Thesis: Outsourcing the Value Chain Activities

Sample Thesis Paper

Outsourcing is considered as one of the widely used strategies in today’s world and organizations employ this strategy to attain competitive advantage. All the functions of value chain management are of utmost importance that is why organizations prefer to perform all the functions by themselves. But they want to stick to the basics of their business that is why intelligent organizations perform certain functions and outsource the rest. Vertical integration describes the extent to which an organization performs upstream and downstream activities. If a value chain is analyzed properly then it can facilitate the organization in outsourcing decisions. A proper situational analysis can easily determine what the strengths and the weaknesses are of an organization. This identification can be made both in terms of differentiation and in terms of cost leadership. In order to outsource the activities an organization must identify certain aspects (Baldwin, Clark, Magretta, & Dyer 2000). These aspects are discussed below:

  1. The activity of the value chain can be outsourced if the activity is performed at cheaper rates.
  2. The activity is one of the firm main competencies and through this activity the organization experience cost advantage or product differentiation.
  3. The nature of the activity is complex and it is totally based on technology that is why it’s better to outsource it because a certain level of risk involves in developing this activity in-house.
  4. The outsourcing of different activities can lead to improvements of certain business processes and it can bring certain improvements in the business which includes reduced lead time, higher flexibility etc.

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