Final answer:
It is true that companies must maintain control over critical activities to preserve their competitive advantage when considering the use of external suppliers, due to the risks of competition, loss of profits, job losses, and national security concerns related to key imports.
Step-by-step explanation:
It is true that companies must be cautious when deciding on whether to use external suppliers, especially regarding key activities that are pivotal to maintaining their competitive edge. Companies face competition from firms with better or cheaper products, which could diminish profits and potentially force them out of business, subsequently causing workers to lose income or their jobs. Additionally, reliance on external suppliers could lead to national security concerns in the event of international conflicts, where access to crucial imports, like oil, could be compromised.
In balancing these risks, businesses must ensure not only cost efficiency and product quality but also consider the long-term strategic implications of outsourcing critical operations. Central to any outsourcing decision is the ability to retain control over activities that are fundamental to the company's unique value proposition, technological advancements, or customer relationships. This strategy helps protect the business from operational disruptions and the volatility of international markets. Maintaining such control is vital in safeguarding a firm's competitive position in an ever-evolving and challenging global market.