Questions: Outsourcing allows a firm to shed functions it does not perform well. True False

The answer is True: Outsourcing allows a firm to shed functions it does not perform well.

Explanation:

1. Definition of Outsourcing: Outsourcing is the business practice of hiring a third party to perform services or create goods that were traditionally performed in-house by the company's own employees and staff. It is often used to cut costs, improve efficiency, and focus on core business activities.

2. Focus on Core Competencies: By outsourcing functions that a firm does not perform well, the company can focus on its core competencies. This means that the firm can concentrate its resources and efforts on areas where it has a competitive advantage, potentially leading to better performance and growth.

3. Cost and Efficiency: Outsourcing can lead to cost savings and increased efficiency. When a company outsources functions it struggles with, it can benefit from the expertise and economies of scale that specialized service providers offer. This can result in better quality and lower costs than if the company attempted to perform these functions in-house.

4. Examples: Common functions that companies outsource include IT services, customer support, human resources, and accounting. For instance, a small business might outsource its IT support to a specialized firm rather than maintaining an in-house IT department, which could be costly and less effective.

In summary, outsourcing can be a strategic decision for firms to offload functions they do not perform well, allowing them to focus on their strengths and improve overall business performance.