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OUTSOURCING Presentation Transcript:
1.OUTSOURCING
2.Outsourcing
Purchasing from someone else a product or service that had been previously provided internally. Avoid outsourcing distinctive competencies
3.Off shoring
The outsourcing of an activity or a function to a wholly-owned company or an independent provider in another country
4.Disadvantages of outsourcing and offshoring
Customer complaints
Long-term contracts
Ability to learn new skills and develop new core competencies
Lack of cost savings
Poor product quality
Increased transportation costs
5.Errors in Outsourcing Efforts
Outsourcing the wrong activities
Selecting the wrong vendor
Poor contracts
Personnel issues
Lack of control
Hidden costs
Lack of an exit strategy
6.Constructing Corporate Scenarios-
pro forma balance sheets and income statements that forecast the effect of each alternative strategy/its various programs will have on division and corporate return on investment
7.Use industry scenarios to develop assumptions about the task environment
Develop common size financial statements for prior years
Construct detailed pro forma financial statements for each strategic alternative
8.Management’s Attitude Toward Risk
Risk-
composed not only of the probability that the strategy will be effective but also of the amount of assets the corporation must allocate to the strategy and the length of time the assets will be unavailable for other uses
OUTSOURCING Presentation Transcript:
1.OUTSOURCING
2.Outsourcing
Purchasing from someone else a product or service that had been previously provided internally. Avoid outsourcing distinctive competencies
3.Off shoring
The outsourcing of an activity or a function to a wholly-owned company or an independent provider in another country
4.Disadvantages of outsourcing and offshoring
Customer complaints
Long-term contracts
Ability to learn new skills and develop new core competencies
Lack of cost savings
Poor product quality
Increased transportation costs
5.Errors in Outsourcing Efforts
Outsourcing the wrong activities
Selecting the wrong vendor
Poor contracts
Personnel issues
Lack of control
Hidden costs
Lack of an exit strategy
6.Constructing Corporate Scenarios-
pro forma balance sheets and income statements that forecast the effect of each alternative strategy/its various programs will have on division and corporate return on investment
7.Use industry scenarios to develop assumptions about the task environment
Develop common size financial statements for prior years
Construct detailed pro forma financial statements for each strategic alternative
8.Management’s Attitude Toward Risk
Risk-
composed not only of the probability that the strategy will be effective but also of the amount of assets the corporation must allocate to the strategy and the length of time the assets will be unavailable for other uses
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