Back to reality read this article, and write a report Essay

Back to reality read this article, and write a report - Essay Example Another phenomenon of globalization grew parallel that supported to source functions and products from anywhere in the world providing most suitable option to business and led countries to take over other countries’ economy (Malarvannan, 2010), for instance, Goldman Sachs prediction of China to take over US economy by 2020 while India will take over US economy by 2043 (Malarvannan, 2010). (Malarvannan, 2010) Between two extremes of sourcing to the extent where businesses with outsourcing had to bear high cost as compared to benefits or moving back to basic model of performing all support services by itself; it is high time for businesses to decide the balance. Hence, this repeated theme of giving out and taking business function back has put emphasis on the in depth and critical assessment of the factors that shall be considered significantly upon on making sourcing decision (Williams, 2012). The scope of this report has been determined around the same assessment. It draws att ention to potential problems and issues while making sourcing decision and developing supplier customer relationship. It will also try to suggest the balancing point between two extremes. SOURCING Sourcing in general term implies to practices and policies for identifying, evaluating and engaging suppliers of goods and services. There are large numbers of sourcing policies such as outsourcing, in-sourcing, strategic sourcing, global sourcing and so on and so forth. Pivotal point around which the entire sourcing mechanism revolves is mainly driven by the firms understanding of its core competency; much easier said than done (Prahalad and Hamel, 2006). Sourcing of supplier varies from industry to industry; within industry from firm to firm and even with firm for various functions. POTENTIAL PROBLEM Souring, mainly aimed to get operational efficiencies, is also being adapted to access skills and expertise that cannot be made part of the firm (Beaumont and Sohal, 2004). Firms, in order t o conduct sourcing, need to clearly state sourcing issues encompassing what, why, which process of decision making to conduct, how to implement the decision of outsourcing and finally how to implement the decision (Dibbern, Goles, Hirschheim, and Jayatilaka, 2004). Moreover these questions are affected by associated costs, and discrepancies in  defining the scope as well as requirement from outside supplier (Beaumont and Sohal, 2004). The other impediment to making an outsourcing decision is the resulting benefit to the firm. Sizeable literature is present discussing the impact of outsourcing on profitability. This factor must appear with more prominence with cost reduction being mentioned as the main motive behind this strategy employment (Gorg and Hanley, 2004). However, the results are not as predicted and empirical evidences showed that outsourcing does not always have positive impact on profitability. For instance, Kimura (2002) in Japanese context found no positive impact wh ile Gorzig and Stephan (2002 ) found that outsourcing is beneficial for material element while outsourcing of services has negative relation in manufacturing of German manufacturing concerns. Hence, profitability is not always extracted by outsourcing business functions and the results vary based on receiving impact from many factors (Gilley and Rasheed, 2000). Another potential