Strategic Management Concept: Outsourcing
Strategic Management: Ourtousrcing
Definition of outsourcing
Outsourcing is defined as the contracting another person or company to perform a specialized function (Lacity and Hirschheim, 1993). Outsourcing can also be defined as contracting out a business process to a third party. In the current business environment, all business will outsource in some way. The term outsourcing not only refers to the large contracting of firms to perform specific functions, but also refers to any non-core activity that a business contracts out to another company. For example, an insurance company could outsource its janitorial operations to another company, which would ensure that the insurance company can focus on its core business. Outsourcing ensures that a business can concentrate on its core business and its overall strategy (Grossman and Helpman, 2005). The firms contracted to perform or offer the service have the necessary expertise and have specialized in the type of work been contracted out.
Outsourcing offers a company greater budget control and flexibility, because the company is able to limit its expenses (Feenstra and Hanson, 1996). Compared to providing the service or function been outsourced, businesses would prefer to outsource since this would offer reduced costs. Outsourcing is a cheaper way to carry out non-core functions of a business. Functions like human resource, information technology, finance and accounting, and call center can be easily outsourced to firms that have better expertise performing these functions. These would ensure that the business is able to focus solely on its core business. This is a strategic management concept because it reduces the resources required by a company or business. A company that is able to focus on its core business is more likely to succeed since it would invest and concentrate on its main activities. Focusing all its resources towards its main activity will ensure that the company remains on course and is not disoriented with the other functions.
Outsourcing is the practice used by companies to reduce operational costs by shifting portions of its non-core work to other companies instead of performing them internally. As a strategic cost-saving strategy, outsourcing could be effective if implemented properly. It is widely known that it is cheaper to buy goods or services from a company that deals exclusively with the good or service instead of producing the good internally. The advantages that a business reaps from outsourcing some of its business functions far outweigh having the function been performed internally. With that advancement of technology, companies are now able to contract some of their business functions to other countries where the services are offered at far lower rates. The contracted companies have the capability to perform and deliver excellent service, which makes them more attractive to the company. For example, many companies have outsourced their customer service function to call centers located in India. The call centers offer unrivaled services at very low rates. This is very attractive for a company that is looking to reduce its operational costs and to have a call center located within the company is too costly to run and operate.
According to Feenstra and Hanson (1999) many United States companies will choose to outsource in order for them to avoid certain costs like high taxes, labor costs, excessive government regulations, and high-energy costs. High corporate tax and mandatory benefits for employees is another incentive for a company to outsource. Outsourcing ensures that a company is not concerned with the additional costs that a company the business process. Once the process has been outsourced, the company will only be charged with paying for the service offered by the contracted company. The outsourced company takes care of all the other additional charges. This reduces the headache of ensuring compliance and paying of necessary taxes. Accounting responsibility is reduced, and the business managers can focus on productive or less restrictive functions.
It is widely known that companies have been struggling with how they can increase their profits, market, and exploit their competitive advantages (Duhamel et al., 2012). The models used in the past were not favorable for global companies, and they were only focused on assets. Many business factors are in play in the current business world that managers cannot only focus on their core competencies. Understanding how a business can reduce its costs and increase its productivity and customer service have taken center stage. Companies have realized that customer is king, and they are now looking for strategies that will ensure they are close to their customers at all times. Outsourcing of customer service and information technology is the two key areas that provide a company with benefits...
Apple Inc. And Samsung Group) Background information about Apple Inc. And Samsung Apple is the global trendsetter in the electronic industry with its tablets, smart phones and computers. The computer manufacture were their core strength for a long time, but it gained momentum in other tech segments later as well. With the introduction of Macintosh contributed significantly to the sustenance of the company. Its solid financial performance is a testimony to
However the lack of stability in these partnerships is a major weakness for the company today. In 2008, Apple released the following graphic illustrating just how pervasive they believed video-based devices would be, which clearly makes the value of digital content providers critical to their future business model. Market Assessment of Video-Capable iPods source: (Apple Investor Relations, 2008). Implementation: Apple will need to work closely with their research and development team to
Strategic Management: JP Kenny London JP Kenny London was "established in 1978 as the original office of the now JP Kenny group, the London office has amassed over 30 years of experience in executing pipeline and subsea projects for clients around the world" (J P. Kenny Ltd. 2011). Its meager beginnings in 19th century roots in the fishing industry have spawned into a multi-billion dollar organization, providing major energy resources. This report
In both cases, Barclaycard should expand with the aid of its already existent products. Were the new markets or territories to retrieve the desired outcomes, the bank could develop and launch new products and services. 3. Recommended Alternatives Out of the strategic alternatives presented in the previous section, the organization has to choose those that best fit its unique needs and features. They must also focus on the strategies that help the
Strategic Importance of Outsourcing in U.S. Manufacturing Company An increase in market competitions, decision to lower production costs and shortened time to market are the driving forces that make a large number of manufacturing companies adopting the outsourcing policy. Outsourcing is the management policy of allowing the third party external providers to take up the activities of non-core activities of an organization to make firms focusing on the core businesses. In
Second, the data will be analyzed using the software application, Statistical Package for the Social Sciences (SPSS) for Windows, Version 13. Statistical measures of correlation of it spending, including controlling for early adoption of SOA platforms, will be entered into the analysis. Finally, the results will be analyzed and recommendations made on specific strategies for attaining higher levels of efficiency in both patient care and operational contexts based on
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now