FINALS Flashcards
T/F
The model for most of the 20th century was a large integrated company that can “own, manage, and directly control” its assets.To increase flexibility and creativity, many large companies developed a new strategy of focusing on their core business, which required identifying critical processes and deciding which could be outsourced.
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Most organizations were not totally self-sufficient; they outsourced those functions for which they had no competency internally. The current stage in the evolution of outsourcing is the development of strategic partnerships.
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“the strategic use of outside resources to perform activities traditionally handled by internal staff and resources”
Outsourcing
Outsourcing known also as “___________”, outsourcing is a strategy by which an organization contracts out major functions to specialized and efficient service providers, who become valued business partners.
facilities management
T/F
the difference between simply supplementing resources by “subcontracting” and actual outsourcing, is that the latter involves substantial restructuring of particular business activities including, often, the transfer of staff from a host company to a specialist, usually smaller, company with the required core competencies.
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Common reasons companies outsource
- Reduce and control operating costs
- Improve host company focus
- Gain access to world-class capabilities
- Free internal resources for other purposes
- A function is time-consuming to manage or is out of control
- Insufficient resources are available internally
- Share risks with a partner company.
In earlier periods, ___________________ were the most common reasons to outsource. In today’s world the drivers are often more strategic, and focus on carrying out core value-adding activities in-house where an organization can best utilize its own core competencies
cost or headcount reduction
Factors influencing successful outsourcing:
- Understanding company goals and objectives
- A strategic vision and plan
- Selecting the right vendor
- On-going management of the relationships
- A properly structured contract
- Open communication with affected individual/groups
- Senior executive support and involvement
- Careful attention to personnel issues
- Short-term financial justification
Enumerate the Outsourcing process
- Program Initiation
- Service Implementation
- Final Agreement
- Program Closure
Covers the activities required to take these ideas and intentions and develop them into a formal, planned outsourcing program and to make the transition to the final outsourced service. Activities are:
* Defining the transition project
* Transferring staff
* Defining the service level agreements (SLA)
* Defining service reporting
* Implementing and handling over the service
*Implementing service management procedures
Service Implementation
Concerned with taking these ideas (variety of ideas and opinions about the purpose and scope of the program, what the final result of the program will be, and how the program will be carried out) and intentions and documenting them to form the basis of the draft contract.
Program Initiation
refers to the Completion of the negotiation cycle
Final Agreement
To gain maximum benefit, program should go through a formal close down
Information generated during the life of the program, and this will have been stored with varying degrees of formality by the team members.
Program Closure
T/F
Outsourcing allows organizations to be more efficient, flexible, and effective, while often reducing costs.
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advantages of outsourcing
- Staffing flexibility
- Acceleration of projects and quicker time to market
*High calibre professionals that hit the ground running
*Ability to tap into best practices - Knowledge transfer to permanent staff
*Cost-effective and predictable expenditures - Access to the flexibility and creativity of experienced problem solvers
- Resource and core competency focus
Different types of Outsourcing
- Business Process Outsourcing(BPO)
- Professional Outsourcing
- IT outsourcing
- Multi-sourcing
- Manufacturer Outsourcing
the engagement of services from a third-party provider. It uses various technology-enabled services to hasten the delivery of services
activities could be back-office such as, but not limited to, payroll, accounting, human resources, or front office jobs like customer service, sales, and marketing, etc. In the case of content providers, these business activities could mean hiring writers, remote editors, or virtual assistants
speeds up processes and enhances efficiency. It helps companies divert their resources to more critical business strategies
Business Process Outsourcing(BPO)
Benefits of BPO
Cost saving
Global market –access bigger employment pool
Global presence – operational across the globe increases trade opportunities.
Flexible workforce – reduces internal local labor and employment compliance obligations.
Leverage skill – leveraging the skill of other specialist companies
Focus – enables the client company to focus on their core functions
Can be a viable option when tasks are too complex for entrepreneurs or their small team.
Professional Outsourcing
It pertains to contracting technology-related services and resources for a part or the entirety of an information technology business function.Every business, whether it is a start-up or a large corporation, has IT needs as it deals with technology on a certain level.
IT outsourcing
combines outsourcing output from dedicated specialised companies and they then aggregate external service providers to create a finished product
can be applied to any business area but is most common in sectors of high specialism and/or complexity.Areas such as technology, avionics, car industry, and space travel all heavily rely on multi-sourcing
forms the best-of-breed teams to achieve business goals. It operates in a manner where the business creates a partner relationship with other providers and is outcome-focused.
This type of outsourcing mostly requires a business to have a comprehensive strategy and a network of governance and relationships.
Multi-sourcing
Can significantly reduce costs on infrastructure, equipment, as well as labour.
Manufacturer Outsourcing
Advantage of outsourcing
- Swiftness and expertise – tasked are outsourced who specialize in the field.
- Concentrating on core process rather than the supporting ones – strengthen core business processes
- Risk Sharing – shift certain responsibilities to the outsourced vendors
- Reduced operational and recruitment costs – eludes the need to hire individuals in-house
Disadvantages of outsourcing
- Risk of exposing confidential data – risk of exposing confidential company information to a third party
- Synchronizing the deliverables – stretched delivery time frames, substandard quality output and inappropriate categorization of responsibilities.
- Hidden costs – signing a contract while signing a contract across international boundaries may pose a serious threat.
- Lack of customer focus – vendor may lack complete focus on organization’s tasks
‘a chance or possibility of danger, loss, injury or other adverse consequences’
risk
Possibility of taking risks
- used to signify negative consequences
- risk can also result in a positive outcome
- A third possibility is that risk is related to uncertainty of outcome
‘exposed to danger’
at risk
Effect of uncertainty on objectives. Note that an effect may be positive, negative, or deviation from the expected. These three types of events can be related to risks as opportunity, hazard or uncertainty. Also risk is often described by an event, a change in circumstances or a consequence.
Definition of Risk by ISO Guide 73
ISO 31000
the combination of the probability of an event and its consequences. Consequences can range from positive to negative.
Definition of Risk by Institute of Risk Management (IRM)
Uncertainty of outcome, within a range of exposure, arising from a combination of the impact and the probability of potential events.
definition of risk by “Orange Book” from HM Treasury
The uncertainty of an event occurring that could have an impact on the achievement of the objectives. Risks is measured in terms of consequences and likelihood.
definition of risk by Institute of Internal Auditors
Event with the ability to impact (inhibit, enhance or cause doubt about) the mission, strategy, projects, routine operations, objectives, core processes, key dependencies and/or the delivery of stakeholder expectations.
definition of risk by Alternative definitions by author
types of risk
Hazard (or pure) risks
Control (or uncertainty) riks
Opportunity (or speculative) riks
Risk Importance
- Operations will become more efficient
- Processes will be more effective
- Strategy will be more efficacious
T/F
Risk management has its longest history and earliest origins in the management of hazard risks. Hazard risk management is closely related to the management of insurable risks. Remember that a hazard (or pure) risk can only have a negative outcome.
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T/F
Hazard risks can cause disruption to normal operations, as well as resulting in increased costs and poor publicity associated with disruptive events.
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Theft and fraud can also be significant hazard risks for many organizations.
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are the risks that can only inhibit achievement of the corporate mission. Typically, these are insurable type risks or perils, and will include fi re, storm, flood, injury and so on. The discipline of risk management has strong origins in the management and control of hazard risks
Hazard risks
are risks that cause doubt about the ability to achieve the mission of the organization. Internal financial control protocols are a good example of a response to a control risk. If the control protocols are removed, there is no way of being certain about what will happen.
Control risks
are the risks that are (usually) deliberately sought by the organization. These risks arise because the organization is seeking to enhance the achievement of the mission, although they might inhibit the organization if the outcome is adverse. This is the most important type of risk for the future long-term success of any organization.
Opportunity risk
derived from the Greek word “ethos” which refers to character or customs or accepted behaviors.
ethics
refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues.
ethics
simply the application moral or ethical norms to business. it is the code of conduct.
business ethics
set of principles and expectations that are considered binding on any person who is member of a particular group. The alternative names for code of conduct are ‘code of ethics’ or ‘code of practice’.
code of conduct
Compliance is about obeying and adhering to rules and authority. The motivation for being compliant could be to do the right thing out of the fear of being caught rather than a desire to be abiding by the law.
Ethics in Compliance
issues in finance that companies and employees are confronted with include:
- in accounting
- related party transactions not at arm’s length
- insider trading
- executive compensation
*bribery
*fake reimbursment
Characteristics if business ethics
- Discipline - guiding principles of business function.
- Ancient Concept - has it origin with the development of human civilization.
- Personal Dignity - decisions should be aimed by giving dignity to the customers, employees, distributors, shareholders and creditors, etc. otherwise they develop in immorality in the business conducts
- Related to Human Aspect - notify those decisions to customers, owners of business, government, society, competitors and others on good or bad, proper or improper conduct of business.
- Study of Goals and Means - accepts the principles of ―Pure goals inspire for pure means‖ and ―Means justifies the end‖. It is essential that goals and means should be based on morals.
- Different from Social Responsibility -
- Greater than Law - law is not greater than ethics. Law is usually related to the minimum control of social customs whereas ethics gives importance to individual and social welfare actions.
The Code may include the following:
(a) Company Values.
(b) Avoidance of conflict of interest.
(c) Accurate and timely disclosure in reports and documents that the company files before Government agencies, as well as in Company’s other communications.
(d) Compliance of applicable laws, rules and regulations including Insider Trading Regulations.
(e) Maintaining confidentiality of Company affairs.
(f) Non-competition with Company and maintaining fair dealings with the Company.
(g) Standards of business conduct for Company’s customers, communities, suppliers, shareholders, competitors, employees.
(h) Prohibition of Directors and senior management from taking corporate opportunities for themselves or their families.
(i) Review of the adequacy of the Code annually by the Board.
(j) No authority of waiver of the Code for anyone should be given.
concerning the quality of life of all people, affirms an obligation to protect fundamental human rights and to respect the diversity of all cultures.
Contribute to society and human well- being
“Harm” means injury or negative consequences, such as loss of property, property damage or unwanted health and environmental impacts.
Avoid harm to others
Honesty is an essential component of trust.
Be honest and trustworthy
values of equality, tolerance, respect for others, and the principles of equal justice govern this imperative. Discrimination on the basis of race, sex, religion, age, disability, national origin, or other such factors is an explicit violation of this code.
Be fair and take action not to discriminate
