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Gizmo, Inc. is a diversified multinational manufacturer. The CEO is considering outsourcing the marketing research function to a global consulting firm. The consulting firm would charge a fixed annual fee of $1,300,000.
At present, the costs of operating the marketing research department are $1,508,000 per year, as follows:
Director salary $146,000
Staff salaries 890,000
Travel 137,000
Occupancy 84,000
Consultants 90,000
Executive VP 75,000
Overhead 40,000
Miscellaneous 46,000
Required:
Question 1: Discuss the factors that the CEO should consider in deciding whether to outsource the marketing research function.
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