Good Essay On Using Tools To Solve A Problem

Outsourcing is one of the most widely spread tools to boost a company’s competitive advantage by making best use of having some of the company’s activities performed in developing states, where labour force and organization of such activities cost less than in home locations. Outsourcing falls within the concept of a so-called “Shamrock Organization” that is characterized by (1) a minimum permanent core of management and technical staff; (2) a flexible labour force, consisting of part-time and temporary employees, as well as (3) independent contractors and outside suppliers, who can be involved in case of large projects (Burkholer, 2006, p. ix-x) The key issue that arises with regard to outsourcing concerns deciding on the type of activities that are to be outsourced and the ones that are to remain in-house.
Creating the right ratio between the activities that remain in-house and the ones that are outsourced can significantly contribute to a company’s capacity to compete within a market at hand. At the same time, outsourcing can be also viewed as a risk due to the fact that it is concerned with significant accompanying costs. Most widely spread categories of accompanying costs involve costs of transition and building up relationships with a new vendor, the ones of productivity lags, as well as costs necessary for improving internal processes and managing the outsourcing relationship itself. It is to be kept in mind that the more processes are outsourced, the larger will be expenses, concerned with ensuring quality performance of a vendor.
The outsourcing decision-making matrix represents a tool that helps a compny to single out activities that can be outsourced. The matrix that will be considered for the purposes of this assignment looks as follows
(Mind tools, 2015)
The matrix helps a company to find answers for two outsourcing-related questions. Firstly, making an outsourcing decision requires finding out whether a considered task is strategic for running a business. In this regard, it is important to remember that particularly strategically important tasks represent the major source of competitive advantage. The second step lies in determining an extent to which a task impacts a company’s operational performance. Tasks, important for operational performance, ensure smooth running of business processes and, therefore, it is not recommended to outsource them. The solution’s dependence on tasks’ strategic and operational performance can be traced with the help of the matrix. The quadrants of the matrix are as follows.
Forming a strategic alliance is recommended in case of tasks that are high in strategic importance, but make a modest contribution to the operational performance of a company. While it is crucial that the company ensures high quality of these tasks’ performance, they are not particularly significant with regard to the costs of smooth running and, therefore, not worthy of full in-house emphasis. Tasks that should be retained are the ones that are characterized with high importance in both strategic and operational terms. Outsourcing is recommended for tasks that are of low strategic importance, but of high operational one. As these tasks are not specifically important in strategic terms, they can be safely outsourced. Tasks that are not important either for strategic development of a company or its operational performance can be safely eliminated.
The tool is to be applied to each activity of a company on individual basis. Firstly, strategic importance of a task needs to be identified. Identification of strategic importance is made, basing on finding out whether a task at hand makes a significant contribution into creating competitive advantage of a company or making a business unique. Secondly, a task’s contribution to the company’s day-to-day operational performance needs to be identified. Finally, the task at hand can be plotted on the matrix.
HR function is becoming increasingly complicated and time-consuming for business, thus, many companies tend to outsource it to specialized companies that focus on HR. In case of public relations, it is important to mention that many small and medium-sized businesses do not actually need a PR professional, operating in-house. Thus, for such businesses it is more efficient to hire a professional, working for a specialized PR company, than to hire the one on full-time basis. Virtual assistants tend to become increasingly popular due to the fact that they allow a company manager getting high-quality virtual support without providing for a need to hire a respective professional and have him working at the office. Manufacturing has long been a function, outsourced by businesses. Important benefit of outsourcing manufacturing lies in the fact that it allows companies avoiding equipment maintenance cost, as well as payroll taxes. While all abovementioned functions are important for ensuring successful functioning of an organization, all of them can be safely outsourced in case outsourcing-related relationships is built on permanent and quality basis. The comparison of the approach, provided for by outsourcing-related decision matrix, described above, and modern patterns of outsourcing testify to the fact that the majority of companies prefer to outsource activities that are characterized with a significant degree of operational importance for the company. At the same time, the matrix does not take into account a range of additional factors that tend to influence outsourcing-related decision-making in real-life companies.
One of important factors to mention is the amount of operations to be performed. For instance, if a company needs a specific kind of operations on an irregular basis (e.g., public relations), it is more beneficial to outsource these operations, rather than hire a respective professional. Similar applies to the possibility of an operation to be conducted virtually. The example of widely spread virtual assistants, who may generate letters, answer emails and work with databases, testify to the fact that clerical work represents an excellent type of operations to be outsourced as it takes place through the Internet.
Concluding, it is worth mentioning that researched decision-making matrix is useful to distinguish between activities to be outsourced and the ones that can remain in-house. At the same time, effective outsourcing-related decision still requires consideration of other factors, such as the amount of work to be completed and an opportunity for an operation to be conducted on a virtual basis. Complex investigation of the factors, included into the matrix and these ones may help accompany to make a well-grounded decision.

References

Burkholder, N. C. (2006). Outsourcing: the definitive view, applications and implications. NJ: John Wiley& Sons
Johnston, K. (2014). Top outsourced services. Retrieved 21 March2015 from http://smallbusiness.chron.com/top-outsourced-services-32126.html
Mind tools (2015). The Outsourcing decision-making matrix. Retrieved 21 March2015 from http://www.mindtools.com/pages/article/newSTR_45.htm