A smartphone company that previously assembled all components internally decides to outsource its camera module production to a specialized supplier in Taiwan. The supplier has cutting-edge imaging technology and achieves lower unit costs due to scale. However, the smartphone firm worries the supplier might later use its knowledge to serve rival brands. Which of the following best captures the strategic trade-off involved in this decision?

Question

Answer

Outsourcing improves efficiency but may increase dependency and reduce control over key capabilities.

Answer

Outsourcing strengthens vertical integration by controlling more stages of production.

Answer

The firm achieves higher differentiation and stronger brand identity through outsourcing.

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Outsourcing eliminates the need for long-term partnerships or supplier management.

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A smartphone company that previously assembled all components internally decides...

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