During the last years international companies dealt with the question of optimal division of labour in cooperation with suppliers; especially in the automotive and supply industry. This question and its solutions decide of the competitive position of many companies in several industrial sectors. Major points in regard to division of labour are the areas of manufacturing-, quality-, logistics- and development functions. Such procedures create qualitative relationships between the parties involved. Another question concentrates on the maintenance or the change of company internal services e. g. cleaning, car pool, human resources, canteen and accounting. Although the core services of the companies remain the same, in these areas total cost reductions as well as flexible processes can be achieved. The process of optimal division of labour to be achieved by giving away internal functions to an external service provider, in economic literature is called outsourcing.
Generally, corporations use outsourcing to target on cost-, flexibility-, time- and quality aspects.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- The problem
- Goal
- Structure of the analysis
- New institutional economics
- The transaction cost theory
- Definition of transactions
- Types of transaction costs
- Measurement of transaction costs
- The property rights theory
- The principal agent theory
- Critical comments
- Outsourcing
- Definition of outsourcing
- Types of outsourcing
- Outsourcing contracts
- International aspects of outsourcing
- Chances and risks of outsourcing
- Chances
- Risks
- Critical comments
- Outsourcing of a warehouse at the company Fichtel & Sachs AG
- The organisation
- Definition of outsourced warehouse
- Cause and goal of the outsourcing process
- Realisation of the process
- Critics and results
- Similarities and differences in theory and practise
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper examines the decision of whether to “make or buy” in the context of international companies, specifically focusing on the potential of outsourcing to reduce business process costs. The analysis delves into theoretical frameworks like transaction cost theory, property rights theory, and the principal agent theory, providing a comprehensive overview of the economic considerations surrounding outsourcing.
- The theoretical underpinnings of outsourcing, drawing on established economic theories
- The advantages and disadvantages of outsourcing, with a focus on cost reduction and efficiency gains
- The practical implementation of outsourcing, exploring the challenges and opportunities involved in the process
- The international dimension of outsourcing, considering the implications of global sourcing strategies
- A case study of a real-world outsourcing project, providing insights into the practical application of outsourcing principles
Zusammenfassung der Kapitel (Chapter Summaries)
The paper begins with an introduction to the topic of "make or buy" decisions, specifically focusing on the use of outsourcing as a strategy for cost reduction in international companies. The first chapter defines the problem, outlines the paper's objectives, and presents the structure of the analysis. Chapter two then introduces and explores the key concepts of new institutional economics, including the transaction cost theory, the property rights theory, and the principal agent theory, providing a theoretical framework for understanding outsourcing. Chapter three delves into the concept of outsourcing itself, defining it, outlining its various types, and exploring the contractual aspects involved. The chapter also discusses the international dimensions of outsourcing, highlighting its potential benefits and risks.
Schlüsselwörter (Keywords)
This paper focuses on the critical concepts of outsourcing, transaction cost theory, property rights theory, principal agent theory, international business, cost reduction, and strategic decision-making.
- Quote paper
- Alexander Merl (Author), Manfred Husa (Author), 2006, Make or Buy decision: Outsourcing - A successful method to reduce costs in business processes of international companies?, Munich, GRIN Verlag, https://www.grin.com/document/59666
