Leadership discussion broad - Essay Example

What value creation activities should a company outsource to independent suppliers? What are the risks involved in outsourcing these activities? A company can outsource its non-core activities to independent suppliers. Non-core activities are those activities in the company that does not relate to the core and sensitive operations of the company. In essence, operations that does not give away the competitive advantage of a company can be outsourced to independent suppliers (Hill and Jones, 2008).

These value creation activities include administrative functions such as processing of payroll where third party vendors such as Accenture provides its expertise. To a certain extent, even customer service can be outsource to be able to save on cost and enable the company to focus on the core operation of the business. Most companies such as IBM, Capital One has been outsourcing their customer service and backdoor operations to Business Processing Organizations (BPO) already because it is more economical to have them done by third party vendors who has to expertise than for companies to do the operations themselves.

Even in the production side of the company, such as the production of the company’s parts that make up its products are outsourced. The classic case for this is Samsung and Apple where parts and accessories of their smartphones and other products are outsourced to third party vendors. They however keep the software and hardware design as well as research and development within the company so as not to give away their strategic advantage and technical competencies.Outsourcing other value creation activities may be cost effective for companies to do but there are also risk involved in it.

Outsourcing company operations inadvertently exposes the technical advantage of a firm making it vulnerable to industrial espionage. Another is the case of Apple where it the company is accused of unethical business practice because its third party vendors employed children and use unfair labor practices. This may not be the doing of Apple because it is a reputable company, but the less than desirable labor practices of its third party vendors hurt the company’s image. ReferenceHill, Charles W.L.; Jones, Gareth (2008).

Essentials of Strategic Management. South-Western Cengage Learning