Economics Of Industry Essay Example | Topics and Well Written Essays - 1500 words

Economics Of Industry - Essay Example Some of the factors which can define the decision making process of whether to buy or outsource also depend upon the agency relationship. Bergmann and Friedl (2008) are of the view that since managers have the private information regarding the projects therefore they intend to exert "unobservable levels of different kinds of effort in order to increase the feasibility of successfully completing the project in terms of meeting product specifications." (Bergmann and Friedl). This paper will attempt to present a comprehensive analysis of the above factors and their impact on the decision making process of whether to buy or outsource. Further, this work will also attempt to present what remedies may be available to address such problems in terms of agency cost. To make or buy is one of the fundamental dilemmas faced by the modern organizations as increasing competition and globalization is forcing organizations to re-evaluate their strategies as well as processes and technologies to better position themselves onto the competitive landscape. As discussed above that the decision to make or buy depends largely upon whether the organization is willing to refocus its strengths on exploiting its core competencies and outsource some of the activities which do not probably fall under the domain of their specialty therefore instead of developing weaknesses into strengths, organizations often consider to focus on their strengths. Secondly, lack of internal resources such as manpower, technology, economies of scales etc may force organizations to decide on buying rather than producing in house. Thirdly, cost reduction is another critical element which contributes in deciding whether to buy or make because due to lack expertise, lack of resources, org anizations may find it expensive to produce in house and rather focus on outsourcing. However, despite all these factors, there are some other critical elements which contribute to that decision making process. As discussed above that uncertainty is one of the key elements which differentiate the labor markets therefore both internal as well as external factors heavily influence the decision making process of make or buy. Internal organizational factors such as agency relationships as well as adverse selection involve the management of the firms however; uncertainty and asymmetric information may be internal as well as external in nature. Agency Relationship Diversification is one of the reasons why managers often decide to make investments so that the risk could be easily distributed across the different products as well as markets. It is also because of this reason that the managers often have to decide whether to initiate that diversification process by producing that product or procuring that machinery in-house or outsource them. However, Denis et al (1997) are of the view that there is a negative relationship between the diversification and the managerial equity ownership. (Denis, Denis and Sarin) This fact also points towards the tendency of the managers to perform in ways which create a sort of value reducing diversification for firms. Therefore taking an analogy from this fact, it can easily be inferred that while making

Analysis and Application_Unit 5 Essay Example | Topics and Well Written Essays - 500 words

Analysis and Application_Unit 5 - Essay Example The method has little freedom for flexibility because of the fixed question order. Thus, individuals may feel that the responses they have given do not fit any of the selected answers (Oatey, 1999). Close-ended questions are types of questions that limit the answers of the respondents to the survey. The participants are permitted to select from a pre-existing collection of dichotomous answers, (such as true/false or yes/no), or ranking scale response choices or multiple choice with options for â€Å"other† to be completed. On the other hand, open-ended questions are forms of questions that do not offer the respondents answers to select from, but instead, the questions are phrased such that the respondents are motivated to elaborate their reactions and answers to the questions with a paragraph or a sentence depending on the survey (Colorado State University, 2012). In this survey, close-ended questions were used, and they included questions such as â€Å"Does your (mother) (father) know who you are with when you are away from home? The response categories were usually, sometimes, or never (3, 2, 1, respectively)† (Jou, Levine, and Singer, 1993). The survey results offered a mixed support for the hypothesis made for the interactive impacts of heavy metal preference. Most of the hypotheses made in the survey were supported, and it was only in one hypothesis that support was little. The researchers found little support for their subcultural hypothesis. This indicates that the methods and approaches used in the survey were valid (Jou, Levine, and Singer, 1993). The questions concerning parental attachment and control were effective. This is because they gave information concerning the link between delinquency, and parental control and attachment. For instance, it was found that the rates of delinquency decreased where there was more control that is parental. However, concerning