Certified Supply Chain Professional (CSCP) Practice Exam

Which factor is essential in deciding whether to maintain an activity internally?

1. Market trends

2. Equity financing

3. Core competency assessment

4. Supplier pricing

The correct answer is: Core competency assessment

The assessment of core competencies is crucial when determining whether to maintain an activity internally. Core competencies refer to the unique capabilities, resources, and skills that a company possesses, which give it a competitive advantage in the market. By evaluating core competencies, organizations can identify which activities align with their strengths and contribute to their overall strategic objectives. Focusing on core competencies helps in ensuring that the organization invests its resources in areas where it can excel and achieve optimal performance. It can also reveal areas where outsourcing may be more beneficial, as some activities might not align with the company's expertise or may be better executed by external specialists. Understanding market trends is important but operates on a different level, as it addresses potential future shifts rather than guiding decisions based on current organizational strengths. Equity financing is more related to funding options than maintaining operational activities. Supplier pricing is a consideration but primarily affects cost management rather than the strategic internal decision regarding core activities. Therefore, a core competency assessment stands out as the most essential factor in this context.