Management Information System (MIS) Practice Exam

What strategy is used when a company moves tax services to another country?

1. Franchising

2. In-sourcing

3. Outsourcing

4. Offshoring

The correct answer is: Outsourcing

The strategy employed when a company shifts its tax services to another country is known as offshoring. Offshoring refers specifically to relocating a business process or service to a different country, often to take advantage of lower labor costs or favorable economic conditions. In this scenario, moving tax services abroad allows the company to benefit from cost savings, potentially access specialized expertise that may not be available locally, and enhance operational efficiency. While outsourcing involves contracting services to a third-party provider, it does not specifically imply that these services are moved overseas; they could remain in the same country. Franchising relates to granting a license to an external party to operate a business under the franchisor's brand, which is not applicable in this context. In-sourcing, on the other hand, refers to bringing processes or services in-house rather than moving them outside the company. Thus, outsourcing and in-sourcing do not accurately describe the strategy of moving services to a different country.