Most commonly a company will outsource, internal company will give ‘work’ to external company, to ‘lighten the load’.
Learning Goal: I’m working on a management discussion question and need an explanation and answer to help me learn.
Read Example 2 and explain your take away, agree or don’t agree, and make sure to add additional information. Your document should include minimum 150 words plus credible references.
Example 2:
Most commonly a company will outsource, internal company will give ‘work’ to external company, to ‘lighten the load’. Hiezer et al. (2020) explains that companies use outsourcing to help with growth and production of the company. For example Johnson and Johnson, is a multinational medical device pharmaceutical and consumer packaged goods manufacturing company (James et al., 2019) who outsources their product production. Their mission statement is, “to stimulate everyone and incorporate the efforts of all like-minded individuals across the globe “. 100% of all Johnson and Johnson’s products, one way or another, at some point is outsourced (Santos, 2012).
Johnson and Johnson using outsourcing in a positive light. This company is in 60 different countries making the ability to manufacturing in one location impossible. This company uses outsourcing do help spread out the manufacturing to increase growth. Although having back lash in the news regarding recalls and injury on customers Johnson and Johnson does not shy away from being confident in their outsourcing. Having the products manufactured externally motivates the other side of the company to focus on other business needs; like being a competitive medical company.
Once a company reaches a certain size the ability to not outsource becomes less. When running a company if you want growth outsourcing is the inevitable. Instead of focusing on the negatives to their outsourcing Johnson and Johnson use it to their benefit. A huge reason, this company and others outsource is to STAY competitive. Having the ability to outsource manufacturing helps companies pay less money to have their products produced and in return shows growth.
Johnson and Johnson has been around since 1886. Because this company has been around for so long it is safe to say they have been outsourcing for a long time. Again, even with the negative situations around Johnson and Johnson products it obvious that this company understands the risk involved with outsourcing. If they were not aware of this risks their company would have not survived for over 100 years.
References
Heizer, J., Render, B., & Munson, C. (2020). Operations management: Sustainability and supply chain management (13th ed.). Pearson Education, Inc.
James, M. M., Kee, D. M., Xian, T. H., Han, K. C., Ching, K. K., & Alshammari, M. S. (2019). Johnson & Johnson’s product safety issues and ways the company can address those issues. Asia Pacific Journal of Management and Education, 2(3), 7–18.
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