Assignment task: Add insight and a question to classmate's discussion below:
Outsourcing Decisions: Chapter Analysis
Outsourcing is a vital tactic that comprises allocating the organizational tasks to a third-party based on informed decision-making. Implementation of the approach can assist to increase productivity, profit margins, and product quality (Wheelen et al., 2018). Hence, outsourcing decisions require a functional strategy to determine the best outcome for the organization. The functional approach requires situational awareness of the organization's core competencies, the areas of continuous improvement, and the units that promote competitive advantage (Wheelen et al., 2018). Emphasis on information intelligence on the total value from the key areas of operations translates into management consideration of the outsourcing functions that will not significantly impact on the competitive edge. Thus, the functional approach sheds light for the management to consider the low functional areas which will not impact the long-term profitability or revenue yield (Wheelen et al., 2018). By assessing the total value, the company decides the sources of competitive edge and determination of the least potential areas which will not impact the overall operations. For example, for Apple Inc., the focus on software components continues to be a source of core competence. Through the functional strategy, the organization considers the hardware unit of production as slightly minor to overall profitability (Wheelen et al., 2018). Hence, opting to outsource the production of the hardware components is an effective approach that maintains the organizational competitive advantage.
Moreover, the outsourcing matrix is a valuable tool that can influence decision-making on the way forward for the organization. Examination of complete or partial integration is centered on the total value that the company can gain from either outsourcing or producing internally (Wheelen et al., 2018). Internal stakeholders should provide a cost-benefit analysis on the value of integration or outsourcing which can shape decision-making. Of significance is the proposed value that emanates from the business units and the promotion of rational decisions that depend on overall competitive advantage evaluation (Wheelen et al., 2018).