Question

Assume you own a company that produces clothing products such as shirts and shorts. Your company has manufactured clothing products locally in the United States for over 30 years. Because low-cost competition is increasingly gaining market share and your company costs are relatively high, you are considering outsourcing production to China.

1. Describe how differential analysis can be used to assist in making this type of make-or-buy decision. Include specific examples in your response.

2. What additional factors would you consider outside of the financial information analyzed with differential analysis? These are called qualitative factors in the text. Be sure to state why you would consider the qualitative factors included in your response.

Answer 1