DE LOS SANTOS, RUTH JOY G.

BM701-P

Answer the following: (3 items x 10 points)

1. Describe the internal and external customers of GE involved in the given case study.
2. Identify the advantages and disadvantages of the insourcing decision of GE relevant its
company
operations.
3. Explain how GE managed to implement its insourcing decision successfully.

Answers
1.The internal involved in the case study are General managers, employees and operating units

External customers involved are suppliers and competitors and clients

2. Advantages of insourcing:

• Competitive advantage. It allows an organization to build a unique value proposition to the

market since their strategies can be different from competing firms who decide to outsource the
same kind of services.

• Trade secrets. These allow an organization to control the access to pertinent information like
confidential data and hidden methods or practices of the company to the general public.

• Organizational culture. It allows an organization to build uniform norms and standards by

executing the organizational activities in-house.

• Direction. It allows an organization to gain complete control over internal functions which they
can measure, improve, and innovate.

Disadvantages of insourcing:

• Costs. These involve higher costs, particularly in some cases where labor costs in the home
country are high.

• Capabilities. These require tedious hiring process, including personnel training and development
since insourcing requires more skills and abilities in managing business functions like accounting
and information technology.

• Focus. It can be a distraction from focusing on the core business functions of the organization.
For instance, dealing with accounting and human resource department for a design company may
not add value to the core functions of the business, which is to impress clients with their designs.
3. The in-house team should be considered in terms of its efficiency and cost-effectiveness. The
constituent personnel must operate as a team if they are to deliver a value-adding service. In
addition, they must be proactive in looking for areas where value can be added. It should not
regard service levels as permanent,
but as providing the basis for improvement. Its expertise can help assess whether the perceived
service levels are the most appropriate. This is particularly relevant in the case of response times
when ordering work. If informed discussion can take place as to real needs as opposed to
perceived needs, the service, with its corresponding resource levels, can be designed to meet
those needs. This value-adding activity
can enable the in-house team to differentiate itself from external service providers with intimate
knowledge of the organization used to good effect. Even so, such knowledge is no substitute for
a service that does not satisfy end-user requirements consistently.