A major U. S. manufacturer of children's toys believes its main competitive advantage lies in its continuing development of innovative toys and games. The company is facing increasing competition on price, and it is strongly considering outsourcing to offshore firms as a means of reducing costs. The LAST function this firm should consider outsourcing is: a. research and development. b. distribution. c. supply-chain management. d. operations.

A. Research and Development

Explanation:

Research and development involves activities that companies undertake to innovate and introduce new products and services.

For the toy manufacturers, what they believe to he their major competitive advantage is in the development of innovative toys which is under the research and development function. It would be bad to put in context if they outsource their competitive advantage first.

If there's need for outsourcing, what is perceived as the company's competitive advantage should always be outsourced LAST.

A) research and development.

Explanation:

Usually when firms start to outsource (to foreign countries) some activities in order to lower costs, the first area to be outsourced is production or manufacturing. Then some supply chain areas might follow, but the areas that are usually never outsourced are research and development (R&D) and marketing.

We can use Coca Cola or Nike as examples:

Coca Cola owns very few production facilities while Nike doesn't own any. Their supply chain is completely outsourced to local firms. The only 2 areas that are kept under control of corporate headquarters are R&D and marketing. The branches that they open on foreign countries are in charge of marketing activities, but they all report to corporate headquarters. R&D is carried out only at their headquarters in order to keep sensitive information classified.