Assighment Essay Example | Topics and Well Written Essays - 1250 words

Assighment - Essay Example It is through this book that various aspects of the hedge fund scheme are being addressed, and how investors should go about resolving the imbalance created by hedge fund managers. It is true that there is a lot of money to be made from hedge funds, because the success of most hedge funds proves that opportunities are present (Lack 42). In an aggressive, fast-changing business environment, individuals are always coming up with ways in which they can benefit from each other. However, the vulnerability of some individuals, especially with regards to finances, is being capitalized on by individuals who are willing to make quick cash from susceptible folks. It is in light of this that the author sought to address some of the aspects that surround hedge funds. The author describes how to tackle the menace that arises from investment managers, and how to become stronger when opportunities are likely to occur once an individual chooses to invest (Lack 46). Summary of the book According to S imon Lack, investors need to be cautious of the risk hedge funds pose on their unsuspecting nature. It is true that hedge funds can be a lucrative source of capital, but the manner in which people are losing their money is not worth ignoring. First and foremost, the charges required to invest in a hedge fund, according to the author, tend to always be ridiculous. It is the author’s belief that half the money invested by investors could make more returns had they put invested in treasury bills (Lack 51). All these assumptions point or lead to one conclusion that; hedge funds are in business for their own interest, and not those of their investors. This bold statement makes one wonder of all that is currently happening to the invested money that happens to find its way into hedge funds. This is also described in the book when the author insinuates that investors lose almost 25% of their invested money to the hedge fund industry. The superior rate of returns, often hyped by hedg e funds, is usually a ploy to have people invest in something that may not necessarily wield high returns (Lack 53). The author believes that even the traditional methods of investment have better luck in having better/higher returns as compared to the glorified schemes of hedge funds. The numbers, as the book suggests, do not add up or are not consistent with what is actually happening in these organizations. It is this claim that leads to the casting of doubt on the whole hedge fund charade. The controversial manner in which the author divulges information about the hedge fund industry brings to light some of the common mistakes people make, and why it is vital to be open-minded when it comes to deals that are too good to be true. Strengths and weaknesses of the book The manner in which the author divulges this information is done in a simple, much easy to understand language. Simple examples have been used to describe scenarios in which individuals are often in, and how they are susceptible to manipulation once the promises of exceptional returns are introduced. No financial or mathematical complexities have been used, so it is easy for even the not so avid reader to comprehend. Moreover, the anecdotes that the author knits into the book form a basis for a relaxed atmosphere where the

Sustainable Supply Chain Management Assignment Discussion Essay

Sustainable Supply Chain Management Assignment Discussion - Essay Example Furthermore, there have been increasing concerns over the long-term effects of these processed foods such as diabetes and obesity and a myriad of other dangerous health conditions. According to research by Oxform, none of the top 10 big multinationals has registered a positive overall rating in their public health policies or commitments especially as pertains to their supply chain. This is probably why in recently millions of packaged food products containing horsemeat instead of beef were distributed in America and Europe; that a firm with such a wide scope could make a great error in their supply chain is evidence that they were not taking their corporate social responsibility very seriously. The aim of this paper is to discusscorporate social responsibilities concerning global supply chains and the development of shared values within the corporates. The Oxform report, â€Å"Title Behind the Brands† goes on to place the multination to task for their extreme secrecy in opera tions, which makes it difficult for sustain and verify their claims of social corporate responsibility (Cofino, 2013). According to this report, despite the fact that 80% of the global populace is perennially hungry; enormous tracts of land are used in the production of unhealthy foods and snacks which in no way address the problem. There is a direct connection, according to oxform, between the global poverty endemic and the food and beverage industry, this is because the sourcing strategy for the fast food industry. Poor nations have supplied the multinationals; most of which are located in the West with products such as tomatoes, soy, coffee, tea, corn and so on; the final products of their exports are fast foods retailed in the west and are of little use in dealing with the hunger issues. In this nations there are a myriad issues ranging from child labour, unfair wages and poor working conditions, as a result firms sourcing their supply from these countries often be highly critic ized for profiting from the problems therein (Schlegelmilch and Obersede 2007, p.14). The report is highly critical of the corporates actions since in their attempt to assist the farmers who produce these raw materials, they focus on superficial aspects such as training farmers on matters, such as irrigation. However, they fail to address the underlying problem of poverty and in a way of their help, they are actually just enhancing their supply base as opposed to actually, assisting people solve the underlying problems(Agbonifo, 2011). In case they were willing, the corporates can ensure workers earn decent pay, asses and eliminate the root cause of hunger and poverty from the areas where they get their supplies. Nevertheless, majority choose to do nothing significant in those respects and do not feel obligated since they lack proper polices for guiding their supply chain operations. The study involved some of the leading food producers in the world such as coca cola, Unilever assoc iated British foods and nestle; these firms were judged based on their standards in several areas such as transparency and their consideration for the rights of workers and food safety. Sadly, very few were able to give a substantiated account of how they deal with suppliers and how they ensure that ethical practices are maintained throughout the supply chain. Associated British foods were ranked last with 19%; its transparency was the lowest, among other things it was discovered that much of the sugar

Factoring Essay Example | Topics and Well Written Essays - 250 words

Factoring - Essay Example Even though, it was not highly developed in the early centuries, major improvements have taken place in the 18th, 19th and 20th centuries. The factoring of Greatest common factors was developed in a mounting manner, with the leaders embracing it. Factoring was a royal sport which, Kings sponsored inform of contests, and the ones who emerged best in Europe went from court to court to display their skills. Techniques of trinomial factoring were secrets that were closely guarded, and topics of betrayals and intrigues. According to Mano, (pg 16) it was also developed because it helps in proving theorems in the modern number theorem such as unique factorization. It also made the computation of GCD of big numbers more efficient since it does not require more steps in division than five times the digits number (base 10) of the lesser integer. Trinomial factoring is generally aimed at improving complex integral operations and making them simpler. In medical fields, Fractional trinomials have been suggested in studies involving epidemics to investigate functional forms of continuous predictor variables. In clinics, it has been more desirable categorize patients into various prognosis groups. E.g. children, youths and adults, or diagnosis groups .E.g. ulcer, tumor and cancer. Medical distributional measures like lower, middle and upper quartile is usually done in classified age groups (e.g. 15-20, 21-25†¦). It makes hospital operations involving numbers easier than when done in other ways. Man, Carlos. "The History of Polynomial Factoring | eHow.com." eHow | Articles & More - Discover the expert in you. | eHow.com. N.p., n.d. Web. Nov. 2012.

Sustainable Supply Chain Management Assignment Discussion Essay

Sustainable Supply Chain Management Assignment Discussion - Essay Example Furthermore, there have been increasing concerns over the long-term effects of these processed foods such as diabetes and obesity and a myriad of other dangerous health conditions. According to research by Oxform, none of the top 10 big multinationals has registered a positive overall rating in their public health policies or commitments especially as pertains to their supply chain. This is probably why in recently millions of packaged food products containing horsemeat instead of beef were distributed in America and Europe; that a firm with such a wide scope could make a great error in their supply chain is evidence that they were not taking their corporate social responsibility very seriously. The aim of this paper is to discusscorporate social responsibilities concerning global supply chains and the development of shared values within the corporates. The Oxform report, â€Å"Title Behind the Brands† goes on to place the multination to task for their extreme secrecy in opera tions, which makes it difficult for sustain and verify their claims of social corporate responsibility (Cofino, 2013). According to this report, despite the fact that 80% of the global populace is perennially hungry; enormous tracts of land are used in the production of unhealthy foods and snacks which in no way address the problem. There is a direct connection, according to oxform, between the global poverty endemic and the food and beverage industry, this is because the sourcing strategy for the fast food industry. Poor nations have supplied the multinationals; most of which are located in the West with products such as tomatoes, soy, coffee, tea, corn and so on; the final products of their exports are fast foods retailed in the west and are of little use in dealing with the hunger issues. In this nations there are a myriad issues ranging from child labour, unfair wages and poor working conditions, as a result firms sourcing their supply from these countries often be highly critic ized for profiting from the problems therein (Schlegelmilch and Obersede 2007, p.14). The report is highly critical of the corporates actions since in their attempt to assist the farmers who produce these raw materials, they focus on superficial aspects such as training farmers on matters, such as irrigation. However, they fail to address the underlying problem of poverty and in a way of their help, they are actually just enhancing their supply base as opposed to actually, assisting people solve the underlying problems(Agbonifo, 2011). In case they were willing, the corporates can ensure workers earn decent pay, asses and eliminate the root cause of hunger and poverty from the areas where they get their supplies. Nevertheless, majority choose to do nothing significant in those respects and do not feel obligated since they lack proper polices for guiding their supply chain operations. The study involved some of the leading food producers in the world such as coca cola, Unilever assoc iated British foods and nestle; these firms were judged based on their standards in several areas such as transparency and their consideration for the rights of workers and food safety. Sadly, very few were able to give a substantiated account of how they deal with suppliers and how they ensure that ethical practices are maintained throughout the supply chain. Associated British foods were ranked last with 19%; its transparency was the lowest, among other things it was discovered that much of the sugar

Quantitative Techniques for Business Project Essay

Quantitative Techniques for Business Project - Essay Example This assignment studies behavior of stock prices at daily interval for the period from July 20, 1988 to July 20, 2009. Figure 1, 2 and 3 illustrate the dynamic character of stock prices respectively of companies Microsoft, Intel, and H&P. The graphical views tell us that these three stocks exhibited exponential growth from the beginning until the middle of 2000. All three stocks later dropped in prices by 30%-% 40% in about 24 moths. They never achieved the previous peak. Microsoft maintained stable prices for the rest of the period while Intel and Hewlett & Packard went through bumpy roads. The dynamic character of Apple stock was different from that of previously mentioned stocks. Figure 4 shows the asymptotic behavior of Apple stock prices from the beginning of the observation period until the middle of 1999. In the latter period, Apple stock price exhibited exponential growth until was hit by the global financial crisis of 2008. Apple’s sudden growth after the mid-1999 can be associated with the release of new products and services. The exponential growth of Microsoft, Intel and H&P stock prices from 1988 until 2000 should be contributed to the development of digital technology of that time. Thus, we can conclude that the innovation and new products influence the rise in stock prices. At the same time, irrespective of innovation, the overall market condition also causes influence on the stock prices. Figure 5 depicts S&P 500 index values from September 26, 2008 to November 21, 2008. In 41 days, the index dropped by 34%. This incident is named as the Global Financial Crisis of 2008. It caused a drop in prices of Microsoft, Apple, Intel and H&P stocks respectively by 27.69%, 35.61%, 31.13%, and 27.55%. This assignment is using time-series data of stock prices. Let Pt be the price of an asset at a time index t and P t-1 at a time t-1. We assume

ABC Co. Marketing Strategy Case Essay Example for Free

ABC Co. Marketing Strategy Case Essay ABC Manufacturing Company is a manufacturer of fine furniture designed to resemble the furniture used in various historical periods. The companys furniture is sold by approximately fifty dealers throughout the United States and in several foreign countries. Dealers are carefully selected by ABC to be sure they maintain the high quality imagine that ABC has established in its 100-year history of making fine furniture. Most dealers sell only ABCs furniture, but a few also sell noncompeting lines of similar quality. Dealers who sell only ABCs furniture are franchised to do business under ABCs trade name and would appear to the public to be branch stores rather than independent business. ABCs factory is a three-story building of heavy timber (mill) construction located in a New England town of 2,500 population. The first floor is used for warehousing and office space, and the two upper floors house the production facilities. The building is 75 years old and has been occupied by ABC since its construction. The local fire department is above average for towns of this size, but its water supply system does not have adequate reserve capacity to maintain pressure for fighting a major fire over a period of several hours. See more:Â  First Poem for You Essay Adjacent to the factory building is a large frame structure used by ABC to store seasoned lumber for its furniture. Lumber is first air dried in the yard adjoining the shed, with the exact drying period depending on the kind of wood involved. The air-dried wood is then kiln dried in ABCs own kiln, after which it is stored in the frame storage building until needed. ABCs power plant is located in a brick building about 50 feet from the main plant. It furnishes heat and steam for all operations. Water for the stream boilers is drawn from a large river adjacent to the power plant. Electricity is purchased from a public utility. Due to the length of the seasoning period, ABC usually has on the premises a supply of lumber adequate for four months of operations. Much of the lumber is purchased within a 200-mile radius of the factory, but substantial amounts are purchased from more distant sections of the United States or from foreign countries. For example, mahogany lumber, which is used in almost half of ABCs products, is imported by ABC from Latin American and Africa. Most of the lumber arrives at ABCs yard by railroad and is shipped FOB point of origin. The imported lumber is shipped by water to the nearest port, approximately 100 miles from ABCs factory, and then by train to the factory. Some locally produced lumber is delivered to ABC by truck, FOB ABCs yard. Workers in ABCs factory use some small power tools, such as saws, planers, lathes, and similar equipment. However, the production process is primarily manual. Highly skilled craftsmen build the companys products, using many of the same techniques that were used two centuries ago. Furniture finishing is done by hand, and most of the stains, varnishes and other finishing materials are compounded by ABCs employees according to the companys proprietary formulas. ABCs labour force is very stable because each craftsman undergoes a lengthy apprenticeship in the plant and because ABC pays wages that are relatively high by the standards of the community. Management considers the high wages to be necessary because of the time and expense required to hire and train a replacement for a craftsman who leaves the firm. Some finished furniture is shipped by railroad, but most of it is shipped by contract carrier trucks. The contract with the trucker does not include any provision relative to liability for damage to goods in transit. Export shipments are transported by truck to the nearest port and by water to the country of destination. All shipments are made FOB purchasers warehouse. All sales, including export sales, are made on open account and only to ABCs established dealers. Export accounts usually are denominated in and payable in the currency of the importers country. Accounts receivable, on the average, are equal to about one-eighth of annual sales. Accounts receivable records are kept on ABCs computer in the office section of the first floor of the factory building. The computer is also used for inventory and production control, payroll management, and other accounting functions. The computer equipment is owned by ABC. The office is cut off from the warehouse section of the first floor by a wood partition. The office and computer room are air conditioned, but the remainder of the building is not. Duplicate computer tapes, updated weekly, are stored in a well-protected vault in another part of the city. A monthly fee is paid for the tape storage. ABC owns several small trucks that are used to move lumber about its own premises and for local pickup and delivery. The trucks are kept in the lumber storage shed when they are not in use. Several lift trucks are used for moving lumber and other heavy items in and around the factory and lumber storage area. A freight elevator moves materials, finished furniture, lift trucks, and other equipment between floors in the factory. Automatic grillwork gates have been installed to prevent workers from falling into the elevator shaft. There is no passenger elevator. Workers use either the freight elevator or the open stairwells when moving between floors. Steel fire escapes have been installed on the exterior of the building to facilitate evacuation of the upper floors in case of fire or other catastrophe. ABC Manufacturing Company is wholly owned by its president, Mr. Carpenter, who is the grandson of the companys founder. Mr. Carpenter is considered wealthy by local standards. However, his fortune consists almost entirely of the stock of ABC Manufacturing Company, and he is dependent on his salary and company dividends for his livelihood. Nearly all of ABCs operating profit has been paid in dividends in recent years. Consequently, the company has only a modest cushion of liquid assets in excess of its operating needs. Profits have been consistent, but they have been relatively low because of the inefficiency of the present factory facilities. Although the dollar amount of ABCs sales has increased steadily because of price increases, the physical volume of sales has remained almost constant over the past several years. The lack of growth has resulted primarily from two factors. First, the present plant cannot accommodate greater production because of space limitations, and there is no available land adjacent to the plant to permit expansion. Second, the long training period required for new employees prevents rapid expansion of production. Mr. Carpenter has considered building a new factory at another location in the same town. However, such a move is not financially feasible unless the present plant can be sold, and no prospective purchasers have been found. A move to any location outside its present hometown would not be practical because of the companys dependence on its well-trained craftsman. The sales manager estimates that both the dealer network and sales could be increased by 30% over the next 5 years if production facilities could be provided. The cost to rebuild the present factory building in its present form would be $2.5 million. However, Mr. Carpenter has indicated that he would not build a new mill-type building to replace the current structure because of the high cost of the thick brick walls and heavy timber interior construction. A new, one-story, noncombustible masonry and steel building of comparable floor area would cost approximately $2 million to build and would be more efficient for ABCs purpose. The actual cash value of the present factory building is estimated to be $1.5 million, and ABC has insured it for that amount against fire and the extended coverage perils. The lumber storage shed, power plant, table and lumber kiln are also insured for their actual cash values. The following table shows the actual cash value and replacement cost for each of the structures. Table 1: ABC Company Building Values ___________________________________________________________________________________ BuildingActual Cash ValueReplacement Cost Factory$1,500,000$2,500,000 Lumber shed 150,000 200,000 Power plant 230,000 300,000 Kiln 270,000 320,000 ___________________________________________________________________________________ ABCs annual premium for fire and extended coverage insurance is $136,000, including the coverage for contends of the buildings and for lumber stored in the yard. There have been no fire or extended coverage losses during the past five years and only minor losses prior to that time. The companys estimated annual workers compensation premium is $165,000. Loss experience has been fairly consistent from year to year. Based on past experience, with adjustments for inflation and current benefit levels, normal losses of $104,000 can be expected. The most frequent claims have been small and have resulted from such minor injuries as splinters in hands, several minor dermatitis cases, and sawdust or metal particles in eyes. The more serious injuries have included back strains and loss of fingers in power saws and other power tools. ABC now has 15 percent debit under workers compensation experience rating plan. (That is, they are paying a rate 15% greater than manual rates). Questions 1. Identify the following loss exposures faced by ABC Manufacturing Company: 1) Direct property loss exposures 2) Indirect property loss exposures 3) Liability exposures 2. Your suggestions in risk management for ABC Company Case 2: Bite-O-Burger Company (Risk Management and Insurance) Description of Operations The Bite-O-Burger Company is a publicly held corporation. It owns and operates 843 fast-food restaurants located in eleven states in the United States. The restaurants feature a limited menu consisting of hamburgers, French fried potatoes, fried chicken, chili, related food items, and nonalcoholic beverages. The restaurants vary in size, but each is located in a free-standing building and surrounded by customer parking areas. All of the buildings were built to Bite-O-Burgers plans and specifications and share enough architectural characteristics to make them easily recognized as units of the chain. All have forced air heat and are air conditioned. At current prices, the average replacement cost of the restaurants is estimated at $125,000 per unit for the building and $100,000 for the equipment. Because of differences in size, the replacement cost, including building and equipment, ranges from $175,000 for the smallest restaurants to $300,000 for the largest. The average actual cash value is $205,000 for building and equipment combined. The restaurants vary in age from a few days to approximately 20 years. All of them are owned by Bite-O-Burger, but the newer ones are subject to substantial mortgages. The home office of the company is located in leased space in a building in the business district of a midwestern city. Bite-O-Burger occupies the upper three floors of the thirty-story building. The companys data processing centre is located on the top floor. All of the computer equipment is leased from the manufacturer. Bite-O-Burger also occupies a leased warehouse near the home office. It is used for storage and distribution of supplies (paper cups, wrapping materials, etc.) and nonperishable food items. Perishable food items are purchased from local suppliers near the restaurants in which they will be used, and they are delivered directly to the restaurants by the suppliers. There is no refrigeration equipment at the warehouse, but each restaurant has a large, walk-in refrigerator. Items from the company warehouse are distributed to the individual restaurants by a fleet of 30 owned tractor-trailer units. The same units also transport goods from the suppliers to the central warehouse when truck-load quantities are purchased. Smaller lots are shipped by common carrier FOB point of shipment. The values of the contents at the warehouse and home office are $15,750,000 and $3,200,000, respectively. Values at both locations are relatively constant throughout the year. Bite-O-Burger advertises extensively in newspapers in the cities in which it has several restaurants. Many of its advertisements feature endorsements of its products by prominent athletes and theatre personalities. Some advertisements feature pictures of local people and their favourable comments on the companys food and service. The company also sponsors softball and bowling teams in some cities as a part of its public relations program. Bite-O-Burgers profit and loss statement and an abbreviated balance sheet for last year are shown in Tables 2-1 and 2-2. The companys operating results for last year were typical of past years, but sales and assets have been growing at a rate of approximately 20% per year. Bite-O-Burgers fire and extended coverage losses for the five years are shown in Table 2-3. The quotations shown in Table 2-4 have been obtained for fire and extended coverage protectionblanket on buildings and contents on an actual cash value basis. Bite-O-Burger is well aware of the fire exposures associated with restaurants. Extensive fire control equipment has been installed in the kitchens of all units, and especially in the range hoods and in the cooking areas.

Advantages Of Outsourcing To Multiple Providers Information Technology Essay

Advantages Of Outsourcing To Multiple Providers Information Technology Essay Globalisation involves higher competition resulting in companies looking for gaining competitive advantages over others. The globalisation vs. localisation discussion is linked to the question of outsourcing vs. insourcing (appendix A.1). Outsourcing consists of nearshore outsourcing and offshore outsourcing. The latter will be applied in this paper. For some companies, outsourcing may be a possibility to achieve competitive advantages. For other companies insourcing could be the better solution. Furthermore, companies, when coming to the decision to outsource, have to face the paradox whether to outsource to a single service provider or to multiple. Firstly, outsourcing and insourcing are presented generally in order to facilitate important information about outsourcing to a single supplier. Then outsourcing to multiple suppliers is explained with advantages, disadvantages as well as governance and finally IT outsourcing is demonstrated. This is shown in a practical example, a case study: Shell Outsourcing Deal 2008. Shell outsourced its IT to three service providers. This example merges outsourcing to multiple suppliers with IT outsourcing and reveals the theoretically explained aspects in practice and why Shell decided to outsource its IT to multiple suppliers. Outsourcing generally describes the transfer of goods and services, which were performed with own means by the company, to a third party (Online Lehrbuch S. 2). The service provider , generally one, takes over the complete responsibility for the outsourced field. Offshore outsourcing is linked to the transfer of companys activities to wholly owned subsidiaries or service providers to other countries from the customers location (Oshri et al., 2009, p.15). These countries have enormous and easily accessible resources which offer competitive advantages to the outsourcing company (Offshore Outsourcing, 2011). Are the companys activities transferred to a neighboring country, this is called nearshoring. Benefits of nearshoring are e.g. the connection in regard to the geographical, temporal, cultural, linguistic, economic, political, and historical (Oshri et al., 2009, p.46) situation. Outsourcing to a single provider offers companies several advantages in a globalising world to obtain the increasing competition. Advantages of outsourcing Disadvantages of outsourcing Cost advantages as special knowledge saves time, costs for personnel and investments are broken up on several companies and fixed capital can be utilised elsewhere as well as the the liquidity of the company can be increased In reality costs often rise when outsourcing potentials are not used sufficiently or specific outsourcing costs were not considered in the planning, fixed costs are insufficiently reduced, costs for the service provider can be higher than own costs as many companies miscalculate own costs Higher strategic flexibility in regard to market changes Performance risks as knowledge and know-how wander off Investments undertaken by supplier Additional entrepreneurial load as higher security is necessary Access to external know-how Possible resistance in the workforce Increase of possibilities for innovation due to collaboration Dependence on the service provider and excessive demands Smaller companies can adapt to current standards and achieve requirements Suffering of quality due to weak communication, shortage in resource or capacity and capability of service provider Discharge for companies in areas, which do not belong to their core competencies Langauge and culture barrier risk to communication Fig.1: Advantages and disadvantages of outsourcing (Expertscolumn, 2009; OnlineLehrbuch, 2011). By managing and minimising the above mentioned risks due diligence plays an important role (Reed, 2011). Moreover, it is important to understand the risks companies face when outsourcing as those can also enhance due to the geographical distance between the company and the service provider. To avoid the emergence of any of the mentioned risks the partners should keep a risk register which distinguishes and lists all possible risks connected to the outsourced service. This should be then maintained over the whole period of operations. 2.1.2 Insourcing in general Insourcing describes the reintegration of processes, belonging to the core competencies of a company, which possibly have been outsourced before (Gabler Wirtschaftslexikon, 2011). Advantages of insourcing Disadvantages of insourcing Transparency and comparability of costs for particular goods and services Higher costs due to initial costs, labour costs and costs for materials Decrease of dependence on suppliers Training period for employees Increase in scope for actions Foundation of a new department (potentially) Integration of goods and services in the company processes Creation and determination of tools for controlling the work flow Encouragement of internal competencies Arising of synergy effects Consistency in the data Fig.2: Advantages and disadvantages of insourcing (Active Sourcing AG, 2011; Leads Stà ¼rmer, 2011) 2.2 Outsourcing to multiple suppliers Today, many companies outsource not only to one service provider but to multiple as this offers them even more competitive advantages (Siemens, 2011). The main point for the success of outsourcing is to outsource the correct task to the correct supplier using the correct contracts and a powerful governance process. Various business conditions favour using multiple suppliers than just one. Firstly, business complexity: Companies have different levels of business complexity. Generally, industries which change slower have easier manageable environments, constant processes and accountable needs. For these companies long-term outsourcing to one service provider offers great options. However, many companies do not have the environment mentioned above. For these organisations long-term outsourcing to a single service provider is risky as they have varying support needs and dynamic operations and generally no single service provider can offer the technical and geographical expertise to fulfill their needs. For these companies, which show a higher level of business complexity, outsourcing to multiple suppliers might be a more effective approach considering that they have the internal abilities and governance structures to manage this approach. The independence of separate business units in a company can vary in regard to budgets and decisions about service providers and support. Separate business units often work out individual business applications. The higher the level of independence of business units, the greater the challenge of creating controlled and managed support. Therefore many companies, having a high level of independence, prefer outsourcing to multiple suppliers as their business units have the liberty to choose individually according their needs. Nevertheless, the central departments can keep control. 2.2.1 Advantages of outsourcing to multiple providers Outsourcing to multiple providers exists in various kinds (Siemens, 2011). Diverse suppliers can be chosen to support e.g. diverse business units or business lines. Companies can also choose suppliers by reason of their expertise or geographic location and coverage. Fig. 3: Overview of outsourcing to multiple providers (Practical Law Company, 2007) Advantages of outsourcing to multiple suppliers Disadvantages of outsourcing to multiple suppliers Better levels of control and management Management of several suppliers Flexibility to decide on providers which meet particular needs (e.g. shorter durations for companies rethinking and reorganising promptly) Ensurement of a good level of cooperation amongst suppliers responsiibility is doubled (organisation and suppliers) Improvement of service delivery Interdependencies can complicate and obstruct activites Stimulation of competition between the suppliers, e.g. dependence Service providers working in alike sectors may be careful regarding sharing information when cooperating Reduction of risks generated when outsourcing to a single provider Fig.4: Advantages and disadvantages of outsourcing to multiple suppliers (Siemens, 2011) These aspects show that single service providers are generally not able to solve all outsourcing and service needs. The skills necessary to support distributed infrastructure are most likely distinctive to those supporting particular business applications. 2.2.2 Governance of outsourcing to multiple service providers Being successful in any outsourcing involvement is based on various points (Oshri, et al., 2009, p.112). Setting up an outsourcing governance in the company can enhance a possible success. Therewith companies introduce a higher complexity of the outsourcing relationships, an internal team, best practices and instruments to assure an advantageous management. Most companies use a three-tier structure when designing the governance (Oshri, et al., 2009, p.113). This includes executive-to-executive relationships concentrated on relationship management and on joined goals. An outsourcing management operates between executives, business units as well as outsourcing project teams. The operational management is concerned with day-to-day issues. Important is that companies do not reduce the management concentrating on the actions. To achieve the benefits, outsourcing offers, governance plays an important role. 2.3 IT outsourcing Reasons to introduce outsourcing in the area of IT vary from one company to another (Dibbern et al., 2004). However, a few reasons explain the decision to outsource in general: The managers interest in reducing costs or outsourcing as a possibility to establish a new department, when the former failed. Some companies, which main competence is not IT outsource its IT department to assign time-consuming issues to other companies. This can be especially advantageous for companies whose actions can change significantly from one period to another. 2.3.1 IT outsourcing lifecycle Fig.5: IT outsourcing lifecycle (Oshri et al., 2009). The IT outsourcing lifecycle, established in 2005, consists of four phases: architect, engage, operate and regenerate (Oshri et al., 2009, p.94). These phases are subdivided in 9 blocks. Each phase and the attached blocks design the way for the next phase. This means that the success of each block depends on the previous ones. The architect phase incorporates four blocks and builds the basis for outsourcing ventures (Oshri et al., 2009, p.96). The first block is named investigation and aims to replace ideological beliefs with goals. Therefore the company gathers information. The second block target is set out to identify in which areas outsourcing would be advantageous. For that reason goals are matched to an appropriate outsourcing model. Moreover, criteria for possible service providers and the scope of outsourcing are determined. Strategy is geared towards the planning to ensure effective decision making for the rest of the lifecycle (Oshri, et al., p.97). Thats why a decision about the rollout approach takes place .The last block in this phase design concludes the architect phase with a definition of the planned configuration. The engage phase consists of two blocks. Firstly select, here the best vendor for the company is supposed to be found. In this block the content of the outsourced work is planned, the most appropriate evaluation team is identified along with the evaluating criteria and interactive evaluation techniques (Oshri et al, 2009. p.98). Negotiate aims to conclude a good contract. Therefore an appropriate negotiation strategy is set and a negotiation team is put together. The operate phase includes two blocks, transition and manage. In the transition block the aim is to ensure an effective and smooth hand over of the IT services to the provider. Therefore, plans are finalised, the impact on the staff and the staff transfer is managed as well as knowledge retention and transfer as well as governance structures are set up (Oshri et al., 2009, p.99). Manage is set out to manage the outsourcing relationship properly. Key activities are investing in the relationship and continuous examination of the relationship. The last phase, regenerate phase, consists of the block refresh and aims to support the client on deciding whether to reappoint in further contracts with the service provider. Outcomes and future requirements are assessed. In the last phase the outsourcing starts again, depending on the decision whether to re-tender, re-negotiate or back-source (Oshri et al., 2009, p.100). 2.3.2 Critique The IT lifecycle offers companies an accurate plan for their outsourcing concerns. It is a relatively new model, which on the one hand ensures up-to-dateness, but on the other hand does not offer a long-term view. However, I would critique that all blocks are arranged consecutively, meaning if something goes wrong in one block that might involve issues in following blocks. Also, I think, problems may arise in defining in which phase and block the outsourcing operations are at a particular moment or if the operations are ready to move to the next phase or block. There is no set duration as this varies from one company to another. Additionally, I would like to mention, that the IT outsourcing lifecycle is a model, which means that certain aspects are left out. Every company should examine this and consider additional aspects. I would suggest that companies, considering to use the IT outsourcing lifecycle walk-through the lifecycle before going on. This could e.g. take place in the arch itect phase, then the persons responsible would be aware of the complete lifecycle. Nevertheless, I evaluate outsourcing as more successful when it is proceeded as a lifecycle than in a one-off transaction. 3 Shell Outsourcing Deal 2008 3.1 Background In 2008 the mineral oil group Shell signed a five-year outsourcing contract with three suppliers responsible for the IT infrastructure (see appendix A.2 for a company description). These were T-Systems, EDS and ATT (Computerwoche, 2008) (see appendix A.3 for more background information). Shell kept strategic control and some specialist services. This is called Outtasking/Managed Services (Appendix A.4 for information on IT outsourcing models) (TPI, 2009). This was one of the largest and most complex business transformations. 3.2 Reasons for Shell to outsource to multiple service providers As times get more and more turbulent and companies face a highly competitive environment Shell decided to outsource to multiple service providers as they believe that competition leads to a successful future and wanted to carry on developing its strategy More Upstream, Profitable Downstream (TPI, 2009). That means to expand companys hydrocarbon reserves as well as production along with the ensurement of manufaction, marketing and distribution in a cost-effective and efficient manner. Additionally, Shell aims for innovation, which they believe the three service provider can offer when collaborating well to develop new goods for them and therefore also for Shell (Rosenthal, 2009). According to Rosenthal (2009) Shell wanted to reduce the risk in case one service provider is not able to perform. Lastly, an important reason for Shell to outsource its IT to multiple suppliers is the ability of working with foreign markets. Here, T-Systems, a German company, can ensure a working relationshi p with countries, which do not favour American workmen. Shells general aim was to encourage higher efficiency and performance, however no detailed aims were announced. Originally, Rosenthal (2009) explains, Shell made the decision to outsource IT as the company missed a commercial accuracy and operational discipline. The IT department could not meet the companys overall requirement. When making the outsourcing decision Shell had in mind to focus on strategic issues, the skill to respond quickly and being agile as well as sustainable, meaning the ability to serve in 20 countries (TPI, 2009). Moreover, Shell wanted to: Pay attention to companys needs and IT opportunities Expand the value from suppliers involved in the IT infrastructure Be more flexibel in service capacity to manage peaks as well as troughs Manage expanding costs of maintaining existing IT infrastructue and developing new Shell decided to outsource the greatest part of its IT infrastructure as the company itself had difficulties managing this (Rosenthal, 2009). When facing the paradox of outsourcing to a single supplier or to multiple suppliers, Shell aimed for outsourcing to multiple suppliers as this approach offered the company competitive advantages in regard to being able to serve in 20 countries, to keep better control as the company kept the strategic control as well as the belief that competition leads to success. 3.3 The IT lifecycle at Shell Architect phase: Investigate: Shell gathered insights and rephrased ideological beliefs into goals (TPI, 2009): Seperate responsibilities for business needs and strategic control Expand service reliability as well as performance Assure access top talents and innovation Decrease costs and turn fixed into variable costs. Target: Shell decided to outsource most of its IT, but to hold strategic control and few specialist services. Strategise: Shell determined to outsource not only to one service providers but to multiple. Design: Shell considered the following when designing the programme: Agree on the mission statement and business targets Create and spread the plan Establish a high-performance team Organise governance Develop diversity in the team Prioritise change and communication management Engage phase: Select: Shell selected appropriate suppliers for their outsourcing programme. Negotiate: With these suppliers Shell negotiated contracts and could conclude efficient contracts with EDS, ATT and T-Systems. The service providers signed a so-called Operating Level Agreement to guarantee a high level of collaboration. Operate phase: Transition: Shell handed over the IT infrastructure in a sensible manner (Rosenthal, 2009). All in all, 3,500 IT employees were transfered from Shell. This gave employees the better career possibilities and knowledge transfer opportunities. A detailed investigation of six months gave the service providers the possibility to develop the necessary solutions for the implementation. Manage: As Shell still keeps the strategic control, the company helds good relationships to their suppliers and monitors them regularly. Regenerate phase: Refresh: As the contracts are laid out for five years no information about the regenerate phase are available yet. 3.4 Governance Shell delegated governance and therefore several roles emerged, e.g. a Shell executive commitee, an executive tender board or commercial deal teams (TPI, 2009). The most important one is the programme management office to develop and maintain the implementation plan as well as to monitor and report the progress and deliverables. 3.5 Early benefits Shells IT infrastructure costs dropped by double digits (Rosenthal, 2009) and the service increased clearly and became more reliable. Rosenthal (2009) views that outsourcing made Shell more efficient and the team concentrates on up-to-date IT solutions to meet Shells needs. Rosenthal (2009) mentions that the three solutions providers convey projects and run systems better than Shell did formerly. 3.6 Problems In the beginning the approach with three suppliers was not working out well (Rosenthal, 2009). They firstly had to get to know each other and to learn working together effectively. Today however, the collaboration between the companies occurs in a flawless mannner. Generally, it has to be mentioned; according to Rosenthal (2009) that the service providers underestimated Shells complexity as Shell is a globally acting company and their approach was more regional. Eventhough early benefits of the outsourcing deal could be identified problems arose. T-Systems, one of the suppliers, had many problems when handling the IT of Shell (Inside-IT, 2010). This was due to the insufficient experience with deals of this size. Moreover, T-Systems also has not achieved the savings it was supposed to manage (Louven and Hofer, 2010). Louven and Hofer (2010) explain this with T-Systems being an affiliate of the German telecommunication company Telekom and therefore stuck in their complex structures. 3.7 Critique on Shells approach Due to the extensive research I found out that Shell did not perform the lT lifecycle in a preferable manner, as Shell did not extensively prepare for the lifecycle and also did not name additional aspects. This could have led to the above explained problems, eventhough these were more on service providers side. However, Shell managed the transition phase extremely well and set up an extensive governance structure. Also, only 3 of the planned 5 years passed, therefore no final evaluation can occur. 4 Overall conclusion Various advantages and disadvantages of outsourcing and its opposite insourcing were recognised. Nowadays more companies choose outsourcing to multiple suppliers instead of its paradox, outsourcing to a single supplier, when deciding to outsource. Therefore outsourcing to multiple suppliers was presented with advantages and disadvantages as well as the necessary governance, The explained IT lifecycle made the connection to the case study: Shell Outsourcing Deal 2008. A background offered important information about the companies Shell, EDS, ATT and T-Systems in regard to the outsourcing deal. Several reasons were explained why Shell outsourced its IT in 2008 and why the company decided to use a multiple suppliers approach. Moreover, the IT lifecycle in connection to this particular outsourcing deal was analysed and the governance was pointed out. 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