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Outsourcing and valuing a firm

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1. Briefly describe what outsourcing is and then decide whether you agree or disagree with companies outsourcing jobs. Explain why you chose agree or disagree as well.
2. Valuation of a firm's financial assets is said to be based on what is expected in the future, in terms of the future performance of the firm, the industry, and the economy. What types of value would you consider when assigning "value" to a firm's stock or bond? What is the significance of each of the different types of value in the valuation process? Use examples to support your response.

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Solution Summary

This solution discusses the benefits of outsourcing and approaches for valuing a firm.

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1. Outsourcing can be termed as delegation of tasks, functions or activities to third party providers in order to focus on core activities or functional areas of the firm. Outsourcing allows a firm to puts its attention and resources to core activities while saving costs on non-core areas by contracting such areas to third party providers that specialize in providing such non-core activities. I agree with outsourcing because outsourcing provides numerous benefits such as-

It allows the firm to tap low cost resources in other countries, which enables cost savings.
It allows firms to tap ...

Solution provided by:
Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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