Natalia Wojtarowicz

Activity 5.4.7

1. Define the term ‘outsourcing’. [2]

Outsourcing is using another business called a “third party” to undertake a part of the
production process rather than doing it within the business (in-house) using the firm’s own
employees. It is a practice usually undertaken by companies as a cost-cutting measure.

2. Explain two potential advantages to an airline of outsourcing inflight catering.

[8]

The two potential advantages to an airline of outsourcing inflight catering are that it will not
only lower costs and create a competitive advantage for the business, but also improve the
quality of catering services, since the catering contractors specialize in providing this kind of
service, and directly contribute to a better flight experience for the customers.

3. Evaluate the decision of an airline to outsource the maintenance of its aircraft.

[10]

The advantage of the decision of an airline to outsource the maintenance of its aircraft is the
fact that it allows for the reduction and control of operating costs. This, as a result, enables
the airline to be more competitive, as the money saved on the maintenance can be invested
elsewhere in the company. It also improves the focus of the business, as by outsourcing some
of the less significant “peripheral” activities, the management of the business can concentrate
on the main aims and tasks of the company.
However, there are also some disadvantages to outsourcing. First of all, there is a risk that the
quality of the services offered by the maintenance companies may be poor, especially as the
mechanics working for the outsourcing companies do not have to be licensed. Second of all,
the loss of the jobs within the business can have a negative impact on staff motivation, as the
workers who remain directly employed by the company may experience the loss of job
security. It can lead to the bad publicity and reputation, especially in a situation like this,
when the business may be accused of employing low-paid workers, and the firm’s ethical
standards may be questioned.
In conclusion, there are some advantages and disadvantages to an airline of outsourcing the
maintenance of its aircraft and all of them should be taken into consideration by the
operations management while making this decision. However, provided that the quality of the
outsourcing services will be monitored and regularly checked in order to uphold the highest
standard, it should be a very beneficial and cost-effective decision for the business.