IDEAS home Printed from https://ideas.repec.org/a/ora/journl/v1y2011i1p276-287.html
   My bibliography  Save this article

Outsourcing Strategies. How To Formalize And Negotiate The Outsourcing Contract

Author

Listed:
  • Pellicelli Michela

    () (University of Pavia, Economics)

  • Meo Colombo Carlotta

    () (University of Pavia, Economics)

Abstract

In the globalized economy multinational firms have given rise to local firms able to produce at a low cost and at acceptable quality levels. A growing number of firms have outsourced production and manufacturing activities of all types to these firms, not only to reduce production costs but also to make their organizational structures more streamlined and flexible. Outsourcing decisions, which originally were limited to production which had a modest technological content and was of marginal importance for the business in question, is increasingly adopted for activities which, requiring core competencies or belonging to the core business, were considered inseparable from the organization and thus not outsourceable. Gradually an outsourcing strategy has developed which has found it convenient to outsource even core competencies and functions, such as specialized manufacturing, which require a particular technology, marketing, product design, and the search for know-how (Prahalad and Hamel 1990: 79-91).\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\r\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nSuch an outsourcing strategy has a number of advantages, among which quality improvement, a greater focus on managing other core competencies, a greater flexibility and leverage regarding resources, along with the possibility of entering new markets, even ones with a high rate of development.\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\r\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\nThis article analyzes the fundamental stages for an outsourcing strategy. It will demonstrate how, in order to achieve an outsourcing strategy, it is necessary to include outsourcing in the general strategy, gather suitable information for choosing the outsourcer, negotiate the contract with the supplier, choose the type of relationship to have with the supplier, and, finally, plan the transfer of activities and functions from the outsourcee to one or more outsourcers or providers.\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\r\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\n

Suggested Citation

  • Pellicelli Michela & Meo Colombo Carlotta, 2011. "Outsourcing Strategies. How To Formalize And Negotiate The Outsourcing Contract," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 276-287, July.
  • Handle: RePEc:ora:journl:v:1:y:2011:i:1:p:276-287
    as

    Download full text from publisher

    File URL: http://anale.steconomiceuoradea.ro/volume/2011/n1/016.pdf
    Download Restriction: no

    More about this item

    Keywords

    outsourcing; outourcing decision; strategic perspective; outsourcing contract; contract negotiation; outside information; organizational culture;

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M19 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Other
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ora:journl:v:1:y:2011:i:1:p:276-287. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catalin ZMOLE) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/feoraro.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.