Characteristics Of Porters Five Forces Model

Characteristics Of Porters Five Forces Model This report aims to discuss the characteristic of Porters Five Forces model which had greatly contributes to strategic management. Porter (1980) sees competition in an industry being governed by five different sets of forces and an industrys attractiveness is contingent on the strength of these five forces. Nevertheless, this model is being debated since it is purely derived from industrial perspective. To be the market leader, resource- base theorists suggested organizations must aware of its intrinsic strength and weakness therefore enable them to formulate strategy efficiently. Apart from perspective imperfect, Porters five forces also limited by some factors when applying in certain industry. To present the contributions as well as limitations of Porters five forces framework, this report will examine the five forces of soft drink and airline industry. All the information is collected from text books, journals, articles, annual report and websites. 1.0 Introduction All purpose of strategy is to help an organization survives and be profitability in the industry. An industry is a group of firms that produce a similar product or service, for instance cosmetics or financial services. (L. Wheelen T., D. Hunger J., 2006). The understanding of the industry structure and its competition environment is a critical ingredient of a successful strategy. Firms need to examine the level of profitability of the industry they are entered, whether it is potentially high profitable in the future. Michael Porter (1980), a Harvard strategy professor contended that the industry profitability is determined by five forces of competition, they are the competition from new entrants, competition from substitutes, and competition from established rivals as well as the power of suppliers and power of buyers. (M. Grant R., 2008). By examine the strength of five forces reveal why an industry is attractive and only then can organization formulates strategy to gain competitive advantage in the market place. Unfortunately, Porters five forces framework has been involved into several criticisms. Some of theorists argued that Porters Five Forces framework is lack of rigorous since it is based on Industrial Organisation (IO) economic perspective and in reality, the strength of the forces may differ from business to business. (Campbell D., Stonehouse G., Houston B., 2002). The prediction of industry attractiveness based on the five forces is unclear and lack of trustworthy. To judge whether Porters five forces framework is useful to predict the industry potential profitability, this report will applying this model into soft drink and airline industry. 2.0 The Values of Porters Five Force Framework Porter Five Forces framework was derived from Structure-Conduct-Performance (SCP) paradigm of IO which concerned on the industry structure was influence by conduct and performance of organizations. (Jenkins M., Ambrosini V., Collier N., 2007). Insight into organization heterogeneity in terms of market attractiveness evaluations and understanding of market entry enable them to make better decisions and prevent from potential loss or go into liquidation. (Dixit A, K. Chintagunta P., 2007). Michael Porter indicated that the industry structure grows out of a set of economic and industrial characteristics that bring out the strength of each competitive force and the forces are threat of new entrants, threat of substitute, the rivalry among existing competitors, the bargaining power of buyers and suppliers. (M. Grant R., 2008). The strength of the five competitive forces can determines the long-run profit potential of an industry by how much of economic value retained by companies in the i ndustry versus bargained away by customers and suppliers, threaten by substitutes or forced by new entrants. (E. Porter M., 2008). The stronger of these forces, the more limited the organizations ability to set higher price and earn greater profits. The low forces, in contrast, become an opportunity for organizations to generate strategies. (L. Wheelen T., D. Hunger J., 2006). In order words, this framework suggested the source of organizational profits is market positions, and the positions protected by barriers to entry into the market. (Jenkins M., Ambrosini V., Collier N., 2007). Many strategic analysis tools formed based on the industrial perspective as Porters five forces did, for instance the PESTEL analysis is the useful environment scanning tool that examine the external factors influence an organization. Game theory, which founded by Von Neumann and Morgenstern (1944) contends that the rivalry among competitors is interdependent, but the issue is generally concerned with a firms external environment. (M. Grant R., 1998) 3.0 Five Forces of Soft drink industry 3.1 Rivalry amongst competitors Porter described the rivalry amongst existing competitors is jockeying for position, where they compete in the form of products price, products innovation and differentiation, advertising and promotion as well as after-sales services slugfests for purpose of scramble for market share and earn superior profits. The degree of rivalry in an industry is determined by several variables; they are the degree of competitors concentration, the level of rivalry, products differentiation, the industry growth rate and exit barrier. (G. H. Richard., 1983) Soft drink industry considered a consolidated industry, where the industry is leading by few large companies, such as Coca-cola, Pepsi-cola and Cadbury Schweppes. These companies who seize large proportion of market share had earned superior profit. In order to gain competitive advantage from competitors, Coca-cola and Pepsi-cola have spent large investment in advertising and promotion to build strong brand identify among consumers and become a barrier for new entrants. Coca-cola build customer loyalty by it unique coke recipe while Pepsi-cola serving different soft drink to capture market share of Coca-cola. The unique recipe of soft drinks had gained many loyal customers which uneasily duplicate by competitors. In the position of market leader, they can determine the price of soft drink and thus avoid price war. (M. Grant R., 2008) According to Agarwal and Gort (1996), the late entrants have relatively lower survival rates because the exit barrier is formed in competitive intensify. (Dixit A, K. Chintagunta P., 2007) The exit barrier in soft drink industry is significant because firms require large capital investment to achieve economic of scale in order to compete with strong competitors. Yet, according to the average return on invested capital (ROIC) of US industries, the profitability of soft drink industry increase consistently indicates that the market value of soft drink tends to grow in future. (Kindly refer to Appendix V). 3.2 Threat of Entry A high barrier to entry benefits the existing players in an industry because the competition is stable and established companies can take advantage of this opportunity to raise prices and generates favorable returns. The established companies who run a larger production may benefit from economic of scales and create barrier to the new comer. Others, the government regulation can also be a barrier to entry. (Johnson G., Scholes K., Whittington R., 2008) The barrier to entry can be created by existing companies by build strong brand loyalty. Although there is no significant restriction from government towards soft drink business, the efforts of Coca-cola and Pepsi-Cola to built brand loyalty have significantly threatened new companies to enter the business. (Kolter p., Armstrong G., 2008). Further, when the new companies intend to enter the market, both companies have take retaliate action by cut down the prices and forcing the new entrant to curtail expansion plans. (M. Grant R., 2008). Since the barrier to entry is high based on strong market leaders, the industry is considered attractive. 3.3 Threat of Substitute When the use of product can be wholly substitute by products out of the industry, customers will switch to substitute if the price of the product goes up. To the extent that switching costs are low, substitutes may have significant impact on the profitability of an industry. (L. Wheelen T., D. Hunger J., 2006) Through industry innovation, incumbents are struggling to produce diversity beverages to satisfy different consumers taste. The soft drink seems gradually substituted by carbonated beverage. In responding to the competition of substitute, Coca-cola expanded its business through alliance and acquisitions like Coke-Nestea and Coke -Minute Maid. Meanwhile, Pepsi-cola diversify their products flavor such as Pepsi with orange juice. (Meghan E., Deichert M, Ellenbecker M, Klehr E., Pesarchick L., Ziegler K., 2006). Yet, Coca-cola had builds extremely strong customers loyalty in the flavor of Coke since the early 1960s, there are no visible beverages can substitute Coke and it has been the top-selling soft drink over centuries. (Coca-cola, 2010). Briefly, substitutes become less of a threat because of the concentrated manufacturers effort in diversification. 3.4 Bargaining Power of Buyers Buyer power is determined by switching costs, the relative volume of purchases, the standardization of the product, brand identity, and quality of service. (Thompson J., Martin F., 2005) Companies are not merely selling their products to consumers, but large proportions of products are distributed to retailers such as supermarkets. Coca-cola and Pepsi-cola mainly distributed their soft drink products to supermarkets such as Tesco and Sainsbury. Although these retailers purchase soft drinks in large quantity, they do not have much bargaining power because they need different kind of soft drink products to generate consumer traffic, especially the popular brand name like Coke and Pepsi. Vending, basically deals with fixed price, was the most profitable channel for the soft drink industry. With no buyers to bargain, Coke and Pepsi bottlers could sell directly to consumers through machines owned by bottlers. (Meghan E., Deichert M, Ellenbecker M, Klehr E., Pesarchick L., Ziegler K., 2006). Therefore, the position of buyers in soft drink industry is weak because companies are not heavily relied on single distribution channel, but other route like vending machine or fast f ood chain. (Soft drink Industry, 2010) 3.5 Bargaining Power of Supplier The suppliers are powerful if they are in the position of well brand name, less competitors and high product differentiated. (Mike W. Peng, 2006). The main inputs of soft drink making are sugar and packaging. Sugar can be obtain from many sources and if the price of sugar increase, soft drink manufacturers can alternatively switch to corn syrup, as happened in the early 1980s. Thus, suppliers of nutritive sweeteners do not have much bargaining power to soft drink manufacturers. In contrary, they need to built long term relationship with soft drink manufacturers to make long-run profit in the business, for example, Monsanto signed long term Nutrasweet sweetener supply contracts with Coca-cola. (M. Grant R., 2008) Soft drink packaged by aluminum can and bottle. The manufacturers of aluminum can and bottle are almost similar and therefore they engaged in price competition to survive in the industry. With more competitors vying for supply contract with large soft drink manufacturers, soft drink manufacturers are able to negotiate extremely favorable price and thus suppliers bargaining power is relatively weak. (Meghan E., Deichert M, Ellenbecker M, Klehr E., Pesarchick L., Ziegler K., 2006) 3.6 Summary on Five Forces of Soft Drink Industry Overall, in soft drink industry, the rivalry is moderate since the concentrated producers had avoided significant price competition. The industry is considered attractive because high entry barrier prevent new entrant from fragment profits, there is no visible substitute and the bargaining power of suppliers and buyers are relatively weak. Cott Corporation is a good example who earned favorable profits in this industry. Cott recognized the unique Coke taste to the mind of consumers thus established its private-label cola called RC Cola and successfully taking 5.5 percent shares of U.S. soft drink market in year 2005. (M. Grant R., 2008). Cott Corporation has proved that Porters five force framework is useful to predict industry profitability, which in accordance with the SCP concept of Porter. 4.0 Debates and critiques on Porters Five Forces Framework As outlined that Porters Five Forces Model was derived from industry perspective and it is therefore expected that the model is limited when applied at the firm level. In the early eighties, strategic management was much dominated by IO perspective, where the organizations performance is contingent on its external environment and thus loses the sight of organizational perspective. (Jenkins M., Ambrosini V., Collier N., 2007) The resource-based view, in contrast, examines the link between the internal characteristics of an organization and organizations performance. (Campbell D., Stonehouse G., Houston B., 2002) It highlights the core competency of an organization are the main sources of sustainable competitive advantage. (Kotenlnikov V.). Hamel and Prahalad (1994) explained that core competence does not appear on balance sheet, distribution channel or even brand and patent, but an aptitude to manage them may be one. Correspondingly, Penrose (1959) argued that a firm is a collection of resources and that a firms performance depends on its ability to use them. (Jenkins M., Ambrosini V., Collier N., 2007). In addition to the industry competition structure, resource-based approach examine deeply into the skills and competences of each competitor, the design of value-adding activities, the technologies employed and strategic groupings. The strategic analysis model like value-chain and SWOT analysis are contri butions of resource-based view which provide a greater understanding of organizations core competences and enable organization well manage their resources and capacities to formulate appropriate strategies. (E. Spanos Y., Lioukas S., 2001). Baden-Fuller C. and Stopford J. (1992) said that it is not industry matter, but the firm itself, as happened in airline industry. (De Wit B., Meyer R., 2005) 5.0 The Five Forces of Airline Industry 5.1 Rivalry amongst competitors The intense rivalry in airline industry caused by undifferentiating products and services, for instance, most of them were using similar aircraft like Airbus A320 family. (Shawn S., 2004)To be the ideal choice of customers, airlines had competing in fare price and their on-board products and service. They struggle to enhance their frequencies and timing of flight to avoid their competitors a frequency advantage. The barrier to exit is one of the significant factors that result fierce rivalry. The capital investments are a large sum and it is difficult to dispose the assets suppose the carriers are suffering in loss. Trans World Airline is the example of company who can remain competitors for three more years before gone into liquidation. (Ridderbusch K., 2006) The reason of high fixed costs significant influence the profitability of industry, like revealed in Appendix V, the ROIC of airline industry is slightly five percent and therefore the industrys growth rate is slow. 5.2 Threat of Entry The main entry barriers of airline industry are capital requirement and retaliation from established airlines. To establish an air transport business is a huge investment, including the expensive assets of airplane and safety facilities. This barrier had been reduce by bank institutions who encourage airline carriers by extend credit. (Vecchio J.D., 2000) There is not significant entry control in international airline industry such as US and Europe, but airport slot can be a barrier to entry. The condition of congested slot in hub airport has makes it difficult for new entrant to gain access to attractively-time slot. However, the congested slot issue has benefits the existing airlines. (Shawn S., 2004). Incumbents enlarge their business by hub system and thus they could serve more cities from their hubs and offer greater frequency flight to satisfy different customers need. (Vecchio J.D., 2000) 5.3 Threat of Substitute Apart from oversea reason, people tend to choose rail transport although they can reach destination in shortest time by air transport. Railway became a good substitute of airway as it provide city centre to city centre travel which makes convenience to consumers and its fare price is always cheaper that airlines. The market of airlines became worse when the development of rail transit. Through constantly innovation and development in railway industry, people today can choose long haul rail transit to reach destination in short time, as air transport did. (Shawn S., 2004) 5.4 Bargaining Power of Buyer Airline offers transportation service to two groups which are travel agents and consumers. Traditionally, travel agency system is overwhelming because it is the main distribution channel for airline. The airlines who much depends on travel agents forced to reduce fare price to keep long-term relationship that able to sustain competitive advantage in the market. The available of internet benefits consumers as they can access to the fare price and compare with each other. Many customers choosing airline travel because they can reach destination in short time, thus they always find for price discrepancy of the same exact flight. Considered airline travel is relatively luxurious trip, the fall in fare price would significantly increase the demand, especially those plans for a family vacation. Since the trend of demand is elastic, customers switching from each other is visible suppose the market fall into price war. (Vecchio J.D., 2000) 5.5 Bargaining Power of Suppliers The suppliers in airline industry are concentrated producers such as Boeing and Airbus. These suppliers became a threat to airlines because they provide high quality airplanes and pilot training services. (Johnson G., Scholes K., Whittington R., 2008) The power of supplier can determine by labor union. Industries which depend massive on employees are low profitability because the more skill people the more they need to pay. Aviation industry required high talent people such as pilots and have a high percentage of employees unionized and it is therefore less profitability. (M. Grant R., 2008) 5.6 Summary on Five Forces Analysis of Airline industry Through exploring five forces, airline industry is easy to entry but hard to exit, threaten by powerful supplier and buyer as well as substitute, and the rivalry is intensified. Therefore airline industry is extremely unattractiveness and all organizations stuck in the industry and are likely to suffer. In reality, however, Ryanair has survived and successfully seize significant market share in Europe. (Mike W. Peng, 2006) The key success of Ryanair is its concept of no-frills, low fares and hassle-free which effectively take cost advantage and perform better punctuality than competitors. However these strategies are zero without the effective management team and good employees performance. Ryanair implemented a third year of pay freeze to achieve cost saving however satisfy its cabin crew by maximize their time off. Despite lowest fares price, Ryanair continues maintain a safe and reliable air travel to meet customers need. (Ryanair, 2010) The successful of Ryanair in such an unattr activeness industry are its peoples competencies that make sustainable competitive advantage, as suggested by Hamel and Prahalad. 7.0 Other Limitations 7.1 Hyper competition Another critique is that competition is a dynamic process of rivalry that constantly reformulates industry structure. Joseph Schumpeter viewed competition is the dynamic forces of innovations which continuously restructure industry and tends to unstable. (M. Grant R., 1998, 2008). Since it is based on the industrial perspective in the eighties, the five forces model is ineffective to predict competition and profitability if the industry structural transformation is rapid like High-tech industries. (Recklies D., 2001). Todays IT and software industry are continuous being revolutionized by innovation. Organizations struggle to gain competitive advantage comes from an up -to-date knowledge of environmental trends and competitive activity tied with a willingness to risk a current advantage for a possible new advantage. This fast growing market structure indicates that is difficult to master the market trends and it is therefore limited for Porters five forces to predict the attractivenes s of the industry. (L. Wheelen T., D. Hunger J., 2006) 7.2 The Complement as an important force Traditionally, Porter contends that the industrys attractiveness is driving by the potential suppliers of substitute good and service. This force is doubtful that as the presence of substitute reduce the value of the products, complements value will increase. Andrew Grove, the former CEO of Intel suggests complements should be added into Porters forces framework because it contributes visible impact, like the available of software add value to hardware. Yet, apart from IT industry, complements influence the competitiveness in other industries, for example the value of water heater increase if consumers access to gas supplier and service. Given the characteristic of complements is crucial to most products, the analysis of competition environment should take them into account. Organizations should reduce the bargaining power of complement suppliers in order to stimulate the demand of the products, like the strategy took by Nintendo. Nintendo controls the operation of games software pro ducers by provides developer licenses and through development of games software successful augments the demand for Nintendo video game console. (M. Grant R., 2008) 8.0 Conclusion and Recommendation Generally, Porters five forces are lack of rigorous and limited by its industrial perspective. In the case of Cotts triumphant in soft drink industry is not merely the commercial market, but much depend on its intrinsic management who wisely distribute its product in grocery channel which saving cost in term of no advertising and promotion. Cott popular with affordable soft drinks and their revenues increase dramatically through the growing of grocery retailers like Wal-Mart. (Cott, 2010). Therefore, Porters five forces seem lack of reliability relative to resource based analysis model. However, as Barney and Zajac (1994) said, the examination of strategy implementation skills (i.e., resources and capabilities) cannot be understood independently of strategy content and the competitive environment within which the firm operates. (E. Spanos Y., Lioukas S., 2001). In conclusion, managers should conduct the strategic analysis not simply based on Porters five forces, but examining in combination with other intrinsic perspective strategic analysis tool like SWOT analysis. SWOT model emphasized the elements of Strength-Weakness of an organization in addition to the Opportunities-Threats from external source. Furthermore, managers may apply PESTEL framework to supply the lack of Porters five forces model. (Trundy G., 2006). PESTEL framework emphasize the important elements of Politic, Economic, Social, Technology, Environmental and Legal to carry out a deeper external environment scanning that may influence organizations performance in the market.

Top 10 Risks of Offshore Outsourcing

Top 10 Risks of Offshore Outsourcing Summary:  Offshore outsourcing is growing 20%-25% per annum, with little evidence of slowing. Indeed, while most enterprises experience initial resistance, most technical issues are readily resolved and geopolitical risk is deemed insignificant after careful evaluation. By Dean Davison | December 9, 2003 — 00:00 GMT (16:00 PST) Offshore outsourcing is growing 20%-25% per annum, with little evidence of slowing. Indeed, while most enterprises experience initial resistance, most technical issues are readily resolved and geopolitical risk is deemed insignificant after careful evaluation.Even the current political fervor about jobs being moved offshore via outsourcing is not impacting the demand or strategy of IT organizations. Offshore outsourcing will continue to grow as a â€Å"labor arbitrage† model until 2008/09. META Trend: During 2004/05, outsourcing will divide into commodity and transformational services. Infrastructure service s will mirror grid-computing structures and develop consumption-based pricing (a. k. a. , â€Å"utility services†). Through 2006/07, transformational services (e. g. application development maintenance and business process outsourcing) will segment along horizontal (function commonality) and vertical (specialized) business process/services outsourcing functions. Although vendors will attempt to bundle infrastructure with â€Å"value† services, clients will demand â€Å"line item† pricing by 2008/09. Through 2004/05, IT organizations will outsource discrete projects/functions offshore (e. g. , from application development projects to specific call center support). Growth will continue at 20%+.Offshore strategies by domestic vendors will shift business from large, integrated outsourcing contracts, but most IT organizations will still develop strategies that focus on pure-play offshore vendors. The top 10 risks of offshore outsourcing are as follows. 1. Cost-Reduct ion Expectations The biggest risk with offshore outsourcing has nothing to do with outsourcing – it involves the expectations the internal organization has about how much the savings from offshore will be. Unfortunately, many executives assume that labor arbitrage will yield savings comparable to person-to-person comparison (e. . , a full-time equivalent in India will cost 40% less) without regard for the hidden costs and differences in operating models. In reality, most IT organizations save 15%-25% during the first year; by the third year, cost savings often reach 35%-40% as companies â€Å"go up the learning curve† for offshore outsourcing and modify operations to align to an offshore model. 2. Data Security/Protection IT organizations evaluating any kind of outsourcing question whether vendors have sufficiently robust security practices and if vendors can meet the security requirements they have internally.While most IT organizations find offshore vendor security p ractices impressive (often exceeding internal practices), the risk of security breaks or intellectual property protection is inherently raised when working in international business. Privacy concerns must be completely addressed. Although these issues rarely pose major impediments to outsourcing, the requirements must be documented and the methods and integration with vendors defined. 3. Process Discipline (CMM) The Capability Maturity Model (CMM) becomes an important measure of a company’s readiness to adopt an offshore model.Offshore vendors require a standardized and repeatable model, which is why CMM Level 5 is a common characteristic. META Group observes that approximately 70% of IT organizations are at CMM Level 1 – creating a gap that is compensated for by additional vendor resources on-site (see  Figure 1). Companies lacking internal process model maturity will undermine potential cost savings. 4. Loss of Business Knowledge Most IT organizations have business knowledge that resides within the developers of applications. In some cases, this expertise may be a proprietary or competitive advantage.Companies must carefully assess business knowledge and determine if moving it either outside the company or to an offshore location will compromise company practices. 5. Vendor Failure to Deliver A common oversight for IT organizations is a contingency plan – what happens if the vendor, all best intentions and contracts aside, simply fails to deliver. Although such failures are exceptions, they do occur, even with the superb quality methodologies of offshore vendors. When considering outsourcing, IT organizations should assess the implications of vendor failure (i. . , does failure have significant business performance implications? ). High risk or exposure might deter the organization from outsourcing, it might shift the outsourcing strategy (e. g. , from a single vendor to multiple vendors), or it might drive the company toward outsourci ng (if the vendor has specific skills to reduce risks). The results of risk analysis vary between companies; it is the process of risk analysis that is paramount. 6. Scope Creep There is no such thing as a fixed-price contract.All outsourcing contracts contain baselines and assumptions. If the actual work varies from estimates, the client will pay the difference. This simple fact has become a major obstacle for IT organizations that are surprised that the price was not â€Å"fixed† or that the vendor expects to be paid for incremental scope changes. Most projects change by 10%-15% during the development cycle. 7. Government Oversight/Regulation Utilities, financial services institutions, and healthcare organizations, among others, face various degrees of government oversight.These IT organizations must ensure that the offshore vendor is sensitive to industry-specific requirements and the vendor’s ability to: 1) comply with government regulations; and 2) provide suffici ent â€Å"transparency† showing that it does comply and is thus accountable during audits. The issue of transparency is becoming more significant as requirements such as the USA PATRIOT Act and the Sarbanes-Oxley Act place greater burdens of accountability on all American corporations. 8. Culture A representative example: although English is one official language in India, pronunciation and accents can vary tremendously.Many vendors put call center employees through accent training. In addition, cultural differences include religions, modes of dress, social activities, and even the way a question is answered. Most leading vendors have cultural education programs, but executives should not assume that cultural alignment will be insignificant or trivial. 9. Turnover of Key Personnel Rapid growth among outsourcing vendors has created a dynamic labor market, especially in Bangalore, India. Key personnel are usually in demand for new, high-profile projects, or even at risk of bein g recruited by other offshore vendors.While offshore vendors will often quote overall turnover statistics that appear relatively low, the more important statistic to manage is the turnover of key personnel on an account. Common turnover levels are in the 15%-20% range, and creating contractual terms around those levels is a reasonable request. Indeed, META Group has seen recent contracts that place a â€Å"liability† on the vendor for any personnel that must be replaced. The impact of high turnover has an indirect cost on the IT organization, which must increase time spend on knowledge transfer and training new individuals. 0. Knowledge Transfer The time and effort to transfer knowledge to the vendor is a cost rarely accounted for by IT organizations. Indeed, we observe that most IT organizations experience a 20% decline in productivity during the first year of an agreement, largely due to time spent transferring both technical and business knowledge to the vendor. Many offsh ore vendors are deploying video conferencing (avoiding travel) and classroom settings (creating one-to-many transfer) to improve the efficacy of knowledge transfer.In addition, employee turnover often places a burden on the IT organization to provide additional information for new team members. Business Impact: Offshore outsourcing can reduce IT expenditures by 15%-25% within the first year. Longer term, process improvements often make great impacts on both cost savings and the quality of IT services delivered. Bottom Line: As IT organizations consider the vast benefits and allure of offshore outsourcing, they must balance the risks and uncertainties with the potential for labor arbitrage.Strategic Decision Challenges Researchers have applied different perspectives to understand sourcing decision, the key among them being production and transaction cost economics (Ang & Straub, 1998), resource-based views (RBV), and resource-dependence views (Teng et al. , 1995). The Resource-Based View (RBV) argues that a firm’s competitive advantage depends heavily on its resources, as well as how these are used. Resources that are valuable and rare can lead to the creation of competitive advantage (Wade & Hulland, 2004).Competitive advantage can be sustained over longer time periods to the extent that the firm is able to protect against resource imitation, transfer, or substitution. The knowledge-based theory (KBV) of the firm considers knowledge as the most strategically significant resource of the firm. Its proponents argue that, because knowledge-based resources are usually difficult to imitate and socially complex, heterogeneous knowledge bases and capabilities among firms are the major determinants of sustained competitive advantage and superior corporate performance.There is certain level of paradox in outsourcing when viewed from RBV or KBV prisms. Proponents of outsourcing have often used RBV to justify outsourcing decisions. The lack of resources, or resourc e gaps, that a firm has can also be rectified by acquiring resources from outside the firm boundaries by souring arrangement (Teng et al. , 1995). Outsourcing has been considered as a part of the way that firms assemble knowledge from suppliers (Shi et al. , 2005). Thus, information systems (IS) outsourcing can be seen as a mechanism to integrate IS knowledge from IS vendors.Knowledge sharing by both, client and supplier sides, is considered to be a success factor in outsourcing (Lee, 2001). However, some researchers have raised concerns regarding the potential loss of internal know-how through IS outsourcing (Willcocks et al. , 2004) and the potential loss of intellectual property (Chen et al. ,2002; Evaristo et al. , 2005). Outsourcing involves the inherent risk of forgoing the development of the knowledge base of the firm. Hoecht and Trott (2006) argues that innovative capability of the firm is largely dependent on cumulative knowledge built up over many years of experience.Innov ative ability cannot be simply bought and sold. Earl (1996) argues that innovation needs slack resources, organic and fluid organizational processes, and experimental and entrepreneurial competences – all attributes that external sourcing does not guarantee. Aron (2005) describes these risks as the long-term intrinsic risks of atrophy. These risks are an inevitable byproduct of the process of outsourcing. Over time, if a company outsources an activity completely, it loses the core group of people who were familiar with it. They retire, they leave for employment where their skills are more alued, or they simply become less technically competent and out of date. Reliance on outsourcing is problematic, not only because key areas of expertise may be gradually lost to the outsourcing organization but also because outside providers may not have the desired leading edge expertise over the long-term (Earl, 1996) or may spread their expertise among many clients so that it degrades fro m core competency to mere industry standard. Hoecht & Trott (2006) remind senior managers of the harm that may be inflicted on the ability of the organization to survive in the long term if its core competencies are slowly eroded through outsourcing.A related issue is that of the strategic intent (DiRomualdo & Gurbaxani, 1998) behind the offshore outsourcing decision by organizations. Strategic intent in this context can range from an improvement in the IS unit of the organization (which generally provides the lowest degree of benefits), an improvement in the business processes of the overall organization, or a commercial intent to generate profits by developing core expertise in the domain of outsourced IT service (Kishore et al. , 2004–2005).The commercial intent is exemplified in the oft-cited case of American Airlines who established a new subsidiary to sell airline reservation related services commercially to other airlines and travel agents using Sabre, its airline rese rvation system, and to generate new revenues and profits from this line of business. Strategic intent behind outsourcing is an important challenge as it has been shown that stock market reacts favorably and rewards companies when they outsource with an intent of creating the maximum returns for the firm (Agrawal et al. 2006). On the vendor side, vendors can develop their expertise through building knowledge from experiences and holding the knowledge for competitive advantage. Szulanski (Szulanski, 1996) identifies lack of incentives, lack of confidence, turf protection, and the â€Å"not invented here† syndrome as motivational factors potentially influencing knowledge transfer in outsourcing arrangements.This two-sided nature of knowledge transfer is expected to create asymmetric information leading to outsourcing failures. From a client’s view several challenges then arise including deciding what is the right proportion of IT function insourced or outsourced, and what IT application should be outsourced or kept within for strategic reasons.

Save A Girl

Save girls, save the girl child, is a campaign in India to end the gender-selective abortion of female fetuses. Aborting a foetus because it is female is a major social problem in India and has cultural connections with the dowry system that is ingrained in Indian culture, despite the fact that it has been prohibited by law since 1961. In India a strong preference for sons over daughters exists, unlike in Western cultures. Pregnancies are planned by resorting to ‘differential contraception'. Following conception, foetal sex is determined by prenatal diagnostic techniques after which female foetuses are aborted.Social discrimination against women and a preference for sons have been promoted. Pre-natal sex-determination was banned in India in 1994. This act aims to prevent sex-selective abortion. But it is estimated that more than 10 million female foetuses have been illegally aborted in India. Researchers for the Lancet journal stated that 500,000 girls were being lost annually through sex-selective abortions. The dowry system in India is often blamed; the expectation that a large dowry must be provided for daughters in order for them to marry is frequently cited as a major cause for the problem.Pressure for parents to provide large dowries for their daughters is most intense in prosperous states where high standards of living, and modern consumerism, are more prevalent in Indian society. In India, dowry is the payment in cash or some kind of gifts given to bridegroom's family along with the bride. Generally they include cash, jewellery, electrical appliances, furniture, bedding, crockery, utensils and other household items that help the newly-wed set up her home. The dowry system is thought to put great financial burden on the bride's family.It has been one of the reasons for families and women in India resorting to sex selection in favor of sons. Female foeticide has led to an increase in human trafficking. In 2011, 15,000 Indian women were bought and so ld as brides in areas where foeticide has led to a lack of women. Government response to the problem has been known to not have stopped female foeticide from occurring. The existence of several loopholes in the system means the practice of sex-selective abortion continues.An example of one of these loopholes would be on the pretext of checking for genetic disorders in the foetus, who can stop a doctor from examining the sex of the unborn child and informing the parents in secret. Authorities often let the unlawful parents and doctors off with light punishment. Often, when the mothers disobey the husband’s family decision to abort the female foetus and report it to the authorities, the suits are ignored or given a light sentence: The mother is targeted for bearing girls and disobeying the family’s decision to abort the child.She may even lose her job, be expose to constant death threats, and be left with unresolved cases. In addition, others who give birth to girls are prone to violence. Even if she is able to give birth to the baby girls, the family is likely to not report the births and even murder them. The â€Å"Beti Bachao† campaign is supported by human rights groups, non-governmental organizations, and state and local government in India.Beti Bachao activities include large rallies, poster campaigns, wall paintings, billboards, and television commercials and short animations and video films. Some celebrities have become involved in â€Å"Save the girl child† initiatives. Another example of an organization, or campaign designed to help or promote girls right’s and lift them out of poverty is â€Å"Because I am a Girl†. It is geared towards equipping, enabling and engaging girls of all ages to acquire the assets, skills and knowledge necessary to succeed in life.The campaign focuses on inequality faced by girls in developing countries, and promotes projects to improve opportunities for girls in education, medical c are, family planning, legal rights, and other areas. The campaign has reported some success in parts of India. In 2009, it was reported that in Gujarat, rates of female births increased from 802 to 882 for every 1000 male births. India declared the year 2007 as â€Å"Awareness year of female feoticide†. Beti Bachao activities were credited with this improvement.

What Makes A Person Valuable - 1009 Words

What is an asset? Merriam-Webster dictionary defines an asset as, â€Å"A valuable person or thing.† This cultivates a new question, what makes a person valuable? What I find valuable, another person may find useless. In the aspect of a classroom, I value someone who is diverse and open-minded. As well as a person who speaks their mind and participates in group conversations. These were the qualities I looked for when given the assignment to interview a classmate and find how they are an asset to the class. When given the name of my interviewee, I was unsure who exactly it was. I met a short girl with brown eyes. At first thought, I was worried. What if I could not get any information that would aid my essay. Thankfully, this was not the case. When interviewing Noam, her diversity and opened mindedness stood out. She showed the willingness and determination to understand topics, as well as her caring personality. All the qualities Noam possessed, amazed me and made me feel she is of value to the class. Noam was the first person in her family born in America. Most of her family lives in Israel. This was surprising; I have never met a person who is the only American citizen in their family. When I asked her how having a connection to a foreign country influences the way she sees situations her response was immediate. â€Å"It’s forced me to be more opened and see other people’s views† (Ron). Being open-minded is valuable in a class based on discussion and feedback. Coming from a highShow MoreRelatedMarquis vs. Warren in the Case Against Abortion1298 Words   |  6 Pagesthreatened by pregnancy, or abortion after rape, because fetuses have a valuable future. Mary Anne Warren contends that late term abortions are morally permissible because birth is the most significant event for a fetus, and a woman’s autonomy should never be suspended. 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