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What Would Be The Relative Advantages And Disadvantages Of Each When Considering The People For A Multimedia Project'
What would be the relative advantages and disadvantages of each when considering the people for a multimedia project'Insourcing gives a company a high degree of control over its operations, which is particularly desirable if the company owns proprietary designs or processes. Insourcing can also lower manufacturing costs, but only if a company enjoys the business volume necessary to achieve economies of scale.
On the downside, insourcing can be risky because it decreases a firm's strategic flexibility. The semiconductor industry is a good example of the risks of insourcing.
Outsourcing typically increases a firm's flexibility and access to state-of-the-art products and processes. As markets or technologies change, many firms find changing supply chain partners easier than changing internal processes. In addition to increasing a firm's strategic flexibility and access to new technologies, outsourcing improves its cash flow. With outsourcing, less investment is required up front in the resources needed to provide a product or service. The benefits can be significant.
Of course, outsourcing has its risks. Suppliers may misstate their capabilities: their process technology may be obsolete, or their performance may not meet the buyer’s expectations. Control is also an issue in outsourcing. Buying firms may need to create costly safeguards to regulate the quality, availability, confidentiality, or performance of outsourced goods or services. At the extreme, they may lose key skills and technologies that are part of their core competencies. To counteract such threats, many companies oversee key design, operations, and supply chain activities and keep current on what customers want and how their products or services meet those demands.
To summaries the advantages of insourcing are a high degree of control, the ability to oversee the entire process and the economies of scale and/or scope. The disadvantages are reduced strategic flexibility; it requires high investment and potential suppliers may offer superior products and services.
The advantages of outsourcing are a high strategic flexibility, a low investment risk, improved cad flow and access to state of the art products and services. The disadvantages are possibility of choosing a bad supplier, the loss of control over the process and core technologies.
As the lists above suggests, insourcing will generally be more favourable in situations where environmental uncertainty is low (thereby reducing the risk of investing in capacity), supplier markets are not well developed, and the product or service being considered is not directly related the buying firm’s core competencies. In contrast, outsourcing becomes more attractive as competition in supplier markets increases, the product or service is not seen as strategically critical, and environmental uncertainty makes internal investment a risky prospect. Given this, it makes sense that a lot of high tech companies, facing short product life cycles and uncertain market conditions, outsource more often than firms in more stable industries.
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