Part1: Restructuring Mergers and Acquisitions — The Merits and Demeritsof Outsourcing and Offshoring
Outsourcingand offshoring presents various advantages, as well as disadvantagesthat need to be considered to enable organizations undertaking mergerand acquisition restructuring to realize positive outcomes. Thispaper explores the options to enable an organization overcome thecost concerns, focusing on outsourcing and offshoring strategies.
Themerits of Outsourcing and Offshoring
Thereare various advantages associated with outsourcing and offshoring.One of the advantages is that it comes with certain elements offlexibility and independence. In essence, the offshored or outsourcedhuman resources are often subject to an independent management systemthat is separate from the firm seeking their consultation services.In this regard, they can make faster decisions because they do nothave to consult the management of the organizations they are offeringthe services (Mann, 2012).
Secondly,outsourcing and offshoring is beneficial because it enables theorganization to continue running by focusing on its core functionprocesses, while delegating the non-core procedures. For instance,rather than the management holding meetings to discuss the merger andacquisition processes, which would typically eat into the time theywould spend on focusing on operation routines, this activity isdelegated to the outsourced firm. Therefore, this process minimizesdisruptions. Besides, outsourcing and offshoring creates theallowance for the organization to overcome inherent team managementproblems. Ideally, outsourcing and offshoring means that part of theorganization’s concerns of restricting mergers and acquisitions aretransferred to a third party. In essence, it can also be inferredthat this approach is a way of sharing the risks, in case thetransitional processes fail (Metters& Verma, 2014).
Thirdly,outsourcing and offshoring creates the allowance for a firm to accessto services of the professional experts, which is associated withhigh quality facilities. Typically, the outsourced or offshored firmsconsist of teams of trained, skilled, and experienced human resourcepersonnel. Considering mergers and acquisitions might come as alifetime experience, the human resources might be limited in terms ofpossessed experience and skills. One of the alternatives to increasecapacity to meet the needs of mergers and acquisition effectivelywould be to train the staff, but this can be laborious and timeconsuming. The outsourcing and offshoring processes overcome theselimitations. In this regard, outsourcing and offshoring is especiallyadvantageous because it helps an organization save time, efforts,operating costs, training costs and labor, which are translated toincreased competitive advantage. In addition, by seeking outsourcingand offshoring, a business can be assured of processes being executedin the efficient and professional manner. Indeed, according to Mann(2012), outsourcing and offshoring can save as significant as 50percent of organization operation costs associated with restructuringand execution of non-core elements of business operations.
TheDemerits of Outsourcing and Offshoring
Despitethese benefits, it is also worth noting that outsourcing andoffshoring has certain inherent limitations. One of the firstdemerits is the threat to company security. Typically, the operationsof the outsourced or offshored human resources may entailcrosscutting payroll process systems, tax preparation, fixing the ITtools and functional audits. Involvement in these different processescreates the allowance for them to access the confidential informationand business secrets, which when leaked to third parties, can havefar-reaching consequences on the security or reputation of theorganization. Secondly, outsourcing and offshoring is accompanied bycertain management challenges. The consulting companies have theirown management structures and company cultures, which might contrivethose of the organization seeking their services. Moreover,considering they operate independently, it is often difficult tomanage them. In some cases, these management problems can escalate torule confusions translating to redundancies in companies and reducedinterest and morale for the staff to give quality work. Thirdly, thesuccess of the merger and acquisition restructuring processes lies inthe hands of the outsourced and offshored providers. The ability todeliver quality work is mediated by several factors, includingcommitment, leadership, and resource equipment, all of which mightnot be within the intervention of the organization. Moreover, it isalso possible for the providers to have different companies theycould be providing same consulting services to. The consequence ofthis scenario is manifested in terms of divided attention and poorservice delivery (Metters& Verma, 2014).
Fourthly,outsourcing might inherently have hidden costs that could, in theend, turn out to accumulate to higher expenses beyond theexpectations and more than what the alternative processes could haveoffered. The sources of hidden operation costs include the legal feesinvolved in developing and signing the terms of contract. Moreover, asubstantial time could also be spent in vetting the application ofproviders to outsource or offshore from. It will also be relativelydifficult for to manage customer-facing operations. Outsourced oroffshored teams might have different priorities that are far-removedfrom the customer focus. There are also chances of occurrence ofother forms of problems associated with renewal of contracts,misunderstanding of terms of contract, poor communications, delayedservice delivery and poor service delivery (Mann, 2012).
Inlight of these discussions, it is worth inferring that the successfuloutcomes of the merger and acquisition restructuring processeslargely depend on how the potential areas of weaknesses can beaddressed. Indeed, is worth noting that there are variousopportunities to avoid these challenges. For instance, the companycan endeavor to contract reputable consultants. Even as this step isexecuted, there will be the need for the contracting partners tostrive and reach the consensus over different substantive issues thatcould compromise the outcomes. According to Urry(2014),it will also be important for organizations to put intoconsiderations the interests of the customers, take informed actionsto engage them and before making a choice to outsource and offshore.The essence of employee engagement is to foster an understanding thatwould beget employee commitment through the restructuring processes.It is also important for the company to communicate constantly withthe providers, as well as its employees to ensure that all theongoing activities are checked and aligned with key company goals.
Inconclusion, the aim of this paper has been to evaluate the options ofrestructuring mergers and acquisitions in a way that would assureefficiency while minimizing the costs of operations. The discussionhas considered outsourcing and offshoring as a feasible method toenable merging and acquiring firms to minimize the risk of failureand realize success. It has been established that, indeed, theapproach has numerous benefits, and has the potential of cutting downthe costs of the process to as significant as 50 percent. However, ithas certain inherent weaknesses. Subsequent discussions have revealedthat, however, these demerits can be easily subdued by takingdifferent informed decisions, which including choosing the rightprovider, agreeing on substantive issues clearly, engaging employeesand communicating regularly to avoid process misalignments.Therefore, as long as a firm is prepared to undertake these measures,Offshoring and outsourcing is particularly recommendable.
Responseto Part 2
Thecurrent environment is characterized by a myriad of challenges suchas heightened competitions, increasing regulations and economicdownturns, among others, which altogether demand businesses todevelop informed strategies to remain competitive and maintainsustainable profit margins. Corporate social responsibility has beensuggested as a feasible strategy to enable companies to overcome thischallenge. This section explores the corporate and socialresponsibility options for VenusWidgets.
TheImportance of CSR on organizations
Thebenefits of corporate social responsibility to businesses can bebroadly categorized into two: differentiation strategy, andself-regulation strategy.
Asa differentiation strategy, corporate social responsibility createsthe allowance for firms to earn a reputation that translates tocompetitive advantage. In this regard, corporate socialresponsibility practices can be seen as a business promotionactivity. Indeed, as noted by Sacconi(2013),the act engaging in recognizable social responsibility initiativesoften sends a strong message to the stakeholders that a certaincompany or business can be trusted as legitimate. For consumers, sucha relational thinking legitimizes actions to prefer buying productsfrom such a responsible company, reasoning that they can always getvalue for their money. For the investors and suppliers, socialresponsibility also sends a message that the business can be trustedas an ethical and reliable partner to work with. Sun(2013)supports this position, asserting that, based on the general businesstrends, the top performing and reputable firms are those that runelaborate social responsibility programs.
Asa self-regulation strategy, corporate social responsibility serves aframework to fulfill its social and legal obligations to avoidrelated problems. For instance, Rothand Bansal (2012) say that thecorporate social responsibility enables firms to avoid problems withthe law and society, thereby evade costly penalties that wouldcompromise the ability to grow. Indeed, there are various notableexamples of what is likely to happen if a company does not exercisean elaborate social responsibility program. For example, thesurrounding communities may join forces and protest for pollutionpractices that compromise community health. In some cases, theconflicts may result in legal suits, resulting in costly penaltiessuch as revoking operation license or meting heavy fines. Therefore,in light of this discussion, corporate social responsibility shouldbe perceived as an obligatory process, rather than discretionary.
Theimpact that CSR will on the community
Apartfrom being important to the business entities, corporate socialresponsibility initiatives are also beneficial to the surroundingcommunities. The underlying benefits can be felt in two ways:improved wellbeing, and environmental protection and sustainability.
Corporatesocial responsibility entails implementation of different initiativesthat result in the improvement of the wellbeing of the communities.Indeed, an ideal corporate social responsibility program may entailcharity work such as funding the education of the needy, buildinginfrastructure, funding construction of roads, and providing food forthe poor, among others. It is also noteworthy that part of corporatesocial responsibility programs include producing quality productsthat meet consumer needs, including health, social and economicrequirements. Therefore, all these initiatives go a long way inimproving the wellbeing of the society, be it directly or indirectly(Rothand Bansal, 2012).
Besides,the growing importance of environmental conservation cannot bedisputed. In the lens of conservationists, environmental protectionand preservation is a critical pillar of sustainable development. Forinstance, if companies do not check on the rampant air emissions, therate of global warming will continue escalating resulting to adverseclimate change. The consequences of the climate change would bemanifested in terms of pronounced famines, disturbed food security,constrained raw material supply, and evolution of diseases that wouldcompromise the efforts of social, health, and economicsustainability. Such a scenario essentially implies that even thebusiness entities are not spared from the consequences of failedenvironmental conservation efforts (Rothand Bansal, 2012).
Theweaknesses a CSR program
Despitethese benefits, social responsibility initiatives have also beenknown to have some notable limitations. The costs associated withimplementations have been widely cited as the most outstandingsetback that has the ability to compromise the ability of a firm torealize its goals. Indeed, like Petit,Feltus and Dubois (2013)discuss, a typical corporate social responsibility program isdemanding in terms of costs and human resource deployment to theextent that firms must consider whether they will need to roll it outas a primary business strategy or a secondary business strategy. Inthe same vein, Rothand Bansal (2012) havediscussed that the initiatives typically cost a lot of money thatcould have been channeled to support other core business processessuch as increasing stock, hiring more staff, motivating the existingteam, supporting the employee training and development and embracinginnovation and new technologies.
Sun(2013)offers a relatively different perspective for conceptualizing theinherent weaknesses of venturing into a recognizable corporate socialresponsibility program. The author discusses that, while corporatesocial responsibility practices are costly, the attached benefits arenot always straightforward — it is always still possible forbusinesses to receive much less than the investments. Moreover, whilethere might be some derivative benefits, it is still difficult tomeasure the gains or even deduce what levels of CSR initiatives willbeget desirable results.
Ascan be inferred from the discussions, while corporate socialresponsibility programs can be beneficial, they have certain inherentlimitations. In this regard, the ability of a firm to benefit fromthe CSR initiatives can be argued to largely depend on the measuresthe undertaking business adopts to avoid becoming a victim ofnegative sides. To a large degree, it seems recognizable CSRresponsibility programs are recommendable for established firmsbecause they have ‘petty cash and floating’ money to fund theinitiatives. It is prohibitive for firms starting from scratchbecause it ‘robs’ them the resources that they would have usedfor growth, expansion and survival. Otherwise, for such firms, CRSinitiatives, if they exist, must be limited as possible to fulfillmeet mandatory and legal requirements — avoiding discretional andcharity undertakings.
Inconclusion, the aim of this paper has been to examine the corporateand social responsibility options for VenusWidgets. It has been established that whilecorporate social responsibility programs can be beneficial, they havecertain inherent limitations. Therefore, it depends on the strategiesit is willing to undertake to shun the disadvantages, and theresource available to fund the campaigns can VenusWidgets decide to pursue a recognizable social responsibilityprogram. Otherwise, it is a costly process and Venus Widgets isbetter recommended to fulfillmeet mandatory and legal requirements and avoid discretional andcharity undertakings.
Mann,C. (2012) Acceleratingthe Globalization of America: The Role for Information Technology,Institute for International Economics, Washington D.C.
Metters,R. & Verma, R. (2014). "History of offshoring knowledgeservices". Journalof Operations Management.26(2): 141
Petit,M., Feltus, C. &Dubois, E.(2013). TowardsStrengthening employee`s responsibility to enhance governance of IT.Case Study of COBIT RACI chart.ISBN 978-1-60558-787-5
Roth,R. & Bansal, P. (2012). "Why Companies Are Going Green:Ecological Responsiveness Approach ". TheManagement Journal 43(4): 717–736.
Sacconi,L. (2013). Account of Social Contract for CSR as Extended Model ofCorporate Governance. Journalon Business Ethics.1 (11): 77–96.
Sun,W. (2013). GoverningCorporations So They Serve the Good: A Theory of CorporateGovernance.New York: Edwin Mellen.
Urry,J (2014). Offshoring.polity UK.