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Copy of GOOD HOPES HOSPITAL
Transcript of Copy of GOOD HOPES HOSPITAL
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RISKS G.H.H. FACE IN OUTSOURCING
UK Retail expenditure Year on year growth(%) 1972-2012
RETAIL - CONCLUDED
Banks Impact on UK Businesses
Impacts of Lending Cuts!
UK Banks Performance over past decade
IN THE FUTURE
Potential local implications in outsourcing
GOOD HOPE HOSPITALS CALIFORNIA
By Haris Chaudhry, Isaac Crichton, Kevin Corcoran & Vanilla Chemnasiri
Background Info on Good Hope
UK CPI - 2.7%
UK RPI - 3.3%
Inflation expectations - jumped to 3.2 percent in October from 2.5 percent in September -
Biggest rise Citi have recorded
Bank of England targets a 2% inflation rate.
UK - 2.7%
Germany - 1.43%
France - 0.9%
Greece - -0.2% (first time - in 45 years)
CPI Inflation rates
Causes - cost pushing
demand pull - agg. demand outweighs agg supply
Inflation causes prices
Recent examples - British gas rising prices 10% overall
House prices up 6%
Gas bill - up 8.4%
Electricity bill - 10.4%
Large contributor to UK economy
11.3% of total gross value
added in 2011
= 4.2 milion in 2011
= 428,000 business in retail sector
Retail accounts for
35% of UK turnover
Four Main Sectors
- Indicator of wider economy and strength consumer spending
- Best quarterly retail sales growth since '08 recession
- Strong performance guarantees the economy will expand
If banks in the UK are doing poorly then they will have
out to UK
businesses and individuals
Thus UK businesses will have
will have less spending money and so will buy less products, for example
demand for white goods (i.e fridges, washing machines)
As there is less demand for these manufactured products, companies will therefore need less staff to produce the required amount of products.
This will lead to
and so people will be
purchasing fewer products
and so the cycle continues
Previous cycle leads to
inflation is a type of inflation caused by substantial
increases in the cost of important goods or services
where no suitable alternative is available
This will drive
the value of the
and so individuals will have less spending power.
Currently the pound is
against the dollar and
against the euro.
Motives & specific strategic goals G.H. achieves from outsourcing
Risks involved outsourcing to India
Specific guidelines G.H. management should have exercised when global sourcing
Implications to California's workers/economy if other firms followed suit...
founded in 1976 - 9 hospitals in Los Angeles, San Diego & San Francisco
Run on a for profit basis. Management want to keep on improve operations
Managers wanted to reap rewards of outsourcing and avoid laying off workers etc...
Mutually agreed to outsource some Cali aspects to foreign suppliers
Operational costs to be cut down in accounting and information technology sectors
Global Sourcing Strategy
Profit from manufacturing; High location attractiveness, High capacity, Low Risk
DHL and BMW success in running business abroad
Consider a Location
Relocate Geographically and Combine With Value Chain Activities
Discrepancy between China and India
Selecting External suppliers; Economic, Culture, Cost and customer.
Analyze foreign market and customer by applying:
Action Ability Strategy
Improvement in market penetration leads to motives in business expansion, because of influential environment, product presenting and export marketing aspect
Indeed, India market potentially can benefit Good Hopes in terms of making higher profit, increase in customer
Should point out advantages first
Maximum productivity, minimum cost
Less services = more focus
Quality & quantity - financially and labor
Outsourcing - the decision making progress
Outsourcing affects 2 groups - clients & suppliers
Offshore outsourcing growing 20-25% per annum
Biggest risk with offshore outsourcing has nothing to do with outsourcing...
Many executives assume labor arbitrage will yield savings...
client company has less control
failure to deliver can incur substantial losses
cost of transferring knowledge is very expensive
examples of delayed performance - customs delays, labor disputes, weather and political unrest
Customer satisfaction - requiring adequate transition periods
Outsourcing is a replacement of production or service functions
Schedules and budgets
Suppliers may not be financially viable
Most companies spend between 40-60% of revenues on 3rd parties
Lack of protection and law
Language barrier - English in India
India - most popular choice for many comps
cheaper labor & English is spoken
IBM, Dell & Citicorp
China - soon to rival India in services
outsourcing much cheaper too
However, excess regulation & bureaucracy
Eastern Europe - psychic distance with USA
wages similar to India
potential labor shortages & tax
Latin America - same time zone & cost effective
language - esp within California
supplier concerns. New to outsourcing
Jiang, J. J., et al., “Closing the User and Provider Service Quality Gap,” Communications of the ACM, February 2003, Vol. 46, No. 2, pp. 72–76.
job losses in the home country
workers are also consumers
balanced out over time?
Reduced national competitiveness
loss of long held knowledge and skills
Declining standards of living
reduction of wages
Government measures to reduce negative effects
Economical & fiscal policies
Wage concessions, grants and tax breaks
Strong educational systems
Provides pools of high-quality labour
Does hiring workers abroad create more jobs at home?
Problems with BangSource
Cost for services was higher than expected
Proved to be less efficient at dealing with Good Hopes customer enquires
Fluctuations in exchange rates
Issues with local electricity led to various problems
Failed hiring efforts led to a shortage of skilled workers.
Make sure the company is going offshore for the right reasons.
Insure employees agree with the reasons to offshore.
Choose carefully which operations to outsource and which to keep internal.
Use effective research when choosing suppliers.
Put emphasis on close communication with suppliers
Insure suppliers uses the same or very similar proceses as company.
Make sure there are safeguards in place to protect the company.
What Should Good Hopes Do Next
Obvious that if Good Hope Hospitals want to expand their profits and company - outsourcing has to be considered
It's not a simple process, various factors have to be considered with strategic appliance
Tamer Cavusgil, S., Knight, G., and Riesenberger, R., J. 2014. International Business The New Realities. 3rd Edition. Essex: Pearson Education Limited
Albaum, G.S., Duerr, E., Strandskov, J. 2011. International Marketing and Export Management, 6th Edition. Pearson Education. [online]
Dahl, Darren (2005), “Outsourcing the Outsourcing”, Inc. magazine: December pp55-56
Outsourcing can negatively impact the local economy and community but there are measures governments can take to reduce this
As with anything else, outsourcing has its various advantages but...also various risks associated
For example - BangSource. Various problems encountered which wouldn't have been part of the plan