The outsourcing dilemma: a composite approach to the make or buy decision

The outsourcing dilemma: a composite approach to the make or buy decision The decision to outsource a part of an organisation's activities is often the result of an initiative to realise potential production cost efficiencies. In order to avoid the use of such narrow decision criteria this paper considers the use of a wider array of inputs. Following a review of the literature, a composite outsourcing decision framework is presented. This framework consists of three main components. The first seeks to utilise the unique contextual factors associated with each decision; the second considers the strategic implications of deciding to outsource and the third investigates the traditional cost aspects. The framework is then applied to a case study concerning an engineering organisation which had to decide whether to outsource part of its production facilities. The outcomes suggest that the framework was a useful instrument in assisting management in making this decision, although further work in this area is required. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Decision Emerald Publishing

The outsourcing dilemma: a composite approach to the make or buy decision

Management Decision, Volume 38 (1): 8 – Feb 1, 2000

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Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
0025-1747
DOI
10.1108/EUM0000000005315
Publisher site
See Article on Publisher Site

Abstract

The decision to outsource a part of an organisation's activities is often the result of an initiative to realise potential production cost efficiencies. In order to avoid the use of such narrow decision criteria this paper considers the use of a wider array of inputs. Following a review of the literature, a composite outsourcing decision framework is presented. This framework consists of three main components. The first seeks to utilise the unique contextual factors associated with each decision; the second considers the strategic implications of deciding to outsource and the third investigates the traditional cost aspects. The framework is then applied to a case study concerning an engineering organisation which had to decide whether to outsource part of its production facilities. The outcomes suggest that the framework was a useful instrument in assisting management in making this decision, although further work in this area is required.

Journal

Management DecisionEmerald Publishing

Published: Feb 1, 2000

Keywords: Strategy; Transactional costs; Organizational structure

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