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Essay / Research Paper Abstract
This 8 page paper looks at the influences that are present in the way a firm will determine whether or not to undertake outsourcing. The paper also considers the use of an outsourcing matrix to aid with the decisions making. The bibliography cites 10 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEoutcontract.rtf
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Unformatted sample text from the term paper:
as well as disadvantages that may be realised. When a firm makes the decision regarding whether or not to outsource or produce or provide a good or service in house
there are a number of potential considerations concerning the potential costs and benefits that may be encountered in order for a firm not only to optimise their resources with issues
such as cost control and minimising exposure to risk, but also in consideration of strategic needs, such as security of supply and quality control. When making this decision the firm
needs to balance different needs to assess the optimal decision. This may also require reviews at regular intervals to ensure the decision remains correct. Looking at a theoretical approach to
outsourcing there is value to be gained by looking to Coase, an old study, but a good place to start. Coase proposed a fundamentally view of the firm that was
fundamentally different from the traditional views of the day, arguing that according to neoclassical price theory there was no reason for the firm to exist. However, as firms do exist
Coase theorized that there would have to be a "cost to using the price mechanism" (Coase, 1937; 390). Within the market exchange is some inherent costs, for example the cost
of negotiating and enforcing contracts and of research to discover prices etc (Coarse, 1937). Inside the firm these can be seen as transaction costs, and entrepreneur may be able to
reduce these costs by managing the activities (Coase, 1937). The internal organization creates other types of transaction costs for a firm, such as incentives, monitoring, information flow and performance evaluation
(Coase, 1937). Therefore, the determination of the firms boundary is made by looking at the trade-off and the margin between the relative transaction costs impacting on the external and internal
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