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Business Strategy - Assignment Example

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It is complimented with the street performances and great dinning places. This is quickly acting as an appetizer to most investors who want to tap…
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Business Strategy
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Business Strategy Morelia, a major in Mexico, reserves the ancient history through its colonial buildings rangingfrom churches to private homes. It is complimented with the street performances and great dinning places. This is quickly acting as an appetizer to most investors who want to tap into such potential money source. It is evident the city has a capacity of integrating information technology (IT) and business process outsourcing (BPO) in its investment portfolio. Flannery Nathaniel confirms that ClusterTIM, which is one of the IT companies in Morelia, is already done with phase one of establishing a reliable IT network with an aim of making sure the industry grows beyond the current level. Its close proximity to the Mexican city makes it a hotspot and many investors find it an ideal place. This is because, even though there is lots of news on criminal activities, Morelia has a good security network. In addition, it is home to Mexico’s leading learning institutions, which again make it a vital place for any investor’s growth. However, for the city to realize such a sensitive dream, both the local and national governments have to back it up because it proves to be viable for IT.
From the article summarized above, the most evident concept is outsourcing. Briefly, outsourcing is a business strategy in which organizations transfer non-core activities and liabilities to external firms in order to attain a competitive advantage (Gamble, et al 115). Morelia is a city with high outsourcing capabilities since it is need of information technology. ClusterTIM is a very huge IT company in the city and has the potential to outsource. The major targets are Ecosistemas, which is digital animation company; Deipi, a renowned international IT and marketing consulting company; Konexo, a contact center; and Scio Consulting, a company credited with software development. In addition, ClusterTIM has outsourced close to 37 business entities and is in collaboration with 22 universities. This makes the dream of being an IT based city a valid dream. By outsourcing services from all the mentioned entities, Morelia, through ClusterTIM will obtain three key advantages. One, there will be an overall decrease in costs. This in return, will act as a stimulant especially for the IT sector which is a new product. Universities have fresh knowledge and thus by outsourcing their services, it will be easy to get superior talents beyond the ClusterTIM’s in house capability. In a good way, it will help eliminate idle capacity and give the chance of getting out of outdated or over used technology. Second, by outsourcing, the company will be in opposition to utilize scarce resource and maximize on its competitive advantage. It is evident that Morelia still lags behind when compared to neighboring cities like Guadalajara and Monterrey. However, Morelia can take advantage of the situation, bearing in mind that it has the largest number of learning institutions and capitalize of education IT. By doing so, it stands a high chance to winning donor funding, support and being allocated with the best skilled personnel. Third, through outsourcing, it will be easy to harness knowledge and expertise of its highly credited supply-chain partners. This in the long run stimulates organizational learning.
Even with advantages discussed appearing so convincing, outsourcing brings along its own disadvantages. In this case, three major strategic disadvantages are evident. First, heavy outsourcing can cost Morelia fortune. This is because it risks losing all the vital essential skills. Alternatively, it can offer room to breeding of mediocre and potentially harmful skills therefore, ClusterTIM risks falling out of the market and may take Morelia down with it. Evidently G4A, a company that has already parted ways with ClusterTIM is of the view that ClusterTIM faces a lot of problems and has to press on hard to get back the attention. Second, there will be drastic loss cross-functional skills. This means the mother company will be incapable of solving simple problems especially if it outsources high-level functional activities. Third, the mother company will lack the power to control its suppliers. This is always the case when dealing with a small supplier base. If suppliers manage to collaborate, they can successfully hold ClusterTIM ‘hostage’ until it falls for their demands.
Conclusion
Outsourcing is an important strategic function in any organization. It does not only bring diversification, but also promotes a competitive advantage and organizational growth. However, keen measures have to be taken to avoid unknowingly selling off the rights to control suppliers and customers. Morelia is a potential business hub and will soon be home to all outsourcing experts. Given its potential of having a good number of learning institutions and enhanced security, it will for sure be a great investment destination.
Works cited
Flannery, Nathaniel, P. “Will Morelia Become Mexico’s Next Outsourcing Hub?” Forbes Magazine 22 July, 2014. Web.
Gamble, John, et al. Essentials of Strategic Management: The Quest for Competitive Advantage 4th Ed. New York: McGraw Hill, 2014. Print. Read More
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