outsourcing and rationalisation

Question 1

what is outsourcing ?

Answer 1

occurs when outside suppliers are involved in activities that could be taken internally by a business

Question 2

advantages of outsourcing :

Answer 2

significantly reduced staffing costs, existing workload and stress levels are reduced, well trained staff provided by the outsourcing company, less investment risk, capital needs are reduced, lower costs increase profits, more capital for research and development costs

Question 3

disadvantages of outsourcing :

Answer 3

potential of poor customer service, existing employees may feel demotivated - increase staff turnover and reduce productivity, quality of product cannot be guaranteed, loss of security of data, more difficult to implement jit

Question 4

what is rationalisation ?

Answer 4

the reorganisation of a business in order to increase its efficiency

• normally leads to a reduction in business size or a change in policy

Question 5

examples of rationalisation :

Answer 5

closing of branches, transferring of production, trimming of product ranges, incorporation of it systems to replace paper systems

Question 6

what does rationalisation lead to ?

Answer 6

achieve increased efficiencies in a business

uncertainty, resistance from staff, loss of jobs, insecurity for employees