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Bus 525 Strategic Management in a Globalized Society

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Outsourcing

BN160722

BUS 525 Strategic Management in a Globalized Society

Professor:  Dr. Marko Nino

Westcliff University

16/04/2017


Abstract

The main focus of this study is outsourcing. This study is conducted to analyze two organizations of different industry that have entered into the outsourcing agreements with the specialized services firms. This paper will be discussing the value chain activities these two companies have selected to outsource. This paper will also discuss whether their outsourcing agreements threaten the competitive capabilities of these two companies or not. Along with outsourcing threats, this study will also discuss the benefits of outsourcing. This paper also aims to analyze whether these two companies are using strategic alliance to manage their outsource or not.

The finding of this study will help the other related organization in terms of their outsourcing’s planning and decision making.

Introduction

Outsourcing refers to the strategic use of outside resources in order to conduct some of its work activities. In other words, outsourcing is the process of transferring a portion company’s business activities to another service providing company which provides service back to the company. Outsourcing consists of contracting a portion of value chain of an organization to other companies with specialized activities. And these outsourcing activities involves information technology, human resources management, supply chain management, accounting, customer support and service management, marketing, research and development, tax preparation, legal service and so forth. Nowadays, many businesses are getting involved in outsourcing. With the help of outsourcing, a company can decrease the cost and allocate its more time and money to strengthen their core activities (Amant & Kirk, 2009). As a result, it helps to gain the competitive advantage in those core areas. Similarly, outsourcing also helps to increase the productivity and profit of an organization.

Outsourcing Companies

The two companies that have entered into the outsourcing agreement with the company with specialized services are:

  • Unilever
  • Acer

Unilever

Unilever is the multinational organization based on the industry of consumer goods. Unilever has been in the market for decades and their products are found in more than 190 nations. With 2012 revenue, it was announced the world’s largest consumer goods company. Unilever have entered into the outsourcing agreement with Accenture, one of the top outsourcing company in the world. Accenture provides services in strategy (business strategy, technology strategy, etc), consulting (management consulting, business consulting, etc), digital (digital marketing), technology (research and development, technological solution, etc) and operation (business process outsourcing, cloud service, etc). They provide their service in more than 120 nation and work across more than forty industries. Accenture helps to increase the business performance of its clients.

Value Chain Activities of Unilever

A value chain refers to the structure of activities the organization utilize to execute its business level strategy (Ireland, Hoskisson & Hitt, 2008). The value chain activity Unilever have chosen to outsource is in terms of Human Resource Management. Unilever entered into the five year outsourcing agreement with Accenture. Accenture will be providing human resource business process outsourcing services for the Unilever which will benefit more than 130,000 workers in more than 100 nations. Accenture will also be presenting a series of administration enhancements concentrated on upgrading the user experience. Under the terms of agreement, Accenture will focus on the improvement of quality and adequacy of Unilever’s HR administration. The extend of the agreement incorporates recruitment, reward and core HR services, learning administration covering content sourcing and improvements, planning and delivery of program, learning system hosting, payroll service and management services. These learning systems will support Unilever’s focus on establishing future leaders and skilled professionals. In addition, Accenture will also present more proactive recruiting approach along with use of social media to select the best candidate for Unilever.

Acer

Acer is Taiwanese transnational organization specialized in advanced electronic technology. The products of Acer are laptops, desktop computers, tablets, notebook, server, projectors, storage devices, display, Smartphone and so on. Acer has entered into the outsourcing agreement with AIMS Asia Group. AIMS is a Malaysian organization specialized in providing the data centers and managed services. Their data center services consists of Data Center Management Consultancy and Disaster Recovery Service while their managed services includes managed cloud, managed CDN, managed connectivity, managed security, managed infrastructure, managed backup and managed monitoring.

Value Chain Activities of Acer

The value chain activity Acer has chosen to outsource is in terms of Supply Chain Management. Acer selected Malaysia’s leading data center operator, AIMS, as their outsourcing hub in terms of their supply chain management. AIMS will help to speed up the Acer Asia-Pacific’s operational adequacy by hosting its regional supply chain management system (CRM Innovation, 2011). Under the terms of the agreement, AIMS will be focusing on providing the reliable, flexible and secure data center with proven delivery processes to meet the growth requirement and elevated standard of Acer Asia Pacific.

Effect of Outsourcing Agreement on the Competitive Capabilities of these Companies

Looking at the outsourcing agreement between Unilever and Accenture and Acer and AIMS Asia Group, I don’t think these outsourcing agreement are likely to threaten the competitive capabilities of these companies. Instead, these outsourcing agreements will enhance the performance and productivity of these organizations. These outsourcing agreements will help to improve the competitiveness of these organizations.

Though the outsourcing agreement between Unilever and Accenture and Acer and AIMS does not threaten the competitive capabilities of these companies, however, there are many outsourcing danger that might affect the competiveness of the organization. They are

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