Case 6 Flashcards
What is outsourcing?
When a company moves part of its operation to a third party.
What is offshoring?
When a company moves its business or part of it to another country.
What is offshore outsource?
When the company moves is the party of it business abroad and to another third party.
What is reshoring(Reverse of outsource)?
The transfer of business operation back to its company of origin.
What is inshore(Reverse of offshore)?
The process of moving a business operation from overseas to the local country.
What is purchase price?
The price that a product/service is actually purchased.
What are total loaded costs?
All costs relate to the product, so also called the hidden costs.
Give the advantages and disadvantages of outsourcing.
Adv. Focus on core competencies, cost and time savings, risk mitigating, access to specialized skills.
Disadv. Language and cultural barriers, hidden costs, exposure of confidential data to third parties, loss of managerial control
What are the drives to outsource?
Improve company focus, obtain access to world-class capabilities, obtain resources not available internally, reduce and control operating costs.
What are the external drives to outsource?
Increase competition
Reduce cost
Government regulation
What are the internal drives to outsource?
Improve company focus
Optimizing utilization of resources
Cost reduction on production
