CIPS Exam L6M9 Topic 2 Question 4 Discussion

Actual exam question for CIPS's L6M9 exam

Question #: 4
Topic #: 2

[All L6M9 Questions]

White Moon Ltd, a manufacturing organisation, is considering outsourcing transportation. What would be a reason for doing this?

ATo gain better access to emerging markets

BTo decrease fixed costs

CTo please shareholders

DTo avoid the inefficiency trap

Show Suggested Answer

Suggested Answer: B

Outsourcing replaces fixed costs with variable costs---companies only pay for what they use, rather than maintaining their own fleet.

Option A is incorrect because gaining market access is a benefit of offshoring, not outsourcing.

Option C is incorrect as there is no mention of shareholders in the scenario.

Option D is incorrect since the inefficiency trap relates to offshoring.

(LO 1.2, See p.44)

by Eric at Mar 09, 2025, 10:35 AM

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Isadora

1 months ago

I think both reasons are valid, it just depends on the company's goals.

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Cletus

1 months ago

Yes, that's true. Lowering costs can improve profitability.

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Cordell

1 months ago

But what about decreasing fixed costs? Wouldn't that be a good reason too?

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Isadora

1 months ago

I agree with Cletus, accessing new markets can help the company grow.

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Audrie

1 months ago

Ooh, emerging markets! That could be a game-changer. Gotta keep those options open.

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Alfred

21 days ago

D) To avoid the inefficiency trap

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Dorothy

23 days ago

B) To decrease fixed costs

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Isadora

29 days ago

A) To gain better access to emerging markets

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Josephine

2 months ago

Pleasing shareholders? Pfft, I think they should be focusing on what's best for the business, not just the investors.

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Maybelle

2 months ago

Avoiding the inefficiency trap is key. Gotta stay ahead of the game, you know?

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Naomi

25 days ago

D) To avoid the inefficiency trap

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Willie

26 days ago

C) To please shareholders

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Lisbeth

1 months ago

B) To decrease fixed costs

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Lacresha

1 months ago

A) To gain better access to emerging markets

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Cletus

2 months ago

I think the reason could be to gain better access to emerging markets.

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Socorro

2 months ago

Outsourcing transportation could definitely help White Moon Ltd decrease their fixed costs. That's a smart move in my book!

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Cammy

1 months ago

B) To decrease fixed costs

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Arlette

1 months ago

A) To gain better access to emerging markets

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