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A company considers moving a portion of its production to a distant country to support a major customer. Which of the following actions is most effective in mitigating the risk of financial loss in the event of a global economic downturn?
Correct Answer: A
* Risk Mitigation in Global Economic Downturn: Diversification is a key strategy to mitigate financial risk during economic downturns. * Actions Considered: * Expanding the Customer Base Globally: Diversifies revenue streams, reducing dependency on any single market, thus spreading risk. * Reducing the Global Workforce: May reduce costs but doesn't address revenue risks and could harm operational capacity. * Reducing Prices of All Products: Could lead to decreased margins and isn't sustainable long-term. * Adding Features for All Products: Increases costs and may not align with market demand during a downturn. * Conclusion: Expanding the customer base globally is the most effective action to mitigate financial loss by spreading revenue sources and reducing dependency on a single market. References * "Global Supply Chain Management: Leveraging Processes, Measurements, and Tools for Strategic * Corporate Advantage" by G. Tomas M. Hult, David J. Ketchen Jr., and Elnora W. Stuart. * APICS Dictionary, 16th Edition.