The article “Managing Value Chain Strategy” seeks to
reassess the meaning of sustainability for companies within adverse economic
conditions like those being faced since the onset of the American financial
crisis in 2008. The article redefines sustainability by analyzing how the
various aspects of business and the environment coexist and depend upon one
another to create value. The authors of the article state that creating value
is in fact the key to sustainability, and that the degree to which the
components of the Value Chain Model interact effectively and efficiently
determines how sustainable companies will be during turbulent economic
environments. The article focuses on how outsourcing business practices
contribute to sustainability. Sustainability can be drastically affected by whether
or not businesses can successfully outsource aspects of their business. The
article also discusses how the value process is a two-way process between both
consumers and the businesses, and that both parties offer differing types of
value.
This article is valuable because it
presents a framework for businesses to follow when attempting to determine how
to best remain sustainable when economic conditions suffer. Businesses are
still attempting to rebound from the economic downturn. Therefore, this article
is very relevant to the current situations that businesses both large and small
are currently facing. The Value Chain Model allows these businesses to change
their management strategies to increase their abilities to create value by
successfully outsourcing various aspects of their business.
This particular article is based on
model building research. The Value Chain Model is the structural model used by
the authors to assess a company’s sustainability based on the level of value
that they are able to produce. The Value Chain Model assesses the interaction
between Infrastructure, Human Resources, Technology, and Procurement, and how a
business can outsource these various aspects of their business practices to
varying degrees to help maintain efficiency. The Value Chain Model demonstrates
that when a business is able to determine the optimum level of services to
outsource and to keep in-house, that is when they will be the most sustainable,
and be able to create the most value.
The implications of this article are
that business executives or managers will now have a way to evaluate their
economic sustainability should economic conditions suffer again. Also, since
business outsourcing is becoming an increasingly common business practice,
executives can use the model whenever they feel that they need to increase
efficiency or effectiveness. Executives and managers will now have a way of
evaluating the various aspects of business and use that to determine at which
levels they should outsource to maintain the highest levels of sustainability.
I own a couple of rental homes that I manage daily. There are times when I go months with no issues and then all of a sudden it pours down on me all at once. My husband and son do most of the work for the homes but I have learned over time that is is cheaper to outsource in many occassions than to do the work inhouse ( by ourselves). Many contractors that I hire already have the material from previous jobs and therefore can supply a reasonable quote for both supplies and labor. As the article states, I do not think I would survive in such hard times that we have gone through if it was not for outsourcing and trying to be more efficient in everything we do.
ReplyDeleteIt is important to have a plan for when times get rough. Whether it be in a business or in our personal lives. I have heard of several people who rent out homes and had the same experiences as Rebeca. People need to have back up plans on how to financial sustain hardships if the time comes. This is extremely important for businesses. Many companies build a relationship with banks to make sure they are able to acquire loans if they are needing cash to operate. If a business is able to sustain economic troubles while other companies close down, it will allow them to get rid of competition much faster.
ReplyDeleteI work in the automotive industry my father is the one who ones one of the businesses that I work at. It finacialy cheaper for us to outsource some work than it is to do it in house. I know of many companies in the industry that will do the same thing at times. Some companies in the industry focuse on one area of expertiese. Where we try to cover all areas and the specialty shops can turn work faster so it is more profitable for us to outsource work.
ReplyDeleteHaving a model to give you some insight on things to do will be very helpful to businesses. Being able to outsource things to help your company can benefit you as long as you know when to outsource and when not to. I know just from experience trying to fix up a house to sell there are times when it is better to hire someone to do some things that may take you weeks to finish and it only takes them a day or two. Time is money and when it is all said and done you can save money by not taking off of work to get those things done.
ReplyDeleteMany companies are looking for more effective and efficient ways to operate and outsourcing is a method that is used to achieve this. I agree with Jennifer in that time is money and sometimes people/companies waste time and resources trying to achieve a goal that could have been obtained more cost effective through the use of outsourcing.
ReplyDeleteThis article makes me think of the glo-bus simulator. The economy has basically turned down this last year and we are all trying to figure out ways to eeek out a profit. Outsourcing was a huge decision to make on glo-bus and we did end up outsourcing some because it was economically the right thing to do. Many companies are faced with this same decision because it may be cheaper to have someone else build a part, than it would be to buy the machines, train the employees, and pay rent on the building it requires to make the part yourself instead.
ReplyDeleteI agree with you Russel about the article relating to glo-bus. My company has chosen to not outsource and therefore we are struggling to make a profit.
ReplyDelete