Answered: What could be the reason for this…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Sun Auto has recently ventured into the electric car industry. It has completely outsourced its requirement for tyres. On the other hand it manufactures all the engines at its in-house facility.
There is a third component for which it manufactures thirty percent of the requirements in-house and sources the rest from the market. What could be the reason for this particular governance structure of Sun Auto?

Expert Solution

Step 1

The most important reasons to venture into the electric car industry are the following:

Less transport cost
Save natural resources
Safe drive
Low maintenance

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