Global Sourcing: Globshops Management and Future Challenges - Essay Example

GLOBAL SOURCING, GLOBSHOP CASE STUDY INTRODUCTION Universal outsourcing of information technology is a unique business strategy for most nations all over the world, particularly the developed countries. Companies and Multinationals within these nations have imperfect development resources and facilities to erect structures that will preserve all levels of services and products for development and improvements within the country, hence the need for offshore mergers. Various motives such as effect of cost reduction mechanisms due to cheap and easy transit of products, information, and other allied services drives the need for offshore sourcing. The rise and growth of global outsourcing are supported by cost benefits analysis since most Multinationals and business empires work on cutting and reducing the production costs. It is to realize and maximizes huge turnover at the end of every financial year. In addition, the technological and industrial improvement that are noticed as time advances improves and stir the need to pool resources with other related companies and businesses to offer adequate and competitive skills. Likewise, the human resources allied with corporate strategies and level of quality improves the value anticipated. The strategy executed by management establishes the efficacy of its resolutions such that setting up the entire plan inclusive of adequate capitalization, funding and monitoring the firm’s probabilities for prosperity in the new environment (Contractor et. al.2010, pg.1428). To ensure a cost reduction, relations must be created, developed and upheld first, since a competitive business affiliations is the basis of achievement for any enterprise client, customer and the associates (Ågerfalk et. al. 2008, pg.7).Therefore, cost promotes the need for outsourcing while affiliation development provides a conducive and enabling environment for achieving cost reduction and other related benefits such as profit maximization. India is recognized as the main outsourcing target in Asia. India has advantages over other nations. It is because its incentives are more attractive to cost- efficacy business strategy with competitive telecommunications industrial sector enhanced by manpower and skills. Additionally, it has technological and industrial resources that are accessible to the nations and other surrounding Asian nations such as Taiwan, South Korea, Japan, China, and several others. GlobShop is a Multinational Billion Dollar empire that utilizes India companies and businesses concentrating on Information technology to expand its infrastructure and capital structures. It is a cost reduction and management strategy implemented by these organizations. The paper aims at assessing the management outlook of GlobShop business in connection with the success and challenges of global outsourcing information technology products and services. Business corporate strategy to expand their companies through global outsourcing is attached towards economical costs and easy transportation (Ågerfalk & Fitzgerald 2008, pg.6). It is in reverence to resources, market growth and expansion, production cost, diverse manpower skills in designs and improvement of technology. In other views, this corporate strategy in connection with the probable partner affects significantly on the bond that is cultivated first hand. Additionally, more factors are noticed once the costs and other benefits are apparent in connections to mutual perceptive. Thus, no obstacles that may frustrate the enterprise are implemented. Cost reduction is considered one of the issues that originate from the proper connection, with market improvements, integration of new developments and expertise. It leads to new inventions and innovations (Grossman & Helpman 2005, pg.151). Although all may look healthy in the global outsourcing businesses, unpredictable and erratic incidences may cause incapability in the operation and management. Moreover, it may create irrevocable risks in situations of political instability, natural disaster, unhealthy competition and offshore financial crisis. DISCUSSION Before undertaking outsourcing, the corporate management must assess and evaluate its guiding principles against the guidelines of the offshore targets. This assessment deals with issues such as legal aspects, costs, employee’s rights, cultural diversity, contractual agreements, businesses regulations, taxations, and incentives. The concept of outsourcing in other countries, for production, developments and other services related to products improvements or strategic change, engages most western states (Grossman & Helpman 2005, pg.149). The scheme is to identify despicable and easily available labor, incentives and resources that aids in costs reduction process. Many of the offshore nations that offer these services have noticed a reduction in costs of labor, expertise, and resources. Main countries such as, United Kingdom, United States, Denmark, Germany and Russia gage their concentration to main outsourcing targets such as China, India, Taiwan and developing nations whose GDP are advantaged and privileged by these prospect (Contractor et. al. 2010, pg.1430). GlobShop as multi-billion dollar conglomerate have sought for global outsourcing to improve cost reduction in its information Technology actions (Grossman & Helpman 2005, pg.157). It is because economic instability results in low business performance due to the occurrence terrorism. Organizations seeking offshore services in information technology, management contemplation and concerns of the new subsidiaries drives examination of issues. Hence, it may result in failures and underperformance since policies and strategies differ in different countries. Cost efficiency is the strategy that most ventures address to attain above par, thus more profits. GlobShop targets of the offshore subsidiary were propped up by merging with Indo- Systems Solutions, an Indian firm to develop its Information Technology systems. The operational contract was inspired by the need for improvement of application, sustaining and maintaining its retail telecommunication infrastructure as a alter strategy in its business aspirations. The firm will be successful since the plan is driven by the eager to reduce operational and maintenance cost in the West compared to India’s. It is because the latter is an unequaled outsourcing improvement country in Asia (Willcocks, Kern & Van Heck 2002, pg.254). Offshore outsourcing needs commitment in sourcing for the right partner who will take roles without inconsistencies and differences occurring. This commitment promotes dependability. GlobShop management was utilizing partners internationally to create a merge that is in line with their business goals and objectives (Fifarek, Veloso & Davidson 2008, pg.235). Moreover, it was considering in-depth evaluation and appraisal of incentives and stability of its destination. The ultimate conclusion for India was supported by the legal and regulation aspects and the several other foreign organization with evident achievements stories of exemplifying India as a favorable global outsourcing spot. Carrying out a feasibility study improve and increase appraisal and evaluation of various risks that may arise and affect the business partnership (Willcocks, Kern & Van Heck 2002, pg.63). Nevertheless, a cost-benefit analysis should show benefits outlaying the limitation that may deter success. Hence, GlobShop is undertaking the assessment of different companies within their capacity to sustain a business connection with the best enterprises in India. The association between a firm and its global partner establishes the progress of its operations and the performance of the company in terms of returns. Companies related associations are administered by a legally binding contract where policies and strategies are executed to avoid inconsistencies and disagreements. A contractual accord lessens the operation risks, by allocating tasks to handle prospects from a holistic outlook. In addition, it aids in realizing how the structure of the partner’s firm operation will benefit with the foreign subsidiary. The circumstances that GlobShop pertained were in respect to reducing and minimizing operations and production costs with the intent of developing and improving the services quality and maximization of returns. When questionable issues surface, the liable and related partners are held accountable, with adequate and viable backup devices (Ågerfalk et. al. 2008, pg.5). In the contractual agreement, concentrating on the organization in the form of roles and execution of policies are frequently scrutinized to uphold the efficiency and corporate performance. It creates stability. Therefore, the results are concentrated, developmental and organizational alterations that result from a significant and consequential collaboration that promotes service delivery and profits maximizations. Global outsourcing management is not only utilized but is developed as well. The motive is to instill liability and improvement in the form of labor training with legal features considering cultural and traditional factors in mind (Grossman & Helpman 2005, pg.156.). It is because the environment is different and new. Moreover, global outsourcing governance improves the achievements in organizations, not only handling different environment completely but also believes their origin. All the areas need to be tackled in an ethical manner and at most precise to evade losing in a given country. It is because many Multinational firms fall short since they use a lot of their energy and resources in the new environment. Strategically directed to objective achievements, in contemporary management, need a corporate body to risk their capital and financial resources within the outsourcing contract, sustained by a capable partner for long term returns. It is generated slowly, and improvement comprehended as time passes by. The possible risk of this contractual agreement is the incidence of unexpected issues such as political instability and natural disaster which can make the client withdraw from the business empty handed or resulting into huge financial losses (Ågerfalk et. al. 2008, pg.6). This relationship management in global outsourcing ventures involves comprehension from the management of both the supplier and the client. In addition, both are the main reason for formulating these outsourcing partnerships. Thus, conducive working conditions promote and enhance its achievements. To solve this, conglomerates opt for delegation of roles and to control issues that affect businesses and uphold admirable and inclusive communication processes. Finding and determining a viable business for a partner who can grow a vision to realism establishes achievement. This scenario is evident in GlobShop scenario where the management body sought for a trustworthy and reliable partner in diverse parts of the world. India is depicted as the best destination for development and improvement encouraged by friendly and acceptable legal system (Carmel & Abbott 2007, pg.45). The option must be facilitated in the form of a company that visualizes its improvements relative to concentrating on a par level accomplishment, thus the choice of Indo- Systems Solutions. Moreover, the main issue for this choice was driven by how it was performing in India. In regard, the association should support its mutuality on the firm’s status, such that small companies tend to struggle if its management considers choosing a large multinational firm for outsourcing that in turn may knowledge difficulty in marketing the products and services of its partner and clients, hence more cost utilization and resources before the business breaks even (Grossman & Helpman 2005, pg.143). Both companies in a contractual outsourcing agreement have configurations that administer and supervise firm’s actions such as management and operation. In regard to this, budding a team that supervises the advancement in form of devising policies for operation of the business easily in combination with preservation of the association improves accomplishments in outsourcing (Gonzalez, Gasco & Llopis 2006, pg.251). Governance matters should be prepared holistically to make sure the client recognizes the rights of workers in the vendor’s backyard. Moreover, clients should understand conflicting matters creating a threat to the general objectives of outsourcing. The management association must emphasize on the customers’ expectations since it is considered a business like any other. Hence, the vendor must understand the relevant management’s mission and vision, to alleviate the employees in accordance with the expectations. It, therefore, castigates when a breakdown occurs and provides competitive incentives when prospects are met or exceeded (Ågerfalk et. al.2008, pg.8). Business can merge different departments and sections particularly related to the field of outsourcing. In GlobShop’s scenario, it’s Information Technology department. It involves the transfer of expertise from the mother business to the subsidiary or offshore business, which is the trend today. It has several risks such as the inability of the expats to adapt to the new culture because of diverse reasons such as family obligations, religious beliefs, and language barrier. To curtail these cases many companies utilizing offshore services are integrating training before the transfer, encouraging motivation for powerful business association with the partner (Lewin & Peeters 2006, pg.229). Outsourcing just like any enterprise needs developmental factors of the workforce. For instance, motivational factors, like awarding and rewarding benefits in cases of high standard prospects, are achieved; thus more attempts are included in the performance. Skilled workers are subjected to poaching by other new companies, which provides attractive remunerations, and inspire and encourage them. It upholds a competitive advantage over the competitors awarding commissions and rewarding of employees when expectations are achieved. It creates an outstanding viable connection with the partner. However, circumstances should be set in cases of failure to meet targets. Competition has become a great impact in the market. It keeps on growing rapidly with new technological improvements and skills expansion thus contractual agreements with the partners should be legalized to keep away from shortage incurring operation (Ågerfalk et. al.2008, p.5). Large organizations such as GlobShop, their contractual costs are lower as compared to those smaller businesses. These costs implicated in the negotiation process, legal aspects and legalization of the contract and offshore government policies regarding taxation and business operations. Large companies are given better programs of investments and incentives as compared to the small companies due to international status. Hence, raising and keeping protected relations merits the company and its partner and ensures recognition from different agencies and the government. In addition, it may originate from growth and expansion application into areas profiting the company and the country. (Willcocks, Kern & Van Heck 2002, pg 53). Evaluating and monitoring financial performance in any venture helps in recognizing ambiguities that are likely and those that have recently occurred to evade massive breakdown, which may affect whole corporate operations. For success, outsourcing business special conferences ensure that the appraisal of the expectations is highlighted to keep a steady track of business performance (Contractor et. al. 2010, pg.1426). Ensuring that the customers are updated on development instills quality and trust in relationships. Cost is an issue that is mostly assessed in these conferences to compare the revenue obtained versus expenditure. In addition, the critical objective of the client partnerships agreement is to decrease costs and maximize returns for the revitalization of a past circumstance (Gonzalez, Llopis & Gasco 2013, pg.246). Creating the prospects known to the partner, guarantees that all the matters to be tackled are handled to evade recognizing business failure when it’s late (Lacity, Khan & Willcocks 2009, pg.138). Therefore, this causes the disorientation of the work of the supplier that could cause a variety of issues for the organization. In addition, keeping efficient communication process for instance performing monthly or semi-monthly report, midyear evaluation and pre-judging the performances by the end of that financial year or quarter annum, promotes realistic work that is imitated in performance results. In case of Conglomerate firms, it is critical to be equipped concerning cultural and traditional disparity. Cultural consideration is critical for the client to facilitate business operations without violation of cultural beliefs and practices. In regard, both partners are mandated to recognize the cultural perception of each other to realize business relationship’s growth and development. Knowledge and familiarity of culture in reverence to the norms and beliefs promotes excellence relationship management. Moreover, business advance differs in the ability to recognize them, jointly with a variety of aspects of the current culture instigate trust from the community and the partner. Another major aspect that poses a great challenge in outsourcing is the association kept with the workforce, depending on how they communicate and relate to them. A chance to maintain the excellent relationship is by learning the host’s language particularly the essentials for instance greetings and which is crucial to human nature (Willcocks, Kern & Van Heck 2002, pg.51). The client is also required to be involved in the community by undertaking community social responsibilities through executing projects that improve the lives of residence within the offshore. Through these initiatives, the cultural gap is reduced slowly with more reputation development. These activities promote relationship management with the partner and the surrounding community. It is also a strategic guideline that the client adopts to reach out and diversify to other business deals in the competitive outsourcing targets like India. Nevertheless, additional threats towards the business venture engross political instability that fuels negativity from the business environment and the community (Oshri, Kotlarsky & Willcocks 2011, pg.157). Political instability hinders the operation of Multinationals through increased service costs, reducing business profitability. In expectations, this trend has a great impact on changing the prospect of outsourcing with states inciting and stirring other states based on improvement of technologies in diverse forms of operation for instance weapons and wars, hence materialization of wars which in turn undermines the economies of states (Ågerfalk et. al.2008, pg.9). Once the management association is resolutely improved the other factors conditionally resolved without a glitch. It is because both partners achieve from a healthy corporate relationship. Main areas that are improved are in connection with the cost that is a significant reason for business outsourcing. Market growth and expansion occurs within the current environmental management relationship that allows for quality results. Moreover, as a result of the growth, new skills and ideas within the partner’s backyard improve, accumulating more worth to the business and the partners (Rottman, & Lacity 2008, pg.271). The competitive edge that is realized by the client firms depends on the status of its performance and management relationship with its partner or supplier. Thus, more enterprise diversifications with suggestions from other firms those are willing to rise. The universal trends in the contemporary period are driven towards uniting environmental friendly plans. From 2008, anxiety towards the business environment is accumulating more weight to the insight of business endeavors. The operations practices and methods within the partner’s nation may change from the client’s if issues like corporate Information Technology are a distress. The significance of this is the assertion of low energy costs thus lower maintenance costs (Wüllenweber et. al. 2008, pg.221). Risks in business outsourcing are anticipated in reference to period and technological improvements, which may obtain all sorts of states enmity for instance wiki leaks. It probes conflicts and growth and the rise of dangerous technologies upsetting the associations between states, thus instability in affiliations management between offshore partners and the clients. Natural disasters for instance drought and flood occur unpredictably with uncertain damages, causing failure of technological devices and services for example cables breakage, destruction of business premises leading to general business restart, thus strategy failure (Willcocks & Lacity 2009, pg.2). In conclusion, joint management associations between a client and the partner, is a critical determinant of the success of the venture outsourcing. Development of management relationships between the offshore partners and the host is critical in achievement strategy for GlobShop. It is because the proposal was dealt with first from a collective perception. Many studies affirm that relationship management and business outsourcing promotes business success and achievements. A comprehensive business outsourcing is subjective to reliable and credible communication for comprehension, which ought to be upheld throughout the enterprise venture (Sun et.. al. 2008, pg.253) In future prospect, to keep outsourcing ventures, risks such as a political instability amid countries should be analyzed because management relationships between states influence the business relationships (Heeks, Nicholsen & Sahay 2001, pg.248). Nevertheless, in outsourcing many factors are unavoidable to promote the expansion and development. In the process of outsourcing, administration encounters other advantageous features causing growth (Grossman & Helpman 2005, pg.153). Offshore sourcing subsidiaries have a workforce that is exceedingly competitive in innovations for the rationale of snitching a competent location in these foreign businesses because the chosen outsource firm may need more employees depending taskforce.  References ÅGERFALK, P. J., FITZGERALD, B., OLSSON, H. 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