Conventional wisdom asserts that low cost strategies depend on the ability of an enterprise to identify and concentrate on the activities in which it holds a cost advantage, while outsourcing other activities. Are there circumstances in which this wisdom might be misguided?
What will be an ideal response?
The danger is to misunderstand or ignore developments where future cost advantages, not merely
current capabilities, may be vital to the success of this strategy. A classic example is of the Swiss
watch industry in the 1970s and 1980s which underestimated the importance of developing skills in
electronic watch technologies in order to remain a player in the high volume, mass market. When
outsourcing is undertaken, the choice of partner(s) matters greatly. If the overall low cost strategy is
to succeed, they too must either have low cost expertise in their respective fields or complementary
knowhow that enables the prime partner to achieve lower cost. For example, many ‘coach built’
motor caravan makers subcontract the manufacture of fully-finished fibreglass body panels; whilst
these components are of higher material cost than the alternatives, they compensate by reducing high
labour costs in vehicle assembly. However, partners must be reliable and of acceptable quality,
issues that western enterprises have sometimes learned to their cost when relying on far eastern
suppliers with long delivery lead times and dubious quality control.
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Management by exception involves ______.
A. giving individualized attention to exceptional employees B. offering payoffs for employees who perform their duties C. negotiating special rules and tasks with employees D. correcting misbehavior by employees
If a check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period, in preparing this period's reconciliation, the amount of this check should be:
A. Added to the book balance of cash as an outstanding check. B. Ignored in preparing the period's bank reconciliation as an outstanding check. C. Deducted from the book balance of cash as an outstanding check. D. Added to the bank balance of cash as an outstanding check. E. Deducted from the bank balance of cash as an outstanding check.
In today's labor relations environment:
A. Sweatshops and forms of modern slavery are nonexistent in the United States. B. Workers are assured of a wage necessary to support a family. C. There is an increasing number of employers violating labor standards. D. Workers are generally fired only for good reasons.
Two competing forces-the pressure to achieve ____________ and reduce costs and the pressure to respond to ____________-determine which of four alternative competitive strategies (home replication, multidomestic, global, or transnational) a company should adopt.
What will be an ideal response?