Ransom’s Question on 11/02/2017
Which if the following is NOT a good reason for an organisation to stop outsourcing its activities and bring it in-house?
A – The company is currently suffering a financial loss.
B – The competitor recently brought their operations in-house.
C – Added delays in providing services to customers have been noted.
D – Increased supervisory cost due to long distance supervision have been noted.
Let us apply the K-E-C approach in answering this question.
Please note that the K-E-C approach is as follows:
K = Keyword, phrase or stem of the question
E = Eliminate two incorrect options
C = Choose the best answer for the remaining two options, linking the answer to the Key or K.
So let us approach this question.
K = Key – The key phrase here is “NOT a good reason”. So it means we should be looking for an “odd answer” or a reason that is not logical or not convincing.
E = Eliminate – When we examine the answer options above, options C and D can easily be eliminated because they are convincing and are valid grounds to reverse the outsourcing decision. Delays in customer services and added supervisory costs are all valid reasons to trigger a reversal of the initial decision to outsource services. We can thus eliminate options C and D.
C = Choose – We are thus left with options A and B to choose from. Option A advances financial loss as a reason to bring back services in-house. This can be a convincing reason. Option B says the competitor brought their services in-house. This does not sound very convincing. The competitor might have had other reasons to do so and the organisation should not just copy what the competitor is doing. Businesses are different and the competitor might be making a mistake. If we link these answers back to our Key (K) which is NOT a good reason, we are left with option B as the correct answer because copying the decision of a competitor to use in your organisation without performing an internal feasibility study is not a good reason to bring your services in-house.
The correct answer is thus B – Business decisions should be based on sound judgements. Reversing the outsourcing decision to in-house services should not be based on what the competition is doing but what the organisation has assessed to be effective and efficient.