Final answer:
Outsourcing refers to a company hiring an outside firm to perform internal tasks, which does not necessarily involve purchasing overseas plants. Offshoring is when a company moves operations abroad, potentially including plant purchases, to save costs.
Step-by-step explanation:
The term outsourcing is often misunderstood. The statement that outsourcing refers to a strategy whereby a company purchases plants overseas is false. Outsourcing actually involves a company hiring an outside firm, which can be domestic or foreign, to perform tasks previously done internally, such as accounting, customer service, or IT support. This can be a cost-saving measure without necessarily purchasing physical assets like plants. Offshoring, on the other hand, is the process of relocating a company's own operations to a foreign country to capitalize on lower labor costs, which sometimes includes the purchase of foreign plants or facilities. For instance, a U.S. company might outsource its customer service to a call center in India while offshoring its manufacturing operations by purchasing a plant in Mexico.