Certified Production & Operations Manager (POM) Practice Exam

Which of the following is NOT an advantage of outsourcing?

1. Outsourcing core competencies

2. Access to specialized expertise

3. Cost savings

4. Focus on core business activities

The correct answer is: Outsourcing core competencies

Outsourcing typically involves transferring certain business functions or processes to external vendors, which can lead to several advantages for a company. However, when considering the specific option stating outsourcing core competencies, it is important to recognize that while companies might choose to outsource various tasks, core competencies are usually seen as vital to a firm's competitive advantage and identity. Organizations generally retain these core competencies in-house to maintain control, quality, and the unique skills that are fundamental to their operations. Outsourcing core competencies could weaken a company’s competitive position, as it relies on external parties for critical functions that differentiate it in the market. In contrast, options that refer to accessing specialized expertise, achieving cost savings, and focusing on core business activities highlight the inherent benefits of outsourcing. Companies can leverage specialized knowledge that they might not possess internally, save on operational and labor costs, and redirect their internal resources towards activities that truly define their market position and strategic goals.