1. OutsourcingOutsourcing: to use o

1. Outsourcing
Outsourcing: to use outside suppliers/ manufacturers to produce goods& services.
Outsourcing :contracting with another company usually abroad to have it perform an activity the organization previously performed itself.
Outsourcing can reduce company’s expenses if suppliers can produce the parts at a lower cost than the company.
Outsourcing increases efficiency because it lowers operating costs, freeing up money, resources that can be used in more effective ways to develop new products.
Outsourcing is to take advantage of lower costs to be more competitive.
Outsourcing may prove disastrous to companies in case overseas companies may use the information to produce their own competitive products.
2. Pros & Cons of Outsourcing
Pros Cons
 Less- strategic tasks can be outsourced so that companies can focus on areas in which they can grow  Jobs are lost & wages fall due to low-cost competition
 Outsourcing may allow companies to reduce the workforce & operating costs  Outsourcing may reduce product quality & can cause damage to a company’s reputation
 Consumers benefit from lower prices  Communication among company members, with suppliers, with customers becomes much more difficult

3. Just-in-time
• Just-in-time(JIT): a system that attempts to reduce materials inventories to a minimum by frequently ordering small amounts of materials.
• Just-in-time production: when parts are delivered just before they are needed in the process of producing something.
• Just-in-time production dictates that parts be delivered to the factory at the last minutes that cuts inventory costs
• JIT system makes sure the right materials
 at the right place
 at the right time
 at the cheapest cost
• to meet both customers & production needs.
• JIT works efficiently .It requires excellent coordination of suppliers.
• JIT requires highly reliable supplier relations.
• JIT requires flexibility in choice of suppliers.
• JIT requires reliable suppliers.
• Just-in-time (JIT): Japanese management philosophy in the early1980’s
4. Inventory Management
• Inventory management maintains the supply of all resources needed for production & products produced
• Inventory management: the process of managing inventory at a level that minimizes costs.
• Inventory management is vital, essential in manufacturing activities
• Inventory: detailed account of company’s materials, supplies, finished products.
• Inventory takes up a large amount of capital.
• Inventory is necessary for production but it also ties up funds.
• Inventory control should be balanced between materials for production& finished goods for market.
5. Explain & Identify TQM
 TQM focuses on analyzing an organization’s input, production process, output activities to improve product quality.
 TQM focuses on philosophies of :
- customer perspective
- continuous improvement
- defect prevention
- all employees are responsible for quality
 Implementing a TQM culture takes years. Returns of TQM investment won’t be instantaneous
6. ISO in the quality management
• ISO helps change in the traditional management
• ISO requires all employees responsible for quality assurance through records and regulations
• ISO helps set up a thorough channel of quality
• ISO is the pride & responsibility of all employees in performing their tasks
7. A firm’s biz risk is also influenced by its characteristics
1. Limited funding
-Small firms- limited funds- less flexibility
-Limited funds result in business risk
2. Reliance on ONE product
- Relying on a single product to generate revenues, when demand declines- firm will suffer risk
3. Reliance on ONE customer
- Relying on a single customer has a higher degree of business risk
4. Reliance on ONE supplier
- Relying on a single supplier will be severely affected if that supplier does not fulfill its obligations, or if that supplier goes out of business, the firm is in shortage of supplies
5. Reliance on a KEY employee for its decision
- If the death of this key person occurs, it would have a severe impact on the firm’s performance
8. Five Forces Model
1. Threat of new entrants
( How likely is it that new competitors will come into the industry?)
2. Threat of substitutes
(How likely is it that other industries’ products can be substituted for our industry’s products?)
3. Bargaining power of buyers
(How much bargaining power do buyers have?)
4. Bargaining power of suppliers
( How much bargaining power do suppliers have?)
5. Current Rivalry
( how intense the rivalry among current industry competitors?)