Analyse the factors that influence your decision to outsource or to remain in-house using the 5 Performance objectives. Evaluate the risks involved in the process of decision making and recommend mitigating strategies to the risks.
In any business outsourcing is the basic idea which deals with the expansion of the company along with the expertise in products. This might need the support of other companies or enterprise which can help in the production of the product. This is at times termed to be business process outsourcing. Starbucks is one such company that uses this idea to expand their business worldwide along with the integration of the production process (Caunhye et al. 2012). This American coffee company has the idea of using outsourcing to bring the best product to satisfy their valued customers perfectly.
The major products of the company include coffee products such as the products that are exclusively available in the Starbucks stores. The online site or the store gives the perfect idea of the portion packs, whole bean, instant coffee and refreshers. However, along with this the company also has varied flavours of teas, drink ware, equipments and different types of gifts. These gifts could be offered or presented on various occasions.
The basic idea for the outsourcing of the products of Starbucks includes the different ways of telemarketing methods. This helps in the unconditional methods that the company uses in case of the strategic marketing and the importance of the supply chain management (Akkerman et al. 2010). In order to deal with the expanding position of the company along with the competition the company decided to outsource products from round the world. This improved the condition of more than 16,700 retail stores globally along with the complexity of the supply chain management. The operations include service in more than 51 countries round the world. The company started changing its strategies from 2008 as the executive vice president of the company Mr. Gibbons tried to analyze two things. This included the analysis of the supply chain in the stores and the cost that the company needs to incur in the entire process.
The complex interpretation of the supply chain was changed by Mr. Gibbons with the easier implementation of planning, sourcing, making and delivering. Estimation states the fact that the organization spends nearly US $00 million in coffee globally. There is extra cost for the diary products, store furniture and baked goods that the company needs to buy from external sources. This makes the company more comprehensive with the right amount of service (Chang et al. 2012).
The in-house products of the Starbucks include the products that they make out of the outsourcing products that they receive internationally. This includes the coffee that comes from various places round the world. Apart from this the organization makes use of the diary products that they outsource to enhance the taste as per the requirement of the customers.
The major objectives of the company include the following:-
Speed- This has been one of the key aspect that has been taken up by the company over the years. The service is made prompt along with the necessary speed to avoid the customers who are waiting in the long queue. This makes prospective customers satisfied with the effective service that they receive in the stores round the world. This is also enhances with the maintenance of an inventory and the space in the stores. Apart from this communication in the stores play a pivotal role within the staffs of the company (Chopra and Sodhi, 2012). Other than this the company has the power and the efficiency of implementing the speed of changing any of the strategy based on the present condition and economy.
Quality – Quality of the company is the most important aspect this is the attribute that helps in the company to offer their best service. This is the aspect that helps in the retention of the customers and to receive the right amount of competitive advantage (Dekker et al. 2012). Along with this the organization has the idea of trying to get the feedback from the customers through different surveys and the ideas that they receive through online media. The maintenance of the quality is through different approach like that of implementation of the resources. The perception of the customers is enhanced with the idea of the service and the quality that is maintained by the company. There is time to time analysis that helped the company with the present brand position that they have (Esper et al. 2010).
Dependability- The dependability of the company may be through the analysis of the products that is sold mostly. Apart from this the analysis might also include the fact that there has to be certain aspects like the measure of the annual report. This makes the company decide the strategy to better their service. They make note of the products that are mostly important or preferred by the customers. This is the dependability factor that makes the company understand and find the necessary loopholes (Feeny et al. 2012). The warranty claims of a particular product are one of the major aspects that enhance the idea of dependability of the company.
Flexibility- The process of the supply chain along with the implementation of the strategic methods of the company is one of the major aspects that the organization has retained over the years. The system of supply chain is made simple and flexible with the proper understanding with the internal stakeholders. Apart from this the internal stakeholders play a dominant role in the same case. The process of placing the order and the service is made effective with right communication. This also makes the system flexible (Flynn et al. 2010). The R and D department of the company takes the special initiative to analyze the market and the economy. This also helps in fostering the flexibility of the company.
Cost- Cost is the most important aspect that any company needs to have in their products in order to retain their valuable customers. In case of Starbucks the most important aspect remains that in order to gain the competition in the market cost needs to be best. Best price ensures the fact that there has to be options or menus that is best in quality along with the best offering in price. Apart from this the major element of Starbucks remains to procure the raw materials and the basic products in most competitive price (Gunasekaran and Spalanzani, 2012). This makes the fact clear that the supplier cost must be reduced. Another aspect is to implement the technology that is both prompt and effective. The better monitoring along with the implementation of best cost in the suppliers account helps in dealing with the price that the company can offer to their customers. The external stakeholders and the suppliers play a key role in this process.
The major risk that is involved in the implementation of the outsourcing strategy is the risk that is to be borne by the companies. In the present case Starbucks makes the basic move with the implementation of the strategy. In case of the problem that is raised by the outsourcing ideas is to know about the loophole or the challenges that the company might face. The issue of the company is to be identified by the managers or the top level officials. The benefits along with the risk in analyzed along with the stock and inventory of the company (Karlsson, 2010). Apart from this the company makes it an important aspect to know and deal with the cost and losses that is to borne by the company. Starbucks plays a vital role in the assessment of the risk with the analyzing of options. The selection and the implementation of the strategy is the most important role that is played by the assessment of the risk in the company. The monitoring process along with the time to time assessment in every level of the company is effective to know about the prospect of the company (Lacity and Hirschheim, 2012).
The major risk that is faced by the company in case of outsourcing may be the quality of product that is received from international areas. The countries or the places may be helpful in the expansion of the company but the issues may be the quality that is to be delivered by the company. However, Pettit et al. (2010) opines the logistics and the operations has to be perfect and at par with the expectation of Starbucks. The recognition of the process has to be evaluative. The products and the merging of the company along with the implementation of the effective strategy is one of the key aspect helps in the expansion of the company. The logistics and the operation of the merger company have to be at par with the efficiency of the company. This is to be tailored by the company and the risk relating to the product, quality of the product and the service of the suppliers has to be perfect. This entails the fact that the company needs to be take case of three levels of risk management in outsourcing clearly (Prawitt et al. 2012). This include
Onsite – This is the most aspect which tops the level and includes internal staffs, contractors and the consultants. The integration and the communication in these people help to discover the risk and the management of the outsourcing process effectively. This is the vision, strategy, management and the SME of the company (Sheu, 2010).
Nearshore –This is the second level which includes the implementation of low cost along with the skill that could be incorporated. Close proximity is essential along with the understanding of the culture that the company is a part of. This cultural difference is found from one country to another and based on this differences that company needs to implement their service. This is the tactical aspect which requires development, support and design of the risk management (Rushton, 2010).
Offshore – This is the operational level that includes the large resource pools, specialized skills and the limitation of the access with the distance of the outsourcing of the products. This also includes design, development and support. The rising cost of the labour is analyzed along with the analysis of the cultural limitations and differences. This is the base level stage and so every base level employee is also responsible for their duty and responsibility in the present stage.
The major recommendations that can be formed in the present case includes:-
To analyze the risk – There are many countries that might have the problem of sending the items or the raw materials owing to the problem of logistics. This happens in many of the countries that are not developed to export large quantities of products. This is to be ensured by Starbucks that they must carry their trade relation with companies or countries that are prompt in the particular raw material. This helps in the implementation of the process of an analysis along with the best quote that is beneficial for the company. This requires a survey in the market before finally coming to the conclusion. Starbucks have faced the issue of outsourcing prior to 2008.
To analyze the financial condition of the company- The Company can only take the decision owing to their present condition and the persisting economy. Starbucks is one of the companies that make use of different surveys and the intervention of the some of the top most level managers in the world. This would help the company to know about the economy and invest accordingly. The condition of the inventory is another important part in the checklist. The return of the company along with the investment and the calculation of the ratio are important in dealing with the company effectively (Rushton, 2010). This is one of the major areas that are looked by the high level officials of the company.
Starbucks has been one of the one of the prominent American companies in the world that implements different strategies correctly and cohesively. This is to ensure that the company can serve the best taste according to the want of the customers. With differencing wants the company implements the idea of outsourcing so that customers are satisfied with the variety in service and products. The company analyses the risks and incorporates the right strategy with respect to the outsourcing.
Reference list
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Caunhye, A. M., Nie, X., and Pokharel, S. (2012). Optimization models in emergency logistics: A literature review. Socio-Economic Planning Sciences,46(1), 4-13.
Chang, S. I., Yen, D. C., Ng, C. S. P., and Chang, W. T. (2012). An analysis of IT/IS outsourcing provider selection for small-and medium-sized enterprises in Taiwan. Information & Management, 49(5), 199-209.
Chopra, S., and Sodhi, M. S. (2012). Managing risk to avoid supply-chain breakdown. MIT Sloan Management Review (Fall 2004).
Dekker, R., Bloemhof, J., and Mallidis, I. (2012). Operations Research for green logistics–An overview of aspects, issues, contributions and challenges.European Journal of Operational Research, 219(3), 671-679.
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Karlsson, C. (Ed.). (2010). Researching operations management. Routledge.
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