Question 3

Using efficient sourcing

The CEO's decision to relocate the factory to a country with cheaper labor and materials exemplifies the strategy of using efficient sourcing. This approach focuses on minimizing costs by sourcing inputs from locations that offer lower prices, thereby reducing overall operational expenses.

A) Achieving international expansion

While relocating a factory may contribute to international expansion, this option does not specifically address the financial aspect of reducing operational expenses through lower labor and material costs. Therefore, it is not the most accurate description of the CEO's strategy.

B) Developing emerging markets

Developing emerging markets refers to efforts to establish a presence in new, often less developed, economies. Although the relocation may occur in an emerging market, the primary focus is on cost reduction rather than market development. Hence, this option does not accurately capture the CEO's intended strategy.

C) Gaining market growth

Gaining market growth involves increasing sales and expanding a company's market share. The CEO's strategy focuses on reducing costs rather than directly seeking to grow the market or increase sales. Thus, this option does not align with the CEO's objective of cutting operational expenses.

D) Using efficient sourcing

This option accurately describes the CEO's strategy, as relocating to a country with cheaper labor and materials directly aligns with the goal of reducing operational expenses through more cost-effective sourcing practices.

Conclusion

The CEO's strategy of relocating the factory to reduce operational expenses is best described as using efficient sourcing, as it emphasizes cost reduction through sourcing inputs from lower-cost locations. The other options either do not align with the specific goal of minimizing expenses or focus on broader strategies that do not directly address the financial aspect at hand.