Management Information System (MIS) Practice Exam

What does offshoring refer to?

1. Having certain functions performed by the same company but in a different country.

2. Transferring the production of goods to lower-cost locations.

3. Licensing a brand to operate in various regions.

4. Setting up new facilities in different states or countries.

The correct answer is: Having certain functions performed by the same company but in a different country.

Offshoring specifically refers to the practice of having certain business functions or processes performed in a different country, typically to take advantage of lower costs or specialized labor. The essence of offshoring encompasses not just manufacturing, but also services such as IT support, customer service, and back-office operations. This answer encompasses the broader context of offshoring, highlighting that the functions may still belong to the same company but are executed in another geographical location to optimize efficiency and reduce expenses. The other choices present related but distinct concepts. For instance, transferring production to lower-cost locations specifically focuses on manufacturing cost efficiency, which is a component of offshoring but does not cover other functions like services. Licensing a brand to operate in various regions pertains to a different strategy involving brand management and rights, not necessarily linked to offshoring. Similarly, setting up new facilities in different states or countries may refer to expansion activities that aren’t inherently about offshoring but could pertain to both onshoring and offshoring depending on the context.