Outsourcing: Advantages and Disadvantages
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Write a 2-3 page paper about outsourcing from the perspective of a multinational firm (Yes, this may be a hypothetical firm), be sure to answer the following questions:
1. What are the advantages of outsourcing?
2. What are the disadvantages of outsourcing?
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Solution Summary
The solution discusses the advantages and disadvantages of outsourcing. References are included.
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As defined by Chase et al. (2004, 372), outsourcing is an "act of moving some of a firm's internal activities and decision responsibilities to outside providers." Others define outsourcing as the procurement of the organization's products or services from external sources. Most definitions of outsourcing describe it as referring to allocating or reallocating business activities from an internal source to an external source. The two basic organizations that are involved in the outsourcing agreement are the client firm (the firm that outsources their internal business activities) and the outsource provider (the firm which provides outsourcing services to the client firm). The client firm outsources business activities such as services, manufacturing activities, tasks and jobs.
Outsourcing in an international context refers to the outsourcing activity between nations or between boundaries of two or more countries. It includes global outsourcing which involves many international, external firms. Although outsourcing is a new concept, it has been practiced before and was referred to as 'subcontracting production activities'. Outsourcing in an international context has been known as a major driving force in the business world. The Internet has allowed firms all over the world to provide services which were not possible before due to geographical limits. The Internet, together with the WorldWideWeb (WWW) has provided the connectivity that is necessary for the rapid growth of the outsourcing in an international context.
Together with the growth of the Internet and WWW is the growth of international business. The passage of international trade agreements such as the 1993 North ...
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