In the context of international business, what does outsourcing mean?

Outsourcing, in the context of international business, refers to the practice of hiring external companies to perform tasks or services that would normally be carried out in-house. This approach allows businesses to focus on their core competencies while leveraging the expertise and efficiencies of specialized external providers. By outsourcing, companies can often reduce costs, improve efficiency, and access a wider range of skills and technologies that may not be available internally.

In contrast, transferring manufacturing to another country specifically refers to relocating production facilities, which is not the broader definition of outsourcing. Developing new products internally focuses on innovation and research and development, which does not align with the concept of using outside resources for existing tasks. Acquiring local firms involves consolidation and acquisition strategies, differing fundamentally from simply engaging external companies for services. Thus, outsourcing encompasses the broader practice of utilizing outside expertise, making it the correct answer.