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1.According to our text, outsourcing can be defined as the complete transfer of a business process that has been traditionally operated and managed internally to an independently owned external service provider” (Benton, 2014, p.197). Outsourcing is essentially taking a product that you have made in the past and sending it out to another company to completely take care of for you. Many times this is done because internally you can no longer make it for a price that is less expensive than purchasing from an outside source. When this happens, you basically are taking that entire segment of your company and shifting the personnel and resources to other areas and in some cases letting people leave. This is a process that takes lots of strategic consideration as well as financial reports to make the correct decision for your company. Many times a business will need experts in a field that they can’t afford to hire on, so in this case they will outsource the work because it will be cheaper. Here are some examples: Call centers, Payroll and bookkeeping, Advertising and public relations, Building maintenance, Consulting and engineering, Records Supply and inventory, Field service dispatch, Purchasing, Food and cafeteria services, Security, and Fleet services (Crosby, n.d.).
2.The goal of outsourcing business practices is to cut costs to produce items with a higher return on investment. By freeing up capital in house and outsourcing items to more specialized firms, costs can be cut in house while still maintaining a profit margin on goods sold that are produced else where. My firm underwent an outsourcing effort five years ago, unfortunately miscalculations of labor and freight caused a huge loss to have occurred inthe last 5 years. This was an extemely embarrassing feat to explain to investors this year, as outsourcing had been occurring for five years. All outsourced products have been brought back in house to analyze costs once again and outsourcing efforts will be reconsidered at the end of our fiscal year.

This outsourcing faux paux has created strife among our investors as they are hesitant of the financial capaiblities of our management team. The past fiscal year (number 60 for my firm) was the first year ever a loss was reported. Investors are usually presented with a 5-15% return. This year they took a 10% hit. Now management needs to take a very critical look of any efforts to outsource production.
3.Global competition is the most important issue facing top decision makers in some of the world's largest companies today. To meet this challenge, leading companies worldwide are focusing their resources on their core competencies as a business strategy to compete profitably in a global market. Outsourcing is paving the way for leading companies to compete globally and increase profitability into the new millennium. The practice is gaining widespread acceptance throughout the United States, Europe, South America, and Asia Pacific as an important new management tool to improve performance and profitability, gain competitive advantage in the global marketplace, and ultimately build shareholder value.
4.Outsourcing involves taking non –core company activities and giving them to a 3rd party to perform. This allows companies the ability to focus on what they do best. This improves the performance of the company’s core functions as well as the performance of the 3rd party supplier. Outsourcing is different from other supplier services because it places a degree of accountability on the actual service provider. The goal is to create a strong relationship between the company and the supplier. This can be done by having good communication, access to people who work in the supplier’s market on a daily basis and can understand and interpret the company’s language. The supplier needs to be well versed in the category, services and products. An example of this could be a shoe manufacture. It may be cheaper for them to purchase the sole of a shoe from an oversee supplier. Because this is that suppliers “core competency” and they make the soles over and over, it keeps costs down. They would have the soles made and shipped to their local US manufacture to assemble with the top of the shoes, shoe laces, etc. This allows the overall costs of the shoe to be less for the consumer.

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8548125.docx

1. The definition of outsourcing is correct because this is one such function which allows
specialization to be capitalized in its fullest extent. This also brings home the advantages that
firms...

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