Challenges of Companies While Developing Sourcing Strategies Free Essay Example, 2250 words

When IBM was the giant in the computer business, they contracted Microsoft to make Operating systems and Intel for microprocessors; however, the two companies soon used this edge to develop their own production. They diversified and cut into IBM's market and as a result, while IBM faded into obscurity; the two companies occupy the top hundred positions in the Fortune 500. In the last few years, Microsoft and IBM have been competing in domains that were previously the reserve of IBM such as modelling because with Microsoft trying to dominate in that as well (Babcock, 2007). For a company to ensure it does dig its own fiscal grave in the form of creating competition, it should always ensure to retain the activities and knowledge that made them competitive in the first place. Firms should avoid dumping important aspects of their production process to other firms since while it may save them from expenses and risk in the short run; they will be jeopardizing their position and relevance in the market in the long run. As such, it is imperative that firms do not rely on outsourcing too much in the belief that a corporation can thrive simply by having a brand name, contractors and directors (Williams, 2012). We will write a custom essay sample on Challenges of Companies While Developing Sourcing Strategies or any topic specifically for you Only $17.96 $11.86/page Awareness of this is important since the supplier may not be able to use it in other ventures, as such; termination of the contract makes it worthless and results in losses. In some cases, the customer may take advantage of the situation and try to reduce the price; however, while they may benefit in the short run, they are likely to have problems getting willing suppliers in future due to their reputation.