(D) Contract manufacturing refers to a type of outsourcing in international business where a firm enters into a contract with one or a few local manufacturers in foreign countries to get certain components or goods produced as per its specifications.

Outsourcing Production and Concentrating on Marketing Operations

Outsourcing a part of or entire production and concentrating on marketing operations in international business is known as contract manufacturing. Contract manufacturing is a business arrangement where a company hires another company to produce goods on its behalf. This allows the hiring company to focus on marketing and other core business operations while leaving the manufacturing process to a specialized third-party manufacturer.

Benefits of Contract Manufacturing:
1. Cost Savings: Outsourcing production to a contract manufacturer can often result in significant cost savings for the hiring company. Contract manufacturers often have specialized equipment, expertise, and economies of scale that can reduce production costs.

2. Flexibility: Contract manufacturing provides flexibility for the hiring company. They can adjust production levels based on market demand without the need to invest in additional equipment or infrastructure.

3. Expertise: Contract manufacturers often have extensive knowledge and experience in manufacturing specific products. This allows the hiring company to benefit from the expertise of the contract manufacturer and ensure high-quality products.

4. Time Savings: By outsourcing production, the hiring company can save time and resources that would otherwise be spent on setting up and managing a production facility.

5. Focus on Core Competencies: Contract manufacturing allows the hiring company to focus on its core competencies, such as marketing and sales. This can lead to increased efficiency and competitiveness in the market.

Example:
For example, a company based in the United States may decide to outsource the production of its products to a contract manufacturer in China. The Chinese contract manufacturer would handle all aspects of production, including sourcing raw materials, manufacturing the products, and quality control. Meanwhile, the US company can concentrate on marketing and selling the products in its target markets.

Conclusion:
Contract manufacturing is an effective strategy for companies looking to outsource production and focus on marketing operations in international business. It offers numerous benefits, including cost savings, flexibility, expertise, time savings, and the ability to focus on core competencies. By leveraging the capabilities of contract manufacturers, companies can optimize their operations and enhance their competitiveness in the global marketplace.