A decision by a corporation to turn over much of the responsibility for production to independent suppliers.

A decision by a corporation to turn over much of the responsibility for production to independent suppliers.

• A. Mass Production
• B. Outsourcing
• C. Vertical Integration
• D. Fragmentation of Production

Answer: (B)

Outsourcing is when a company delegates production to external suppliers rather than making it in-house. By turning over much of production to independent suppliers, the firm can focus on its core activities while tapping the specialized capabilities, equipment, and scale of external producers. This often lowers unit costs, provides greater flexibility to respond to demand, and allows access to expertise the company doesn’t have internally. It also spreads some risks to the supplier and can speed up production if the suppliers are more efficient. Mass production describes producing large quantities efficiently, not who is doing the production. Vertical integration involves bringing production steps in-house under the same company, the opposite of outsourcing. Fragmentation of production refers to breaking production into different parts, often across multiple firms, but outsourcing is the precise term for transferring responsibility to independent suppliers.

Outsourcing is when a company delegates production to external suppliers rather than making it in-house. By turning over much of production to independent suppliers, the firm can focus on its core activities while tapping the specialized capabilities, equipment, and scale of external producers. This often lowers unit costs, provides greater flexibility to respond to demand, and allows access to expertise the company doesn’t have internally. It also spreads some risks to the supplier and can speed up production if the suppliers are more efficient.

Mass production describes producing large quantities efficiently, not who is doing the production. Vertical integration involves bringing production steps in-house under the same company, the opposite of outsourcing. Fragmentation of production refers to breaking production into different parts, often across multiple firms, but outsourcing is the precise term for transferring responsibility to independent suppliers.