Outsourcing Production I

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     The outsourcing of production factories to locations overseas from companies' home countries has been a hallmark practice of multinational brands since the 1990s and is lauded by some economists as advancing the well-being of people in both the home country and the production country. However, not all of the benefits attributed to this globalization practice necessarily accrue, and there are concerns about outsourcing that are not readily addressed within the formulations of economic theory. First, a home company that separates its brand and its product as completely as possible and places the brand as paramount hardly sends a message that product quality is central to its operations; more likely, all of its innovation attempts will focus on branding, and such a company will settle with a product that is merely (and maybe barely) good enough. Dismissing this point, economists may cite the law of comparative advantage: outsourcing allows both companies involved to pursue greater profit and well-being according to their capabilities. Specifically, workers in the companies of manufacture should be paid more than they would be paid otherwise, even if they are paid less than factory workers in the original country; meanwhile, workers in the home country should be pushed to increase their skills and education and move to higher-skill jobs that are less available in the country of manufacture. Whether displaced workers in the home country acquire skills and make this shift in any reasonable timeframe is hardly demonstrated, however, and while outsourcing may create value by lowering costs, it has been asserted that workers in the countries of production are making no more after outsourcing than previously and hence in effect are enjoying none of the new profit. The CEO of one outsourcing company, when pressed on this point by a reporter, explained that, as the employees of those factories were not employees of his company, he could not be responsible for them. He asked the reporter whether journalists should be expected to know, and be responsible for, the manufacturing conditions of the paper on which their articles are printed. This comment, as much as it defends corporations, highlights the broadest form of worry about outsourcing: in global supply chains with increasingly distant and opaque connections, responsibility is too easy to shirk and maybe even impossible to determine.

The primary purpose of the passage is to

Review: Outsourcing Production I


Explanation

We are asked for the purpose of the passage. We already know it: the author is pointing out problems and concerns with production outsourcing. Let's look for that in the answer choices. At first blush, choice (C) looks closest. Let's find objective fault with the other answer choices. (A) is out because the author hasn't said that outsourcing hasn't been successful and it would be compatible with everything that the author says, in fact, that it has been very profitable, for example. (B) is out because the author proposes no alternative; he doesn't even say, for example, that companies should stop outsourcing. (D) is way off because, according to (D), the author would endorse outsourcing and want more. (E) is better because there is a hint of the CEO not understanding responsibility in this passage and that responsibility is maybe even "impossible to determine." But that's a parting thought, not the meat of the passage, and the meat of the passage includes also the brand/product point, which is something that companies appear to understand fully. So while (C) is a little odd-sounding in using the singular "concern," but we could accurately paraphrase the point of the passage as a single concern: "production outsourcing is not all it's hyped to be, when it comes to product quality or mutual benefit."

The correct answer is (C).


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