Homework #3- MGT 436
North Shore Sushi
(NSS) is a fictional sushi restaurant located in Marquette Michigan. The owner is considering outsourcing two activities they currently do themselves: (1) winter snow removal and (2) management of their social media accounts (currently just Facebook and Twitter).
Since they opened ten years ago, the owner of NSS has plowed the parking lot for the restaurant during the winter months. However, recently the engine on the truck used for plowing self-destructed. While the plow could be removed and put on a different truck, they would need to purchased another truck. Since the truck is used only for winter plowing, the owner would likely buy something used. However, the owner is considering having an outside service provider plow the parking lot instead. Due to the high snowfall in Marquette, there are numerous people/firms that provide such services.
The second decision concerns their social media management. Currently, the owner of NSS manages the social media herself, and makes an attempt to post on both Facebook and Twitter at least every few days. However, this not only takes time, but the owner, being in her mid-50s, does not feel like she has the expertise to use social media in a way that is optimal for the business. However, by doing it herself, she is able to connect directly with customers, and post photos of dishes she is currently preparing in the kitchen. However, she has been approached by a recently graduated NMU marketing student who has offered to manage the social media of NSS for a monthly fee ($300). This individual is also managing the social media accounts of a number of local businesses, including a couple of restaurants.
For each of the two scenarios, discuss which benefits of outsourcing discussed in class would be relevant in each scenario and explain your rationale. Then for each of the two scenarios, discuss which risks of outsourcing discussed in class would be relevant in each scenario and explain your rationale.
Discussed in Class:
Strategic Outsourcing
- Strategic outsourcing involves having one or more of a firm’s value chain activities or functions performed by another firm that focuses on that activity.
- Firms commonly outsource:
- Information technology.
- Human resource management.
Benefits of Outsourcing
- Lower cost structure.
- Enhanced differentiation.
- Focus on the core business.
Risks of Outsourcing
- Increased competition.
- Loss of information/forfeited learning opportunities.