9609 · 4.3.2
Outsourcing flashcards
Revision flashcards for Cambridge 9609 Outsourcing (syllabus 4.3.2). Flip, recall, then mark a real past-paper question.
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Outsourcing?
Using external suppliers to perform business functions previously done in-house.
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Offshoring?
Outsourcing to firms in another country — often lower wages.
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Core competency?
Activity where firm has distinctive advantage — keep in-house.
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Common outsourced functions?
IT support, payroll, cleaning, call centres, component manufacture.
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Benefits?
Lower cost, access to expertise, flexibility, focus on core.
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Risks?
Quality failures, data security, job losses, supplier failure.
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Stakeholder view?
Shareholders may favour cost cuts; employees/unions oppose job losses (1.5).
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Outsource production risk?
Losing manufacturing may lose process knowledge and innovation.
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What is outsourcing?
The business practice of contracting out a business process or function to a third-party specialist provider, rather than performing it in-house.
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What is a 'core competency'?
A unique ability or activity that a business performs particularly well, which is central to its competitive advantage and value creation.
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What is a Service Level Agreement (SLA)?
A key part of an outsourcing contract that formally defines the level of service to be provided, including metrics for quality, availability, and responsibilities.
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Identify one key benefit and one key risk of outsourcing IT support.
Benefit: Access to specialist IT expertise and 24/7 support without high fixed salary costs. Risk: Potential for sensitive company data to be breached by the third-party provider.
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What is 'offshoring'?
A specific type of outsourcing where the business function is moved to a company in a different country, often to take advantage of lower labour costs.