Business – 4.3 Capacity utilisation and outsourcing – Outsourcing | e-Consult
4.3 Capacity utilisation and outsourcing – Outsourcing (1 questions)
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Strategic dimension
- Outsourcing can free resources for innovation, allowing the firm to develop new products faster than rivals.
- Reliance on external suppliers may limit flexibility, making it harder to respond to market changes.
Operational dimension
- Cost efficiencies from lower production expenses can enable lower pricing or higher margins.
- Potential loss of proprietary knowledge and reduced quality control can erode operational excellence.
Ethical dimension
- Adopting ethical suppliers can enhance brand reputation and attract socially‑conscious customers.
- Association with suppliers that breach labour or environmental standards can damage the firm’s image and lead to consumer backlash.
Overall, while outsourcing can provide short‑term cost and focus benefits, its long‑term impact on competitive advantage depends on how well the business manages strategic alignment, maintains operational standards, and safeguards its ethical reputation.