Advantages and Disadvantages of Outsourcing
- Created by: me.com
- Created on: 22-03-17 09:32
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- Outsourcing
- Advantages
- Businesses are able to react to changes in demand more quickly is they have access to other firms
- To increase capacity = increase supply to match demand without the need to increase the size of the factory
- To reduce supply to match a fall demand (reducing the amount of work its outsourcing) without making changes to the factory size
- Outsourcing providers may be more specialised
- Outsourcing allows the firms to focus on its core business
- Non-standard orders can be outsourced so the business gets the order, but then doesn't suffer with the destruction with dealing with it
- Businesses are able to react to changes in demand more quickly is they have access to other firms
- Disadvantages
- Not in direct control of quality, so if the outsource provider is unreliable it could negatively affect the company
- Excessive outsourcing can impact on R&D and the company's ability to make changes
- Cost of outsourcing is likely to be higher than producing in-house
- May need to give confidential information to supplier, if the ideas are stolen the company could lose its competitive advantage
- Advantages
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