Bus 401 Mod 3 Case

1108 Words Jun 9th, 2012 5 Pages
TUI University

BUS 401

Case Study Module 3

Dr. Yi Ling

Abstract
Outsourcing occurs when a company either buys products or services from outside sources or sends work to outside contractors versus doing it themselves. There are several advantages and disadvantages to outsourcing to include cost savings, sharing risk and developing better leaders internally. There are also some disadvantages like lack of quality control, loss of some management functions and losing the ability to build well rounded leaders in all aspects of the company. In a country like Iraq, the United States military is outsourcing many occupations in an effort to rebuild the Iraqi economy and eliminate the need for military presence at the same time
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The second advantage is the shared risks associated with outsourcing. If there are five different companies each producing one piece of an object or item to make a whole item, if something happens to one of the firms like filing for bankruptcy, the entire operation doesn’t suffer, only that one piece of the whole product. An example is a financial profile. I have in the Army what is called the Thrift Savings Program, like a civilian 401k. There are five different investment options and I elected to put 30% of my contributions into one fund, 30% in another, and then 40% in yet another. If one of those funds start going south, it is my hope that the other two compensate the first one. The third advantage is being able to outsource work when the need for production rises. Instead of having to hire additional employees to augment the increase in labor, a company will have a set staff and then when the need arises, they will hire out for the additional work to be completed. The fourth advantage to outsourcing is that it can help develop internal staff. As I stated in the advantage above, outsourcing projects help meet performance peaks, but it can also assist in completing projects that are nearing the end of its requirements. What this does is allow the company staff to focus on new initiatives that

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