private sectors.
D)the term used when entire operations are outsourced.
E)the term used when entire operations are insourced.

Question 6

Noncore competencies of an organization are typically:

A)the first things to be outsourced to access supplier expertise.
B)the same for companies in the same industry.
C)dependent on the staff performing the tasks.
D)seldom outsourced because they contribute to competitive advantage.
E)flexible and easily changed depending on who is in charge.

Question 7

Outsourcing of services is:

A)unrealistic because of the difficulty in measuring service providers' performance.
B)realistic because of the ease in measuring service providers' performance.
C)increasing because it is easy to define service requirements and measure quality.
D)decreasing because buyers are dissatisfied with most third party service providers.
E)realistic if service requirements and quality expectations can be clearly defined.

Question 8

Subcontracting refers to the practice of:

A)an organization hiring a contractor to perform a task it has been doing in house.
B)an organization hiring substitute labor to cover for a supplier's labor shortage.
C)a prime contractor bidding on another contractor's incomplete jobs.
D)a prime contractor bidding out part of a job to another contractor.
E)a prime contractor hiring substitute labor during a strike.

Question 9

The logistics activities most frequently outsourced are:

A)core competencies of the buying organization.
B)transactional,operational and repetitive.
C)analytical,strategic,and non-repetitive.
D)both strategic and operational.
E)analytical,strategic and repetitive.

Question 10

Make or buy and insourcing or outsourcing decisions are:

A)routine decisions with low levels of uncertainty.
B)routine decisions with high levels of certainty.
C)key strategic decisions.
D)key operational decisions.
E)key tactical decisions.