Outsourcing in the era of globalisation
Maria Stepien Bath 13/03/19
Entrepreneurs Society, University of Bath
Globalisation was initiated after the World War II when the countries stressed the importance of interdependent cooperation and trade liberalisation. Despite the growing tensions in Eastern European countries and the emergence of the Cold War, there’s no doubt that after 1945 world started realising that the ways through which countries can gain a competitive advantage include variable entry modes to other countries, such as exporting, licensing, franchising and turnkey contracting. It can be argued that all of these contributed to the popularity of outsourcing.
What is outsourcing?
Accordingly to Morschett et al. (2015), ‘outsourcing’ is an activity realised internally in the company and transferred to the external firm at a strategically convenient time, for instance to get the access to locally scarce resources. There are certain advantages and disadvantages to this practice:
However, there are also significant drawbacks that need to be taken under consideration before involving the firm in the outsourcing practices.
Outsourcing can be placed in the so-called “strategic relevance/ competence-matrix”, developed by Krüger and Homp (1997), meaning it is supposed to support company’s strategy and organisation. It is therefore crucial that the right partner is chosen in order to face the challenges of globalisation.