Consequently, it avoid leaking core technology and other confidential information to its competitor (Earl 1996). In conclusion, the advantages like lower cost and disadvantages like leaking of private information, cooperation probable and high transaction cost both coexist in outsourcing from competitor firm. However, “make” and “buy” are two extremes along a continuum of possibilities for vertical integration (Besanko et al 2009). The degree of integration of a firm differs across industries, firms within an industry and transaction within a firm. Most importantly, it depends on firms themselves to combining the in-house production and outsourcing from competitors to take the largest advantage for business.
It is generally accepted that one of management’s primary roles is to optimize profits by controlling costs effectively. This includes costs associated with operating the day-today business, such as those related to labor, materials, and administrative functions, as well as more strategic costs, such as those for research and development (R&D) and capital investments in property and equipment. Traditionally, companies have focused on costs that they can control from within, which is known as internal cost management (ICM). But with the advent of technology capable of measuring and tracking costs along a supply chain, there is an emerging trend to manage costs associated with supply chain partners, too. Broadly speaking, a manager’s role in the context of
Therefore its strategic impact for understanding, analyzing and creating competitive advantage has been reduced. • Moreover, the value chain analysis only direct rivals. It ignores the threat of potential new entrants, or new substitute products from other company. As a result if a company inly rely on value chain analysis they might fall in danger. • According to Value chain analysis, competitive advantage cannot be assumed by looking at the company as a whole.
The same issues such as getting existing services for a reduced price at acceptable quality standard came up repeatedly. Second, failure to meet service standards can force management to find other ways of achieving reliability. It is not atypical to find a company in which cumulative IT management neglect eventually culminated in an out-of-control situation the current IT department could not recover from. Management can see outsourcing as a way to fix a broken department. Third, a firm under intense cost or competitive pressures, which does not see IT as its core competence, may find outsourcing a way to delegate time-consuming, messy problems so it can focus scarce management time and energy on other differentiators.
This skill set may not be a core competency of its business. To focus their core mission in providing a high quality product and service to the customer what makes sense is offshoring the task to people can perform better. The company not only spend less on employee trainings and save precious man-hours but cut costs as well. The competitive advantage by outsourcing is a good opportunity to other company to serve in their companies by providing service in any business system. Outsourcing will allow the company to share any associated risks with their outsourcing partners there by reducing your burden.
Firms may have the objective of profit maximization; it would be hard to find an employee who shared the same objective as the firm all the time. There is clear conflict between the goals. This inefficiency means motivation has a big part to play and solve the problem. However, the extent to which managers can change employee’s motivation is debatable since it can be said that it is human nature to be selfish and ‘impossible’ to be altruistic especially to an organization. Thus, it is crucial to assess different mechanisms (incentives and corporate in particular) which may help improve motivation with perspectives from economists, sociologists and psychologists.
If companies did not manage employees, the company would not function at an optimal rate or even fail. 2. Given the importance of employees for a company to sustain a competitive advantage, why do you think so many companies have engaged in layoffs, outsourcing, and offshoring of work to other countries? Companies have to have employees to have any kind of advantage or even have a business. The reason that many companies engage in layoffs, outsourcing, and offshoring is because of the regulations and the labor is cheaper with less restrictions.
Value creation is related to competitive advantage based off of business strategies. If a brand it known to be of higher quality, customers will expect the price to be higher than cheaper alternatives. This can also apply to the internal processes of the organization, especially if they are manufacturing anything. Having a lower production cost per unit, or better logistics than other competitors will give an advantage. 2.
Outsourcing also implies the organization is offered the access to internal resources from its partner company. Moreover, the organization shares risks with another partner company once an outsourcing contract is built. Therefore, the risks will be minimized for both parties compared with conducting the project
Knowledge Management and Innovation Theory Introduction Arguably, world economy in the recent post-industrial times can be said to be an information-intensive atmosphere. A good number of scholars assert that, competition both in global and local market, distinction of the market place, as well as profitability is influenced by efficient knowledge. There are numerous definitions that have been put forward to explain the term ‘knowledge’, depending on the area in which it is applied. In this particular context or rather in the business context, the term ‘knowledge’ is used to refer to the state of being aware and able to understand specifics, truth, or information that is achieved through learning or experience. Admittedly, to an organization or rather an enterprise, knowledge is considered as being an asset.