Strategic Management and Business Policy - Essay Example

Strategic Management and Business PolicyOutsourcing refers to an arrangement where one company contracts another one to get services that could also be provided internally by in house employees. It involves one company involving a third party to get a function, process or service done (Wheelen & David, 2010). Non-core business processes can be outsourced to increase efficiency. There are major outsourcing mistakes that people make. They include: over estimating on the savings made on costs.

Outsourcing in itself saves money but only when done with prior caution. Usually, companies expect unrealistic cut on costs so much after outsourcing. Failing to plan an exit strategy is another mistake. Often companies rush in to outsourcing, discuss every thing but exit does not cross their minds thus fail to agree on important issues such as what should b be done if the outsourcing strategy fail to perform as expected. Sometimes companies jump into outsourcing too quickly. This is wrong for business because care should be taken; it should be gradual so that company outsource on a small service observes the results before going in deeper.

Another common error in outsourcing is over depending on the contracted company after going all in. Back-up plans should be put in place just incase a contracted company fails to deliver what is agreed. Customers should not suffer any effect if a trusted contractor failed to deliver. Failure to communicate well to the outsourced company and to offer guideline is another error. Guidelines help to ensure quality and consistency of the contracted service or process. It also sets out expectation standards.

Failure to have a performance checks mechanism where the services or process that is outsourced can be evaluated. Companies need to set up performance measure against which to compare actual performance (Wheelen & David, 2010). Ignoring the relationships with customer is another error in outsourcing. It may lead to loss of customer; customers appreciate the relationship established over time. Switching them to another outsourced company may send them away. Outsourcing may mean that the personal touch between client and the outsourcing company is lost.

This is more so in places where services such customer care services are outsourced. The touch is what creates trusting relationship with clients’ thus, building loyal clients and customers (Wheelen & David, 2010). .References:Wheelen, Thomas L. & David J. (2010). Concepts in strategic management and business policy (12the ed.). Upper Saddle River, NJ: Pearson Prentice Hall.