Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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What is a modular organization primarily involved in?

Ensuring compliance with regulations
Outsourcing all functional tasks
Producing goods in-house only
Outsourcing production of parts or modules

The correct answer is: Outsourcing production of parts or modules

A modular organization is primarily involved in outsourcing the production of parts or modules. This approach allows companies to focus on assembling these pre-manufactured components rather than handling the entire production process in-house. By engaging specialized external suppliers for specific parts, a modular organization can enhance flexibility, reduce costs, and leverage expert capabilities in various areas of production. This model is particularly advantageous in industries where rapid innovation and responsiveness to market changes are crucial, as it enables firms to adapt more swiftly to customer demands and technological advancements. Such organizations can strategically focus their resources on core competencies while relying on collaborators for additional expertise and efficiency in module production.