![]() Organizations are therefore liable to work towards the reduction of operational costs by outsourcing of goods, activities and processes that are provided by the outside contractors at a relatively lower costs than it would be if it was made inhouse. ![]() The costs of operation have substantial effect on the final price of the product, which in turn affects the profit portfolio of business as proved by the predatory pricing doctrine where a firm raises the operational costs of a competing firm so as to gradually reduce their revenue, keeping them out of market (Salop 267). Most organizations and businesses aim at value, profit and wealth maximization which is often not the case where there are huge costs incurred such that it exceeds the revenue reaped from the business operations. Not all activities and processes in an organization can be outsourced from external contractors since there are number of factors such as quality, lead time deliveries and activity level of importance that have to be considered. Firms and corporations face numerous challenges in choosing modes of outsourcing and the contractors to provide the services therefore there is urgent need to realize the best practices and services to apply as specific businesses in order to focus on their major activities in the event of reducing their operational costs and improving their contest in the business field (Liou and Chuang 1). The success of every company depends on its ability to react to future changes a little bit sooner than competitors and the first step to focus company’s operations to human factors and its core business activities and processes and refrain from monitoring operational details and additional operational activities is through outsourcing practices (Potkány 53). ![]() Business premises and organizations have always preferred to use their own personnel and resources whereby they purchase or produce their needs such as of goods and services from the domestic environment so as to have ultimate control in the overall business activities as opposed to where business premises and companies have to focus on major value adding activities and therefore procure goods and services that are not main to their production, from the outside suppliers.
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