Personal Development Plan

Globalization

Question no 1 (a).

Introduction

According to http://operationstech.about.com , Outsourcing may be defined as any task, operation, job or process that could be performed by employees within an organization, but is instead contracted to a third party for a significant period of time.

Then according to Wikipedia.org, The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider. In this sense, two organizations may enter into a contractual agreement involving an exchange of services and payments. So in other words, outsourcing simply means the organization asks the third party to produce certain materials that needed in the production activity instead of producing it by themselves. Outsourcing is widely practiced in big MNC companies due to some advantages that the company might experience when they do outsourcing. According to http://operationstech.about.com , company who do outsourcing will have certain advantages such as to focus core activity production, cost and efficiency savings, reduced overhead, operational control, and staffing flexibility as well as develop internal staff.

The first advantages that the organization might experience when they have decide to do outsourcing is that they are able to focus on the main core or most important activities or mission. Lets take an example, LTK Sdn Bhd, a Malaysian based manufacturing company which supply major of electricity equipment for the nation wide market, such as lamp, cable wire or etc. So when the company won a large contract from other big contractor company, they might outsource certain electricity material components from other independent supplier instead of producing all the material by themselves. When they outsourced materials from other company, they are able to achieve their main mission or core activity which is providing enough products for the contractor company within the timeline given.

The second advantages of outsourcing is the company will have cost and efficiency saving. Let take an example, if the LTK Sdn Bhd, produced all the material component part by themselves, they might facing higher cost due to the electricity and the manpower cost has occurred during the production activity. So in other words, when they outsourced certain component parts from other suppliers they might bring down the cost and save a lot of time.

The third advantage of outsourcing is the company able to reduce overhead. Example, if the LTK Sdn Bhd win the large contract, and they plan to produce all the material by themselves, so they need to rent more factory building space, more machinery or etc. When they do so, their rental expenses and overhead might keep increasing. But when they do outsourcing they can