Which term best describes producing goods at low cost with minimal strategic role?

• A. Source Factory
• B. Outsourcing
• C. Offshore Factory
• D. Lead Factory

Answer: (C)

The idea being tested is using a production site primarily to cut costs, with minimal involvement in broader strategy. An offshore factory is exactly that: a manufacturing facility located in a lower-cost country whose main job is to produce goods cheaply, while strategic decisions, design, and coordination stay elsewhere. This setup leverages geography to achieve cost advantages without entangling the site in strategic leadership.

The other terms don’t fit as neatly. A source factory’s role centers on supplying components or products to the network, not primarily on mass-producing at the lowest cost. Outsourcing refers to transferring activities to an external provider, which can occur anywhere and isn’t limited to production sites or low-cost locations. A lead factory is the strategic hub that drives design, development, and global coordination, not just cost-efficient manufacturing.