Question

Which of the following is a major challenge often faced by focal firms that engage in global sourcing?

A) no control over the quality of outputs
B) domestic management of local distribution
C) increased costs of business travel
D) lower-than-expected cost savings

Answer 1

One major challenge often faced by focal firms that engage in global sourcing is lower-than-expected cost savings.

Step-by-step explanation:

One major challenge often faced by focal firms that engage in global sourcing is lower-than-expected cost savings. This occurs when companies expect to achieve significant cost reductions by sourcing materials, products, or services from lower-cost countries, but the actual savings are not as substantial as anticipated.

For example, a company may choose to outsource manufacturing to a foreign country with lower labor costs. However, they may encounter unexpected expenses such as transportation, tariffs, customs duties, and quality control issues.

Another challenge may arise from language barriers, cultural differences, and time zone variations, which can affect communication and coordination between the focal firm and its international suppliers.