Which one of these business decisions is most clearly an example of outsourcing? A French sportswear company keeps its design team in Paris but asks a speci...
Question 1 Report
Which one of these business decisions is most clearly an example of outsourcing? A French sportswear company keeps its design team in Paris but asks a specialist firm in Vietnam to make its trainers. Its organisational structure still includes a production manager who checks supplier quality.
(a) Identify the activity that has been outsourced. [1]
(b) Explain one reason why the French business may outsource this activity rather than carry out all production itself. [2]
Answer Details
(a) The outsourced activity is the manufacturing or production of trainers. [1]
Outsourcing means paying an external specialist business to carry out an activity that could otherwise be done within the company. The French company keeps design in Paris but asks a separate Vietnamese firm to make the trainers.
(b) The specialist firm may have lower labour or factory costs. [1] This can reduce the sportswear company's unit costs, allowing it to increase profit or compete at a lower selling price. [1]
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