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Custom Outsourcing essay paper sample

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Coca-Cola is a multinational enterprise with subsidiary companies in nearly all corners of the world. The higher management of the company has their offices in Atlanta, the company’s headquarters that creates a distant contact between the higher management and employees. The company is the second largest in non-alcoholic beverage industry in United States with its presence in more than 11 states and serves a total customer base of 18 million. The company is engaged in the manufacture, sale and delivering of the beverages.

Products normally undergo a number of stages that include introductory stage, growth stage, maturity stage and decline stage. During each stage, consumers exhibit different characteristics. This paper will utilize Porter’s position to outsourcing of data centers to HP, initiating from development of infrastructure all the way to applications (mature), then it continues to new development and in the final stage rests in business processes outsourcing (growth).

The company will adopt a complete outsourcing model; this means that specifications will be sent to Hewlett Packard for development of an entire system and the delivery of the system. This move has some limiting factors such as integration costs, communication costs and getting requirement up-front that is complete (Torrington, 2008). In addition, the model creates additional potential risk. To ensure implementation of the strategy, the company assembled the necessary resources and utilized them, they put into practice the plans chosen, marshal commitment and the resources necessary for progress, build new capacity as well as tap existing potential and forge ahead for results achievement.

The mechanism for monitoring the strategy ensured that progress is geared towards the attainment of organizational goals and establishing whether the changes in the external environment will necessitate any change of strategy. Plans and actions should be modified to facilitate accommodation of the changes in the operating environment. The change received resistance from workers since it was threatening their security, in terms of job loss. The management had to involve them involve them in the process and offer them alternative remedial action. Most of them were to be taken in as employees for HP and others compensated for the loss.

The company expected a chunk of benefits and performance from outsourcing, but as it is evident, outsourcing has both positive and negative impacts. The company’s objective of improving efficiency in production as well as attaining competitiveness in the global market has been attained through outsourcing. The company has also minimized costs in terms of power, space, server’s costs, cabling costs, coupled with a force multiplier in its IT department. On the other hand, the main negative effect of the change is that a considerable number of employees will lose their jobs. Though it is beneficial to the company, it may be detrimental to the economy as a whole. It means that the unemployment rate will rise, rendering huge proportion of the population jobless. This also is against the goodwill of the company in dealing with the corporate social responsibility. The company has to act precisely in consideration of all the internal and external effects. There has to be an equilibrium point that will maximise both the factors (Talwar, 2006).

In conclusion, change is inevitable in an organization but it should be managed properly to achieve the numerous benefits that accompany the change. For a change to be implemented properly strategies should be designed and developed that will see proper implementation of the change. Good practices should be put in place to aid in change management. Such practices include developing a top-bottom approach, which will ensure a zero tolerance to unauthorized change as well as promote an organizational culture. In addition, there will be enhancement of monitoring unplanned outages to exercise control over the change, putting in place risk mitigation strategies and finally measuring success that has accrued due to implementation of a given change.

Change Diagnosis

Coca-Cola is a multinational enterprise with subsidiary companies in nearly all corners of the world. The higher management of the company has their offices in company’s headquarters in Atlanta, this creates a distant contact between the higher management and employees. When the contact between employers and employees is huge, management tend to change its methodologies. The decision of Coca-cola to outsource its data center to Hewlett Packard come about because of some analysis carried out by the company’s management.

The company is the second largest in non-alcoholic beverage industry in United States with the presence in more than 11 states and serves a total customer base of 18 million. The company is engaged in the manufacture, sale and delivering of the beverages. The company was initially using low-cost servers for applications such as workgroup collaboration and sales force automation. The low-cost servers added to server spread out. This lead to data center outgrows the available cooling and power capacity. The company shifted to server virtualization but it proved to be slowing the network performance. Though the company required a 10 Gigabit Ethernet without the expense of putting up an additional building, they had to a build a new data center. The data center network was meant to assist in storage together with the present servers before the company could migrate gradually to a unified fabric (Asongu, 2007).

After the completion of the structure and the organization began to migrate gradually, it came at a point in time when leases are maturing, equipments ageing as well as company development of new applications. The organization adopted Cisco as a new design data center, which enabled it to consolidate the existing 80 servers to 4 only. The move came with benefits such as lower server costs, SAN costs, Cable costs, cooling costs as well as a “force multiplier” for IT and power and space savings.

The company achieved much with the new data center, but they had to move to a switch Cisco Nexus 1000V that is embodied in the server.  This saw the separation of responsibilities for network group and server group and promoted freedom with minimal concerns on security settings and quality of service. The company’s quench to improve its efficiency in production across the world as well as mounting costs that are incurred in the IT department, lead to the company’s move to Outsource its data center to Hewlett Packard (HP). This was aimed at collaborating global IT functions into a new GBTS (Global Business and Technology Services) unit.

The company decision to implement the change was based on factors such as a cost saving, cost restructuring, improved quality, focus on core business, improved quality, access to talent, knowledge, operational expertise, capacity management, catalyst for change, enhance the capacity for innovation, contract as well as risk management.

Outsourcing Implementation Strategy

Products normally undergo a number of stages that include introductory stage, growth stage, maturity stage and decline stage. During each stage consumer’s exhibit different characteristics, the introductory and growth stage is characterized by stiff competition; vary product features, quality differences as well as few standards. In the maturity stage products undergoes minimal rapid changes, the product appeal well in the market, their market saturation and minimal standardization and differentiation. In the final stage, production declines are firms starts to quit the industry.

This paper will utilize Porter’s position to outsourcing of data centers to HP, initiating from development of infrastructure all the way to applications (mature), then it continues to new development and in the final stage rests in business processes outsourcing (growth). When outsourcing IT there are two questions that, come forth, what to and how to outsource? Gartner developed an ascending value chart that stipulates the different areas of IT that can be outsourced.

The chart begins with Data/Network center/Desktop support to legacy application-to-application development and finally business process automation. When an area of IT is identified and picked for outsourcing, there are two decisions that need to be made: how to outsource and how to tie the outsourcer closely to the organization; from growing and coaching the business, to a model that augment staff, then collaborating and finally complete outsourcing.

The company will adopt a complete outsourcing model; this means that specifications will be sent to Hewlett Packard for development of an entire system and the delivery of the system. This move has some limiting factors such as integration costs, communication costs and getting requirement up-front that is complete. In addition, the model creates additional potential risk.

The company through its promise to have IT employees being employed by Hewlett Packard and others who is not employed given huge sums of money ensured that the move gets support from the employees’ welfare team.

To ensure implementation of the strategy, the company assembled the necessary resources and utilized them, they put into practice the plans chosen, marshal commitment and the resources necessary for progress, build new capacity as well as tap existing potential and forge ahead for results achievement (Bodden, 2008).

The mechanism for monitoring the strategy ensured that progress is geared towards the attainment of organizational goals and establishing whether the changes in the external environment will necessitate any change of strategy. Plans and actions should be modified to facilitate accommodation of the changes in the operating environment. The change received resistance from workers since it was threatening their security, in terms of job loss. The management had to involve them involve them in the process and offer them alternative remedial action. Most of them were to be taken in as employees for HP and others compensated for the loss. The management employed a rational-adaptive strategy to manage resistance to change. The employee is given enough reasons for the move undertaken by the company (Dessler, 2000).

Results

The company expected a chunk of benefits and performance from outsourcing, but as it is evident, outsourcing has both positive and negative impacts. The company’s objective of improving efficiency in production as well as attaining competitiveness in the global market has been attained through outsourcing. The company has also minimized costs in terms of power and space, server’s costs, cabling costs, coupled with a force multiplier in its IT department. The company can manage its data concerning sales, manufacturing processes and deliveries in an efficient and affordable manner.  Cost management is being witnesses through streamline of the workforce, where employees in IT department will be transferred to HP Company.  In terms, of quality the company has recorded improvement in nature and how data is stored. This is significant and it appeases the shareholders as well as the economy as a whole (Eldred, 2008).

Data management is free from any threats and quality issues. Connectivity has improved with minimal or no interference on the network. The company has much to celebrate out of the change to outsource in relation to risk management; the outsourcer will be responsible for mitigating any possible risk that can potential harm the company. In addition, the existing body of knowledge, skills and experience that accrue from the outsourcer are essential in improving customer loyalty and brand name in the global market. The company has since recorded high volume of sales and deliveries.

On the other hand, the main negative effect of the change is that a considerable number of employees will lose their jobs. Though it is beneficial to the company, it may be detrimental to the economy as a whole. It means that the unemployment rate will rise, rendering huge proportion of the population jobless. This will indirectly affect the company through low demand for its product. It can also lead to nativism and protectionism in the long-run. Outsourcing puts the organization concern in the outsourcers’ mercy. This is because the outsourcer will control all the resources that are necessary for the project (Ivancevich, 2006).

Conclusion

Through outsourcing such benefits as lower server costs, SAN costs, Cable costs, cooling costs as well as a “force multiplier” for IT and power and space savings accrue to an organization.  Change is inevitable in an organization but it should be managed properly to achieve the numerous benefits that accompany the change. For a change to be implemented properly strategies should be designed and developed that will see proper implementation of the change. In addition, strategy-monitoring process has to be effected to ensure that the implementation of the change is in line with the objectives of the organization. The monitoring programs should be coupled with the plan and actions that will take care of resulting influences from the external environment.

Good practices should be put in place to aid in change management. Such practices include developing a top-bottom approach that will ensure a zero tolerance to unauthorized change as well as promote an organizational culture, monitoring unplanned outages to exercise control over the change, putting in place risk mitigation strategies and finally measuring success that has accrued due to implementation of a given change.

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