Managerial Accounting Writing Assignment
Outsourcing Business Operations

Outsourcing Business Operations Outsourcing has become a common business practice being utilized by companies all over the world. Outsourcing is when a company decides to contract a different company to make a product or perform a service. Like anything else, outsourcing has its own positive aspects and negative aspects. Because so many businesses have started outsourcing jobs, contract manufacturing, which are manufacturers that specifically build products for other companies, has become an entire industry. Top management needs to weigh the benefits versus the disadvantages when deciding whether to keep the operation in house or have another company handle it. There are many things that need to be taken into account when trying to figure out whether or not to outsource a portion of a business’s operations. Some of the advantages of outsourcing are being able to cut costs and get your product or service done for cheaper, having a company with expertise in the specific area produce your product, and it allows a company to focus on other aspects of their operation. But where there are advantages, there are also disadvantages, such as the loss of quality control, divulging confidential and sensitive information, managerial control over the process, and a drop in employee morale because of any layoffs a company may have to make. Renesas Electronics is the world’s fifth-largest chipmaker and largest producer of microcontroller chips used in automobiles. Recently, global competition has gained traction because of rising costs and the inability to acquire investments. Because Renesas has encountered these setbacks, it has decided to outsource the production of some of their high-end chips to Taiwan Semiconductor Manufacturing Company. By deciding to outsource, Renesas will be able to