Outsourcing: A Strategic Advantage

Assignment 1: Discussion—Outsourcing: A Strategic Advantage?

Outsourcing may provide tremendous advantages for firms. It may allow companies to specialize, reduce costs, and focus narrowly on the core competencies they deem strategic; however, companies also have to think about what they may lose both qualitatively and quantitatively. For example, when outsourcing, managers need to be certain that what they source from outside is not a key component of their value proposition.

A way to reduce those risks is to use an approach called vertical integration. The meaning of vertical integration is developing the ability to produce goods or services previously purchased or to actually buy a supplier or a distributor. It can take two forms: backward and forward. These forms relate to how the corporation moves in its supply chain to pursue the vertical integration. If the movement is towards the suppliers, it is called backward integration. Conversely, it is known as forward integration.

Using the module readings,  University online library resources, and the Internet, research outsourcing. Based on your research, respond to the following:

• What are the risks and benefits of the outsourcing approach?
• What are the strategic advantages of outsourcing to vertically integrated firms?

Whenever possible, provide, examples of Fortune 500 companies to illustrate your points. Write your initial response in 2 pages. Apply APA standards to citation of sources.

Assignment 2: Outsourcing Federal Healthcare

Early in their existence, many businesses handle their activities internally. As businesses mature and grow, they often find competitive advantage in the specialization provided by outside firms. This trend is particularly frequent in industries such as information technology (IT) and healthcare.

The U.S. federal government delivers healthcare through its two main insurance programs: Medicare and Medicaid. In these programs, private healthcare providers are reimbursed by government insurers for health services delivered to insured citizens.

• Visit the Web sites of Medicare and Medicaid programs for more information about them.
• Review the article, “Outsourcing: Assessing the Risks and Benefits for Organizations, Sectors, and Nations” by Harland, Knight, Lamming, and Walker (2005). The conceptual framework in this article shows how corporate strategy is influenced by regulation under the decision node of policy issues (p. 844).

Based on your analysis of the article and the Web sites, address the following:   

• Identify the main stakeholders in the US federal healthcare system. In your view, what are their respective goals, wants, and needs with regard to public health?
• Analyze the current status faced by the federal government in terms of the strategy being used in its healthcare system.
• Identify strengths and weaknesses of the strategy as well as opportunities and threats (SWOT analysis) present in the external environment.
• Propose a new policy to be implemented for optimizing the use of outsourcing in healthcare services to private hospitals and healthcare practices in order to provide medical services to the bulk of the US population. This policy should include the following objectives:
• Lowering costs of the program to reduce federal spending
• Providing highest quality treatment for the insured
• Providing consumer-oriented choice
• Lowering treatment costs for consumers
• Based on your proposal of a new policy, describe the benefits for at least one stakeholder group you identified in the first question. Discuss how your outsourcing strategy objectives satisfy the wants and needs of the specific stakeholder(s).
• Explain the likely outcomes of the outsourcing policy you recommended. Which stakeholder group benefits the most and which benefits the least? What are the strategic tradeoffs implied by your outsourcing recommendation?

Write a 3 page paper in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M2_A2.doc.

Harland, C., Knight, L., Lamming, R., & Walker, H. (2005). Outsourcing: Assessing the risks and benefits for organizations, sectors, and nations. International Journal of Operations & Production Management , 25 (9/10), 831–850. (ProQuest Document ID: 232337858) 

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