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Question
Which of the following is a disadvantage of outsourcing production to independent suppliers?
A. It makes it necessary for firms to invest in specialized assets.
B. It reduces the strategic flexibility of a firm by limiting its ability to adapt during changes in exchange rates.
C. It increases the risk of suppliers expropriating a firm's proprietary product technology for their own use.
D. It increases the bureaucratic inefficiencies and costs associated with transfer pricing decisions.
E. It makes it difficult to achieve coordination in an organization by increasing the number of subunits in it.
Answer
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