MANAGEMENT AND THE GLOBAL ECONOMY

Management and the Global Economy

Management and the Global Economy

Restructuring operations through Outsourcing

Outsourcing is the process of a company contracting a business function to an outside business or individual. Typically, the function outsourced is considered non-core to the business and is pursued in an effort to reduce costs, enhance quality, access expertise, access economies of scale, facilitate growth, and/or free up time for executives to focus on key business processes. While outsourcing has been a common practice as management philosophies have moved toward a division of labor, the term did not enter the English lexicon until the 1980s. Facilitated by technological communication advances, the practice of outsourcing has grown exponentially since this time among all facets of industry including multinational firms, professional franchises, and even intercollegiate athletic departments. Virtually any conceivable business practice can be outsourced, but the advantage of outsourcing is dependent upon the strategy and contractual leverage of the organization.

The process of outsourcing generally involves four primary stages. First, philosophical assessment: a company must evaluate their philosophies and determine how outsourcing may affect the vision of the organization. Second, evaluation and selection: an audit of business processes through a strategic lens should take place in order to evaluate where competitive advantages may be gained through outsourcing. Projects or functions should then be designated and service providers evaluated and selected. Third, contract development: the organization should finalize pricing and service level agreement (SLA) terms with the contracting companies. The final stage of the outsourcing process is outsourcing management (Haugen, et. al., 2009). Communication and governance structures should be implemented and sustained in order to facilitate a smooth transition, allowing for flexibility as the outsourcing relationship develops.

The case of outsourcing fit best on Dell. Dell continues the revolution. After changing its business model by offering its computers in the U.S. and European hypermarkets, Dell could within a year and a half to outsource all of its products. According to the Wall Street Journal, the U.S. giant seeks in effect to sell all its factories. Contacts with subcontractor's computer have been made in this direction in recent months. Financially, Dell is far from being critically endangered, with a growth of 11% of its revenue last quarter (16.4 billion dollars) for a net profit of $ 616 million, but for many, these results are far from satisfactory, and this is not the stiff competition from Hewlett-Packard, Acer, Lenovo, ASUS, Fujitsu and Apple should improve its conditions. The Texas firm is changing and in recent years, laying off massive (8,500 people), closing plants, and changing its business model. And, perhaps soon, we can say that Dell outsources all of its computers, like its competitors. According to the Wall Street Journal, to find buyers for its plants will be against a tall order. Indeed, some plants often receive subsidies (via tax incentives), in exchange for which Dell has to keep a minimum number of employees and invest locally. Its plant in North Carolina and is subject to these requirements until 2015 (Krueger, 2010).

Strategic decision in relation to human resource

The definition of IHRM is a vexed question since, as argued below; the focus of the area has been excessively narrow. A relatively broad perspective on IHRM is captured in the following definition from Taylor et ...