Which of the following is true of contract manufacturing?
A) It enhances a firm's in-house capabilities.
B) It allows firms to meet the scale of market demand by committing to long-term capital investments.
C) It enables a firm to tap the greater economies of scale.
D) It decreases organizational responsiveness to the environment.

Question

Quizplus · Accepted Answer

Contract manufacturing allows a firm to tap into the greater economies of scale of the contract manufacturer, leading to cost savings and increased competitiveness. Option A is incorrect as contract manufacturing does not enhance a firm's in-house capabilities but rather relies on the capabilities of the contract manufacturer. Option B is also incorrect as contract manufacturing allows firms to meet market demand without committing to long-term capital investments. Option D is incorrect as organizational responsiveness can depend on the contract manufacturer's ability to quickly adapt to changes in the environment.

Which of the Following Is True of Contract Manufacturing