discussion
The Strategic Sourcing Process (5 of 17)
Table 7.7 Advantages and Disadvantages of Insourcing and Outsourcing
| Insourcing | Blank |
| Advantages | Disadvantages |
| High degree of control | Reduced strategic flexibility |
| Ability to oversee the entire process | Required high investment |
| Economies of scale and/or scope | Potential suppliers may offer superior products and services |
| Outsourcing | Blank |
| Advantages | Disadvantages |
| High strategic flexibility | Possibility of choosing a bad supplier |
| Low investment risk | Loss of control over the process and core technologies |
| Improved cash flow | Communication/coordination challenges |
| Access to state-of-the-art products and services | Increased risk of supply chain disruption, corporate social responsibility (CSR) risks |
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The Strategic Sourcing Process (6 of 17)
Table 7.8 Factors that Affect the Decision to Insource or Outsource
| Blank | Favors Insourcing | Favors Outsourcing |
| Environmental uncertainty | Low | High |
| Competition in the supplier market | Low | High |
| Ability to monitor supplier’s performance | Low | High |
| Relationship of product/service to buying firm’s core competencies | High | Low |
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved.