Procurement Strategies Outsourcing Review, Essay Example

The characteristics of the global sourcing approaches as they have been applied during the past twenty years will be reviewed .The perspectives of strategic alliances, outsourcing and competitive advantage will be explored from the perspectives of Gibbs (2009) and Hitt et al. (2008) for the outsourcing activities of the Wonderful Widgets organization.

The global economy of the past twenty years has been categorized by the constant economic growth and forecasted economic conditions. In the extremely competitive environment of Wonderful Widgets, many of the competitors have begun to manufacture their products in locations which have a lower expense. In addition, many of the competitors have begun to outsource the manufacture of the parts or finished goods on an original manufacturer basis. Wonderful Widgets could incrementally apply outsourcing with a strategic ally in order to acquire access to the capabilitiesofoverseas suppliers (Gibbs, 2009; Hitt et al., 2008).

The global sourcing perspective addresses the administration of logistics by classifying which of the manufacturing units will provide service to which of the market segments. Global sourcing also addresses the manner by which the parts will be supplied for production and the associations between strategic allies, manufacturing, marketing in addition to the fields of research and development. The primary goal of the Wonderful Widgets organization is to optimize the supplier’s benefits and its proprietary competitive advantage (Gibbs, 2009; Hitt et al., 2008).

Wonderful Widgets may apply strategic alliances and outsourcing in order to optimize the locational benefits of diverse overseas locations in order to gain a competitive advantage.  In the absence of outsourcing designs, service and distribution networks, it would be quitedifficult for Wonderful Widgets to optimize on the potential markets and the new technologies which are developing. Consequently, the enhanced pace of the introduction of competing products and the decrease of innovational lead time have called for a more proactive administration of the corporate and institutional resources of Wonderful Widgets. The Wonderful Widgets can be perceived as a functioning and operating product (Gibbs, 2009; Hitt et al., 2008).

This quality is in alignment with the low supply risk and decreased profit influence scenario. The Wonderful Widgets organization is not concerned with decreased clock speed or value placed on the components. These characteristics cause the Wonderful Widgets organization to receive the best service in applying a minimal expense loading and outsourcing approach(Gibbs, 2009; Hitt et al., 2008)  .

The challenge in this scenario is finding a suitable a strategic ally to which Wonderful Widgets could outsource some of its business functions. This may be accomplished by finding a suitable strategic ally which could enhance the capabilities of Wonderful Widgets. Strategic alliances are not the same as joint ventures (Gibbs, 2009; Hitt et al., 2008). If the concluding point of entering a partnership could be perceived as vertical integration, the step which precedes the vertical integration could be viewed as a joint venture (Gibbs, 2009; Hitt et al., 2008).

In a joint venture another organization is established. This organization may receive its personnel partially or completely form the employees of the organizations which are sponsoring the joint venture activities. Strategic alliances are delineated by their strategic importance. A strategic alliance doesnot always imply the formation of a new entity (Gibbs, 2009; Hitt et al., 2008).

Conclusion

Outsourcing is the optimal option for Wonderful Widgets. In the application of outsourcing and strategic alliances, wonderful widgets could optimize the capacities of the strategic alliance and the outsourcing supplier. Strategic alliances can influence procurement strategy by minimizing costs and maximizing profits. In this manner, the competitive benefits of the strategic ally and the Wonderful Widgets organization could be applied to the maximum potential.

References

Gibbs, R. (2009). Strategic alliances and marketing partnerships; Gaining a competitive advantage through collaboration and partnering. London: Kogan Page Ltd.

Hitt, M. Ireland, R. D. & Hoskisson, R. (2008). Strategic management competitiveness and  globalization concept. Mason, OH: South Western Cengage Learning.