There exists some well developed theory under the headings of "make-buy," "firm boundaries," "economics of organization," and "vertical integration. In this dissertation, we draw from the manufacturing strategy, economics, and business strategy literature to enhance the existing economic theory of outsourcing by incorporating an operations strategy lens.
Specifically, we look how manufacturing outsourcing influences-and is influenced by-a firm's cost and quality capabilities. We do this through three separate essays using multiple methods.
All three essays arose from an iterative process of literature review and practitioner interviews. The essays are related both in their grounding in existing literature and theory and in their focus on the relationship between manufacturing capabilities and outsourcing decisions and outcomes.
Free general motors outsourcing Essays and Papers page 4
In the first essay, "The Effect of Learning and Strategic Behavior on Manufacturing Outsourcing Decisions," we analytically evaluate how the presence of learning-by-doing and strategic behavior by both parties affects a major outsourcing decision in a two-period game. Previous analytic work that has assessed the effect of learning on outsourcing neglected the possibility of opportunism by the supplier.
To fill this gap, we analyze a two-period game involving a firm that has the opportunity to outsource some portion iii of its volume to a contract manufacturer. Both firms can reduce their production cost through learning-by-doing. When the contract manufacturer is the Stackelberg leader, we obtain several interesting results. These include showing that the contract manufacturer's learning can benefit the buying firm, but only if the buying firm also learns. We also show that learning by the buying firm can either help or hurt the contract manufacturer.
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In addition, we find that below-cost transfer pricing by the contract manufacturer will occur. We also analyze alternative bargaining arrangements. This essay analytically shows the importance of considering both learning-by-doing and possible future opportunism when deciding whether or not to outsource.
In the second essay, "Outsourcing of Manufacturing Resources: The Effect of Manufacturing Capabilities and Priorities" we empirically analyze relationships between operations capabilities and priorities quality and cost and a firm's plans to outsource. This essay extends the existing research on antecedents of outsourcing in two ways. Chapter 5: Consultants on outsourcing Ritt, Spatzenegger 5. Publications underline the complexity of strategic outsourcing 5. Advantages and goals when outsourcing 5.
Roland Berger predicts the situation in Austria 5. Chapter 6: Strategic frameworks for outsourcing decisions Ritt, Spatzenegger 6. Outsourcing and strategic change management 6. Evaluation of strategic frameworks for outsourcing decisions.
Effect of outsourcing strategies on the performance of small and medium scale enterprises (SMEs)
Chapter 7: Resumee Ritt, Spatzenegger 7. The new strategic framework 7. Is outsourcing a path without the choice to return? Outsourcing is a complex process.
Effect of outsourcing strategies on the performance of small and medium scale enterprises (SMEs)
It is a top management issue and a strategic task to maintain competitiveness and sustainable competitive advantage in a corporation. As a main outcome of this thesis the authors developed and created a strategic framework, guided by the aim to increase the quality and efficiency in outsourcing decision processes.
It should provide a supportive tool for successful outsourcing decisions in a fast changing environment. Furthermore the authors answer the question whether outsourcing is a path without return or not. The basis for the outcome and the method the authors chose to achieve their findings and concluding framework are:. At first: an analysis of the relevant academic publications and a comparison of the main findings with popular scientific literature.
Covered topics are outsourcing as a strategic tool for competitiveness, core competence concentration, offshoring versus outsourcing, service outsourcing and ethics in outsourcing. This was followed by an analysis of long term impacts to national economies caused by outsourcing and offshoring activities. Further qualitative interviews with two Austrian Enterprises and expertise knowledge from the worlds top consulting firms, flow into the development of the strategic framework.
Cooper and an advancement of it. This model is originally used in innovation management for the evaluation of new developments and innovations. Outsourcing, that is not a new topic. Outsourcing and offshoring already has already existed for over 30 years, and has gained momentum worldwide over the last years. It is a slow-burner topic, always on discussion and is sparking a lot of interest in both academic literature and economic press. In booming periods companies are aiming to get access to new resources and technologies, and in recession periods outsourcing is used as a measure to cut costs or increase efficiency.
Hardly a subject is as controversial as this. And barely a topic has as many socio-political implications as outsourcing. However, technological progress, the opening of China and Eastern Europe, as well as the enlargement of the European Union in recent years has tremendously changed international trade.
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Increased fragmentation and lower costs for service links make production and assembling of different parts of the value added chain at different locations more feasible and profitable. Therefore, the modern industry is characterized by a high number of vertical fragmentation and international outsourcing.
Media and political attention seems firmly focused on international outsourcing, even though domestic outsourcing is also common. Various stakeholders are involved in the outsourcing process. These participants may gain different benefits or have to face different risks. For example, the outsourcing company, the outsourcing partner or the national economy which is influenced by the companies that outsource — each institution will have different aims, experiences and requirements in the entire process.
However, measuring international outsourcing in terms of its usability as a strategic tool for competitiveness is a challenge. The authors, Friedrich Spatzenegger and Sylvia Ritt, are aiming to take up this challenge. The authors start this thesis with an overview of the content and the relevant chapters.
Pillar A chapter 1 — 3 : at first, the authors will describe the role of outsourcing as a strategic management tool in corporate decision making processes, and will link it to the topic of core competence concentration in a company, according to the academic literature. The authors will examine what chances and risks occur and distinguish the different forms of outsourcing, for example offshoring, manufacturing or service outsourcing.
It is the aim to examine and establish what the hypes and what the facts about the various types of outsourcing are, discussing and comparing empirical studies and new media literature. Within this pillar the authors also link the characteristics of outsourcing with offshoring and outsourcing experiences of two Austrian based but internationally successful companies, Palfinger AG and EMCO Maier GmbH.
In a second step, within pillar B chapter 4 , the authors prepare a macro-economical analysis and examine the impacts of outsourcing on the national economy exemplifying the German industry and other European Union member countries. Questions like who are the winners and losers of this development, the workforce, the entrepreneurs or the national economy will be answered. Cooper . The authors refer to chapter 2 2.
This paper further compares academic and news media literature. Due to the widely ramified variety in the economy and the literature about the topic, the authors of this thesis do not lodge a claim for completeness and universality of their work. In fact it should show the complexity of strategic management and strategic decisions exemplified with the chosen topic of outsourcing. As repeatedly quoted in academic literature, companies who are undertaking outsourcing activities have very similar expectations from their outsourcing partner and the resulting benefits of this process, although the reasons for the decision to outsource may vary significantly.
Companies are not only aiming to cut costs through outsourcing, fact is the tended to do so in the arising decades of outsourcing? So what do companies expect? Main expectations are improvements in diverse business processes which lead to an increase in efficiency, competitiveness and profit.
Often an outsourcing opportunity seems attractive at the first impression, but in reality it is a long term process that needs extensive evaluation and efficient usage of the right evaluation criteria. It relies on closely calculated cost management and not primary on degression effects. Moral and political aspects may also influence the decision to outsource activities or leave the process in-house. Those endeavours should receive extensive attention as well.
When aiming to achieve improvements in effectiveness in terms of costs or other parameters that help a company to achieve its long-term success , outsourcing seems to be an adequate activity for a great number of corporations.