Compare and contrast the costs of owning and operating your own fleet with that of contract hire, economics homework help

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Economics

Description

Your company has traditionally operated a fleet of vehicles wholly owned by the business and maintained on its principle site with full facilities. Due to the huge financial investment involved, the Board of Directors are formulating a strategy for the future with one area of investigation being the possibility of changing vehicle sourcing to contract hire.

As the Transport Manager, using a fleet type of your choice:

a) Compare and contrast the costs of owning and operating your own fleet with that of contract hire. b) Within a contract hire model, analyse the changes in control of the fleet that can be expected and outline how this model might meet sudden changes in demand. c) Discuss the effects of totally outsourcing your transport requirements whilst still meeting the expectations of your customers.

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Explanation & Answer

Attached.

In House Operation or Outsourcing
Thesis statement: Choosing between in house operations and outsourcing strategies of doing
business calls for someone to consider the pros and cons of either of the two strategies.
1) The difference between in house operation strategy and outsourcing
2) Factors to consider when deciding the strategy to use
3) Comparison between the cost of owning and operating the company’s own fleet and
outsourcing
a) Purchase, maintenance and disposal of vehicles
b) Efficiency
c) Insights
d) Training
e) Benchmarking
4) The changes in control of the fleet in contract hire model that can be expected and how
this model might meet sudden changes in demand
a) Legal requirements
b) Technological change
c) Economical change
5) Effects of totally outsourcing transport requirements whilst still meeting the expectations
of the customers
a) Positive effects
1) Speedy deliveries
2) Safer traveling
b) Negative effects

1) Low quality customer service
2) Slower issue resolutions
6) Conclusion


Running Head: IN HOUSE OPERATION OR OUTSOURCING

In House Operation or Outsourcing
Institution Affiliated
Date

1

IN HOUSE OPERATION OR OUTSOURCING
Introduction
The major aim of a business is to realize profits. This means that businesses should make
effective decisions from time to time to guarantee that they get profits. The need to maximize
profits also calls for businesses to make effective decisions that would lead to this. These
decisions range from which region to operate in, which employees to get for the needs of the
business, best methods or advertising and which business strategies to use amongst others
(Merrill, 2015). Businesses use two major strategies in conducting their operations. A business
can decide to use either in house operations strategy or outsourcing strategy or both.
The difference between In house operations strategy and outsourcing
Just as the name suggests an in house operations strategy means that all the business
needs of a given company are taken care of in house, without input from a source without. Going
by this strategy, it means that a company uses its own employees, resources, management to take
care of its needs. Outsourcing, on the other hand, means that a company does not handle all its
business needs within. It means that a company transfers some portions of its work to other
company to be completed externally other than internally because of the benefits that it stands to
get from the same.
Factors to consider when deciding the strategy to use
Since the major aim of doing a business is to make profits, my company should ensure
that it considers different things while deciding the strategy to go with. Proper decision-making
process leads to effective results and as such, it should be paid attention to (Chandra, 2005. One
of the factors to consider is the control, which the manager of the company will maintain if a
company chooses to go with either of the strategies. As it is, with in house operations strategy,

2

IN HOUSE OPERATION OR OUTSOURCING
the manager has all the control of the business but this changes with outsourcing as now input
from an external company will always be at play. Another factor to consider is the value that the
firm wants to give to its customers. With in house operations, the quality is always high because
the manager will know the customers even at a personal level, which makes it easy to fulfill the
needs of such a customer fully. With outsourcing, however, this is not guaranteed because a
company that offers such services has a lot of customers t...


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