OUTSOURCING ARTICLE - Coursework Example

Module Outsourcing Article: A Passage out of Hong Kong Link: http www.businessweek.com/articles 07-25/china-s-unsafe-food-chain-takes-chicken-off-the-mcdonald-s-menu-in-hong-kongCitation: Larson, Christina. Chinas Unsafe Food Takes Chicken off the McDonalds Menu in Hong Kong. 25 June 2014. 29 June 2014. http://www.businessweek.com/articles/2014-07-25/china-s-unsafe-food-chain-takes-chicken-off-the-mcdonald-s-menu-in-hong-kongSummary Hong Kong is undoubtedly the cleanest city in mainland China however; this does not mean that it is safe from the health and environmental risks that are present in the country.

A TV report that was conducted in the previous week showed that Shanghai Husi Food sold expired and dirty meat. Major brands including Pizza Hut and KFC outsource meat from the company and they apologized to their diners following this event. Further, imports from the entity were suspended (Larson). This will result into increased pressure on parties in the restaurant industry to take charge of the supply chains. A national survey revealed that 19% of the soil in the country is polluted as well as 44% of the rice that was tested was found to be impure (Larson).

Relevant to OutsourcingThis article is important to outsourcing in restaurants in Hong Kong. Restaurants will be forced to thoroughly scrutinize companies that provide their supplies. This mainly applies to rice, meat and other products that grow on the soil. This is following the revelation that 19 percent of the land was polluted. Shanghai Husi Food was owned and operated by the OSI Group that is an Illinois based entity (Larson). It is clear those well-established diners in Hong Kong including Pizza Hut and KFC (Larson).

These and other companies that outsourced from the Shanghai Husi Food were forced to stop doing business with entity following the release of the report and the suspension of its operations. The article is relevant to long-term contracts that restaurants and other parties had established with the entity. Being a well known supplier of meat and other products that are used in the food industry Shanghai Husi Food had formed business partnerships that resulted to the formulation of long-term contracts.

Following the publication of the report in the last week most of these long term contracts would have to be cancelled. This is owing to the fact that no company would risk continuing to engage with a supplier that was clearly supplying contaminated products. Shanghai Husi Food would be forced to compensate the companies it had entered into long-term contracts with for breaching the terms of the contract. Short-term contracts would have to be terminated as well. This is because the food industry is highly sensitive and any slight contamination can result into food poisoning causing even more serious scandals for the food companies.

The article states that restaurants would be forced to take charge of the supply chains in the country. This means that they are less likely to get into long-term contracts with suppliers. Consequently, companies will be more likely to engage in short-term contracts with suppliers. It is can thereby be understood that short-term contracts are the best since there are minimal risks that are associated with such engagements. Finally, the article warns against renewing contracts with Shanghai Husi Food as its operations were suspended (Larson).

QuestionsShould restaurants consider entering into long-term, short term or renewed contracts with Shanghai Husi Food?Restaurants will be forced to be in charge of value supply chains, are there likely to be more problems to be discovered in relation unsafe food in the McDonald’s menu?