A production strategy in which one organization hires another organization to manufacture a good under the hiring firm-s name and to the hiring firm-s specifications is known as ________________.
A) contract manufacturing
B) outsourcing
C) diagonal integration
D) value added

Question

Quizplus · Accepted Answer

This is the definition of contract manufacturing, in which the hiring firm contracts another organization (the manufacturer) to produce a good according to their specifications and under their brand name. Outsourcing refers to the practice of contracting out certain functions or tasks to external parties, which could include contract manufacturing but is not limited to it. Diagonal integration is not a commonly used term in the context of production strategy, and value added is a concept relating to the increase in value that a company adds to a product or service as it goes through the production process.

A Production Strategy in Which One Organization Hires Another Organization