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Outsourcing a Portion of the Company's Operation

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A researcher has observed that some firms in the furniture industry outsource activity such as transportation services while others do not.

He/She wants to study why firms outsource or do not outsource and whether outsourcing affects the firm's performance. Suggest a study to enquire into these research questions.

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Solution Summary

The solution discusses why companies employ outsourcing in its operation.

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The purpose of outsourcing is cost minimization in daily operations of the business.
Cost-cutting may not be the only reason to outsource, but it's certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business (All Business, 2012).

Outsourcing enables a company to concentrate on their main functions. A typical example is Coca-Cola which outsourced the transport and distribution of its products (Admin, 2012). Coca-cola realized that by outsourcing its distribution and transport of products, savings involving maintenance of trucks and transport equipment were realized. It does not need to purchase new vehicles. All it has to do is partner with transport companies and private individuals who are willing to do the marketing side of the ...

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