Commercial Operations: Outsourcing: Growth Of Outsourcing (Copy)
Cheat Sheet: 2.2.1 Growth of Outsourcing
| Concept | Meaning | Example |
|---|---|---|
| Outsourcing | When a business contracts another company to perform tasks, handle operations, or provide services instead of doing them in-house | A clothing retailer outsourcing stitching to Bangladesh |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
| Type of Outsourcing | Features | Examples |
|---|---|---|
| Contract Manufacturing | Hiring external manufacturers to produce goods on behalf of the business | Apple outsourcing iPhone assembly to Foxconn |
| Logistics Outsourcing | Using specialist firms to handle distribution, warehousing, and delivery | Amazon outsourcing delivery to courier companies like FedEx/DHL |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
| Reasons for Growth of Outsourcing | Explanation | Example |
|---|---|---|
| Cost Savings | Reduces expenses on labour, equipment, infrastructure | Retailer outsourcing packaging to low-cost suppliers |
| Expertise Access | Specialists provide higher-quality services | IT company outsourcing cybersecurity |
| Focus on Core Activities | Business concentrates on main strengths (marketing, innovation) | Clothing brand focusing on design while outsourcing stitching |
| Scalability | Easier to meet seasonal or sudden demand | Logistics firm managing Black Friday sales deliveries |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
| Positive Impacts | Negative Impacts |
|---|---|
| Lower costs, higher efficiency | Less control over quality |
| Faster access to global markets | Risk of supplier delays |
| Greater flexibility in operations | Possible job losses in home country |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course
| Summary | Key Idea |
|---|---|
| Growth of Outsourcing driven by globalisation, lower costs, and specialist expertise. | |
| Two major forms: Contract Manufacturing and Logistics. | |
| Helps businesses expand, but reduces control and may impact local jobs. |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Commerce Full Scale Course