TEAM EXERCISE ABOUT OUTSOURCING

 

            Synopsis of the Situation

            Outsourcing is a practice that is carried out either in foreign or domestic contract where the firm may transfer some of its workers and some possessions to another country at times as you hand over to them control of the public services with an aim of attaining profit from those corporations (Halvey et al 2007). Basically outsourcing helps an organization to be better able to perform well in their major competencies and be able to alleviate shortage of proficiency in the specific areas where they want to outsource. This practice enables the business to have a greater flexibility rate and control of their budget. This is made possible as it enhances the businesses to use expenditures on the services that they need at that particular time in which they need those (Vitasek et al 2010).

            This has greatly decreased the urge of the business management to train its specialized employees as well as reducing the amount of capital and operating cost required and other expertise needed in the business such as the engineers. As a result of the globalization in the business world most of the organizations are outsourcing their enterprises to different states so as to cut off the cost.

            The group has settled on discussing on the LEGO Group Company found from the Fortune 1000 that has so far used the outsourcing practice and has so far succeeded in their business (Ireland et al 2008). The LEGO Group is involved with large manufacture a wide variety of toys and their products were the best all over the world.

However in 2004 a drastic change occurred in this organization as a result of the great internal crisis that took place in the company leading the company to almost a bankruptcy state (Herman 2012). The reason behind the company’s drastic fall was the loss of the confidence in their major product.

            Alternative Solutions

1. The company in carrying out Offshoring and outsourcing practice would be in a position to cut off the rapid expenditures as enhanced by the outsourcing advantage.
2. Diversification of the company’s product is another strategy that would have helped the business in curbing their financial crises as this would increase the rate of inventions of new toy products that are digitalized hence increasing sales and ultimately the profit.
3. Another important strategy is the used of shared vision where the organization would share their goals with others such as the retailers, managers, customers and the market at large.

            Selected Solution to the Problem

            Outsourcing activity therefore in this case is the best procedure to see the business grow back to its original fame. This would involve the Offshoring activity where the organizations functions would be relocated to another state. While outsourcing it is important to partner up with another organization especially the right partner so as to be able to attain maximum profits.

            The LEGO Group therefore has been able to partner up with the Flextronics who are proficient in dealing with plastics in terms of using the right capacity and having the right amount of resources needed. This company has the capability to mould, assemble, package and distribute their products in the best way.

 Hence in partnership with them this would enable the LEGO Group to have their products being advertised to many and hence packed and distributed to many customers globally.

            Implementation

            Establishing the core suppliers in the different localities is one of the core implementation strategies that would enhance the company to distribute their products. Once the company has identified these retailers for instance the best retailing companies in Europe, this will enhance the distribution of their products at ease while the cost of distribution is cut-off. Also in identifying some of the companies that operate globally such as the DHL solutions as well as Exel Inc and making contracts with them would enhance a global distribution of goods.

            Sharing the cost of some of the roles and responsibilities with some of the companies in other states greatly helps in reducing the amount of expenditure used on those costs. For instance in case the LEGO Group wants to change its branding process starting from the molding, assembling, pre and post packing this would cost them so much but after outsourcing is done this cost is reduced.

            Recommendation and conclusion

            Though outsourcing is seen as a good method but it is not yet the best method. Therefore business should be discouraged from entirely participating in the outsourcing process only but they should as well incorporate other methods which are also important. For instance in producing other varieties of play toys that are able to meet the technological needs would enhance the customers to increase their sales due to that diversification.

            SWOT analysis in any business should be the key guide to any business and in understanding their weakness they can be able to convert them to strength and also be able to seize the opportunities while working towards curbing any threat to the business. This enhances both the administration and the employees and the retailers involved to share in the vision of the company thus making the goals achievable.

Appendix

SWOT Analysis based upon outsourcing for LEGO Group.

Strengths

1. Economies of scale
2. Flexibility and control of the budget
3. Diversification of cost of hiring and training of employees

Weaknesses

1. Shared responsibility among the companies thus resulting to delay as a result of contract binding
2. Confidentiality challenge resulting to insecurity issues
3. Market dissemination

Opportunities

1. Good network with the suppliers
2. Tax dependable position
3. Technological advancement

Threats

1. Permissible risk
2. Capital for the operating cost
3. High rate of competitors

 

 

 

 

 

 

 

 

 

 

 

 

            Reference

Halvey, J. K., & Melby, B. M. (2007). Business process outsourcing: Process, strategies, and      contracts. Hoboken, N.J: John Wiley & Sons.

Herman, S. (2012). Building a history: The Lego group. Barnsley: Remember When.

Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning.

Vitasek, K., Ledyard, M., & Manrodt, K. (2010). Vested Outsourcing: Five Rules That Will          Transform Outsourcing. Basingstoke: Palgrave Macmillan.