Table of Contents
What is vertical outsourcing?
Vertical outsourcing, where the services provided are focused towards a specific product line; and horizontal outsourcing, where the tasks that are needed are distributed across many different product lines.
What are two types of vertical integration?
Companies can integrate vertically in two ways: backward or forward. Backward integration occurs when a company decides to buy another company that makes an input product for the acquiring company’s product. For example, a car manufacturer is pursuing backward integration when it acquires a tire manufacturer.
What is vertical integration of a company?
Vertical integration involves the acquisition of a key component of the supply chain that the company has previously contracted for. It may reduce the company’s costs and give it greater control of its products. Ultimately, it can increase the company’s profits.
Why is outsourcing better than vertical integration?
Companies use outsourcing to reduce labor costs, lower their business expenses, and to focus on the core aspects of the business. While vertical integration offers many advantages, the process is time-consuming and expensive in practice, and outsourcing can also provide a competitive advantage for a business.
Vertical integration expands the presence and influence of your business, while outsourcing involves contracting some of your business operations to external service providers. The suitability of vertical integration and outsourcing depends on the nature of your activities and industry of specialization.
What’s another word for outsourcing?
What is another word for outsource?
| contract out | subcontract |
|---|---|
| turn over | hire out |
| allocate | depute |
| appoint | nominate |
| select | designate |
What are the factors of outsourcing?
10 Factors to Consider for Outsourcing Decisions
- 1) Cost Savings.
- 2) Pricing.
- 3) The Resources and Technology.
- 4) The Ability To Meet Deadlines.
- 5) Minimal Supervision.
- 7) Trustworthiness.
- 9) The Service Level Agreement.
- 10) Communication.