Project #106097 - Discussion Responses

Please respond to 5 discussion question atleast one paragraph long APA format, Scholarly reference where needed in text. And references at end of each paragraph. This is a MBA level course perfect grammar and APA format.

1.One trend in the current economy is outsourcing.  Out sourcing is “the act of obtaining semi-finished products, finished products or services from an outside company if these activities were traditionally performed internally” (Dolgui and Proth, 2013, p. 6770).  The company that opts to outsource is the buyer and the company providing the service or product is the vendor.  There may be valid reasons a company would seek to outsource, such as increased quality or lower material costs.  However, when the company chooses to outsource internationally, criticisms may arise for replacing jobs within the country (Dess, Lumpkin, Eisner, & McNamara, 2014). 

Thanks to technological advances, ease in communication, and improved transportation, outsourcing has become a popular option among the business-world.  When a company considers this option, they must ask, “In what way is this decision going to enhance the company value?”  When we analyze the advantages and disadvantages from the company perspective, the following points are presented:

Advantages-

- Cost saving occurs when the vendor performs more efficiently than the buyer 

- Lower wage costs due to reduced staff

- Opportunity for employees to stop tedious tasks and concentrate on core activities

- Knowledge gained through external expertise, skills, and technolgies

- Improved cash flow due to selling assets that were formerly used in the outsourced activity

- Product quality provided by vendors at a level the buyer could never achieve

Disadvantages-

- Reduction of staff and cost has negative impact on social environment

- Unemployment in the buyer’s country

- Loss of control over business processes

- Possible increase in turnaround time (requires larger stock of inventory for buyer)

- Performance and expectations of vendor fall short (Dolgui and Proth, 2013)

Personal experience:  Not long ago, I had a medical procedure completed by a medical specialist.  He completed the procedure at a local hospital, which is routine.  Prior to the procedure, I had a consultation regarding the financial aspect of the procedure.  I thought I understood and knew what to expect for the billing and cost.  Several weeks later, I began to receive the medical bills from various offices and companies.  When I inquired about some of the charges, it was very difficult to get a clear response because some offices outsourced the billing to another company.  The negative for the customer (me) was that I had to call multiple places before I fully understood what I was reflected on my bill.  The advantage was that the doctor/hospital felt that the outsourced billing company was more efficient than they could be in-house, thus my medical bills were less than they may have been if this duty was performed in-house.       

When a company chooses to outsource in a global market, there are multiple strategies that can assist in the venture.  These strategies include: global, transnational, international, and multidomestic.  No matter the strategy chosen, the company must learn in how to adapt locally in order to have an advantage.  According to Strategic Management, companies must “tailor their products to the demand of the local market in which they do business.  This requires differentiating their offerings and strategies from country to county to reflect consumer tastes and preferences” (Dess et al, 204, p. 227).  This may have a negative impact on cost, and the company will have to analyze if the expansion is worth the cost.      

 References

Dess, G., Lumpkin, G., Eisner, A., & McNamara, G. (2014). Strategic management: Creating competitive advantages. (7th ed.). New York: McGraw-Hill/Irwin.  

Dolgui, A., & Proth, J. (2013). Outsourcing: definitions and analysis. International Journal Of Production Research, 51(23/24), 6769-6777. doi:10.1080/00207543.2013.855338

2.Outsourcing is “using other firms to perform value creating activities that were previously performed in house” (p. 224). Outsourcing actually only occurs when an organization decides that it needs to utilize other firms to perform their value creating activities that were normally done previously in the house. Outsourcing may be a new activity that the firm is perfectly capable of doing, but actually chooses to have someone else perform for a cost or quality reasons. (p.224). Organizations that decide to outsource only do so for a limited number of reasons. Most of these reasons are based on realizing gains and pains in business profitability and efficiency. The advantages of outsourcing is the cost savings. This is because businesses embrace outsourcing as a way to realize cost savings or better cost control over the outsourced function. Companies usually outsource to a vendor that specializes in a given function more efficiently than the company could, simply by virtue of transaction volume. Another advantage is the staffing levels. This is a common reason for outsourcing because it achieves headcount reductions or minimizes the fluctuations in staffing that may occur due to changes in demand for a product or service. Companies actually use this to reduce the workload on their employees, or to provide more development opportunities for their employees by freeing them from tedious tasks. Another advantage is focus. Some companies outsource in order to eliminate distractions and force them to concentrate on their core competencies. Morale is also a benefit because it is gained by initiating an outsourcing relationship. Flexibility is an advantage because many companies outsource to achieve that greater financial flexibility, since the sale of assets that formerly supported an outsourced function can improve a company's cash flow. Knowledge is also an advantage because in small businesses that may not be able to afford to hire company experts or develop the in-house expertise to maintain the high level technology. When such tasks are outsourced, the small business gains access to new technology that can help it compete with larger companies. The final advantage is accountability. Finally, accountability is the last advantage because outsourcing is predicated on the understanding shared by business and vendors. These arrangements require that the quality service in exchange for payments. "Outsourcers are well aware that this accountability is both practical and legal, with fiscal implications. The same cannot be said internally provided functions" (Advantages and Disadvantages of Outsourcing , 2016).  Some of the major potential disadvantages to outsourcing include poor quality control, decreased company loyalty, a lengthy bid process, and a loss of strategic alignment. All of these disadvantages can be addressed and minimized, however, companies who go about the outsourcing process in an informed and deliberate fashion.

A positive area that I have seen in outsourcing is that it is cost saving, and most companies that don’t have the staffing, nor the equipment to make the items it saves them overall costs, and time. A negative impact is that sometimes companies don’t get the quality products that they themselves would put into a product, and outsourcers don’t really care about the company itself. I know when I work in production our company outsourced a good many products, and when we had to change who we outsourced to it cause a great deal of problems, and issues, also causing slow shipping, or customer returns.

How to achieve advantages in Outsourcing in global markets.

To achieve advantages in a global market you must outsource your non-core activities and spend more time concentrating on your core business processes. Offshoring will give a company access to professional, expert and high quality service, you organization can experience increased efficiency and productivity in non-core business processes, you can streamline your business operations, offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs, giving you overall cost advantage, outsourcing can make your organization more flexible to change, experience increases control of a global business, save on investing in the latest technology, software and infrastructure and let your outsourcing partner handle the entire infrastructure, get the assurance that your business processes are being carried out efficiently, proficiently and within a fast turnaround time, offshoring can help your organization save on capital expenditures, by outsourcing, your company can save on team management problems as your offshore partner will be managing the team who does your work, cater to the new and challenging demands of your customer, free up the cash flow of your company, share your business risks, give your business a competitive advantage, outsourcing can help a global organization to cut its operations cost.

 

References

Advantages and Disadvantages of Outsourcing . (2016). Retrieved from Global Outsourcing Agency: http://www.globaloutsourcingagency.com/adv.html

Dess, G., Lumpkin, G., Eisner, A., & McNamara, G. (2014). Strategic management: Creating competitive advantages. (7th ed.). New York: McGraw-Hill/Irwin.

Outsourcing . (2016). Retrieved from Advameg: http://www.referenceforbusiness.com/small/Op-Qu/Outsourcing.html

 

 3.The role of corporate governance in strategy

Corporate governance aids in assisting boards achieve a better understanding of their oversight role (Joshi, 2010). It assists in defining the role of both the board and the management, delineates tasks and duties and assists in averting duplicate efforts and the overlooking of vital issues. Corporate governance also helps with the execution of the core processes of the board by offering structure to tools and policies. A case in point is the Deloitte Company that uses corporate governance through effective risk management.
Vision of a company
Deloitte’s vision is to be the standard of excellence.
Explain how a Board can actually support that mission without direct intervention in management.
A board can support the vision of a company by developing a corporate governance framework which helps clarify the roles of each board committee member in fulfilling the objectives of the board such as supporting the vision and mission of the company.

References
Joshi, A. B. (2010). A Study on Coporate Governance and the Financial Performance of Selected Indian Companies (Doctoral dissertation, Saurashtra University)

 
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