Question

Which of the following is a risk that a company faces when it outsources its operations?

1) modular production
2) third party provider not lacking degree of expertise
3) declining cost of labor for outsourcing company
4) product transformation risk

Answer 1

When a company outsources its operations, it faces the risk of the product being transformed or modified in a way that is not aligned with the company's original vision or specifications.

Step-by-step explanation:

When a company outsources its operations, it faces various risks. One risk is the potential decline in the quality of the products or services provided by the third-party provider, as they may not have the same degree of expertise as the company's own workers. This is known as the third party provider lacking degree of expertise risk.

Another risk is the product transformation risk. When a company outsources its operations, there is a chance that the product may be altered or modified in a way that is not aligned with the company's original vision or specifications.

Therefore, the correct risk that a company faces when it outsources its operations is option 4) product transformation risk.