What is outsourcing?
- When would it make sense based on quantitative factors only for companies like Toyota and Boeing to outsource?
- What are 3 qualitative factors that companies like Toyota and Boeing should consider before outsourcing?
Outsourcing is when one company hires anther company to perform some of its functions on a contract basis.The main motive is to save costs and increase profits.For eg. A call centre.
It would not make sense for companies like Toyota and Boeing to outsource based only on quantitative factors
such as costs.
Qualitaive factors they should consider before outsourcing:
1) Employee Morale : outsourcing leads to lay offs , which may have an adverse effect on the remaining employees
who may fear that they may be the next to be laid off.
2)Quality :The quality of the goods or services supplied by the external company should be good , other
wise the reputation of these companies is at stake.
3) Stability of the external company: The company should be financially stable , because if it shuts down,
it will interrupt the activities of the outsoucing company ( ie Boeing and Toyota)
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