Question

As for costs, the Boeing article cautions managers that...

options:
A. Outsourcing reduces costs, and the potential gain in innovation by NOT outsourcing can rarely ever compensate for it.
B. Organizations must evaluate offshoring payoffs more dynamically because it is important to take into account rapid changes in relative costs.
C. High levels of safety is a mission-critical latent need in the airline business. As Boeing's huge waiting list of customer airlines (about 900 back orders as of this year) shows, customers will pay a premium for a product that meets a latent need.

Answer 1

The article indicates managers need to dynamically assess the payoffs of outsourcing and offshoring, factoring in rapid cost changes and industry-specific needs like safety in airlines, which customers value highly.

Step-by-step explanation:

The Boeing article underscores the imperative for managers to adopt a dynamic and strategic evaluation of outsourcing and offshoring decisions, emphasizing that the notion of cost reduction through these practices is nuanced and subject to rapidly changing variables. Contrary to a simplistic view that outsourcing inevitably leads to cost savings, the article highlights the need for a comprehensive assessment that considers factors beyond immediate financial implications.

In the airline industry, where safety is a latent need and a paramount concern, Boeing's approach to outsourcing goes beyond a mere cost-cutting focus. The large backlog of orders for Boeing's products suggests that customers are willing to pay a premium for aircraft that prioritizes safety and reliability. This implies a strategic perspective, acknowledging that certain aspects, such as innovation and meeting critical safety requirements, may take precedence over immediate cost considerations.

The dynamic evaluation recommended by Boeing suggests a recognition of the multifaceted nature of outsourcing decisions. Global markets, innovation capabilities, and the evolving cost landscape all play crucial roles in shaping the outcomes of outsourcing and offshoring strategies. This approach aligns with the understanding that outsourcing decisions should not be one-size-fits-all but rather tailored to the unique needs of the industry and the specific demands of the market.

Ultimately, the strategic approach advocated by Boeing involves balancing cost considerations with a focus on meeting customer needs, particularly in safety-critical industries like aviation. It reflects an understanding that successful outsourcing requires a nuanced and adaptive strategy that goes beyond simplistic notions of cost reduction, taking into account the broader business landscape and the evolving expectations of customers.