Analysis of the path to strategic outsourcing : experiences of Standard Bank Card Division

Abstract :

This research offers some insight into strategy formulation and implementation in the banking sector. Conventional wisdom tells us that for companies to be successful, management must anticipate the trends and events that will shape the future. Huff, S (1991) notes that a major trend in business in the past decade has been outsourcing, in which companies have sought to reduce costs by contracting out services and functions traditionally provided in-house. Dissecting the organizational value chain enables the identification of those processes and activities, which do not contribute value, and which can instead cause substantial costs and limit flexibility. James Quinn and Frederick Hilmer (1996) suggest that there are two new strategic approaches which when combined properly, allow managers to leverage their company skills and resources way beyond levels with other strategies: Concentrating the firm’s own resources on a set of core competencies. Where it can the researcher achieves definable pre-eminence and provide unique value for customers. And, strategically outsourcing other activities, (including) many considered integral, do any company where the firm has neither a critical strategic need nor special capability. These authors summarized the benefits in terms of the following: Maximization of return on internal resources and concentrating investments and energies on what the firm does best; full utilization of external supplier’s investments, innovations, and specialized .professional capabilities that would be prohibitively expensive or even impossible to duplicate internally; well developed core competencies provide formidable barriers against present and future competitors seeking to expand the companies area of interests, thus protecting the strategic advantages of market share. In the rapidly changing market place and technological situation, joint strategy decreases risks, shortens circle times, lower investments, and creates better responsiveness to customer needs (1996:64). When intelligently combined, core competencies and external outsourcing strategies can provide improved return on capital, lower risk, greater flexibility , and better responsiveness to customer needs at lower costs. This report sets out to examine the feasibility of outsourcing, as a strategic tool to achieve the benefits described above. While these benefits are achievable, without thorough planning outsourcing could lead to major losses. It is therefore important that managers know what the process entails before deciding to outsource. This dissertation would therefore benefit managers seeking to outsource some or all of their operations to an outside vendor, by providing examples from the Standard Bank experience. Opinions expressed in this paper are largely based on theories relating to the major themes of the topic. Research, through interviews and questionnaires also provided valuable information relating to the dynamic process of outsourcing.

 

Details

Author Siphugu P
URL http://hdl.handle.net/20.500.11892/179306
Date Accessioned 2016-09-26T06:59:14Z
Date Available 2016-09-26T06:59:14Z
Date Created
Identifier URL 1999
Language English
Subject Economics
Subject 2 Economics
Alternative Title
Degree Type Masters degree
Degree Description  MBA