Mabuhay Pumps Company has manufactured high quality residential pumps for over 20 years. The firm has always been profitable and relied on home grown talents who have worked with MPC since 15 years ago. The BOD is composed mainly of closed relatives of the founders who have either passed away with a couple of outsiders. Point of View Knowing that MPC is popularly known for their home grown talents, quality products, and trusted specialization in creating residential pumps and have recently established their own a foundry to cast pump housings and assortment fittings to prove their mastery in their line of business, it would be difficult for Renzo to point out that outsourcing their foundry production, would help the company in more ways than they expect, even though it is a huge change from the norm. Renzo believes that outsourcing will lessen expenses, generate more income and save enough money for future use or plans.
The company’s president strongly believes that MCP does not need to outsource products that they are able to produce themselves for this might mean loss of jobs, loss of talents and skills, and negative impact on both employees and the public. The President also pointed out that MCP has gained recognition from their field without using any means of outsourcing. Renzo, on the other hand has a firm standpoint on his idea that it would really be beneficial for the company to outsource the pump housings and it would really give the company a little leverage to focus on future projects that is why, I strongly believe that proper strategic management is needed to pursue outsourcing without worrying the president of its possible risks. Statement of the Problem Can outsourcing the production of the pump housings produce greater benefits for MPC, than producing its own pump housings and fittings? Areas of Consideration Strengths ATF Housings can be used for the MPC pumps with a 15% lower cost.
Outsourcing can be a leverage to help the company to focus on their future goals. ATF produces good quality housings using their cutting edge technology that is acquired in Japan. Saves more time without losing the quality of the housings. Focusing on new products while not losing the quality on their current products might attract more customers. Weaknesses Their reputation of relying to their home grown talents will be affected. MCP might lose loyal, efficient, skilled and talented employees who have been in MCP for many years and result to internal conflict. Possible negative impact on the public and customers. Lesser Quality Management Control of the pump housings and fittings. Opportunities Outsourcing could give the company a head start to focus on other goals and plans. Initiating a new product line in lieu of the saved money and time from outsourcing, could generate more revenue and make them more competitive in the market. Showing flexibility and expansion in creating new products might make MPC more attractive and gain more customers.
Possibility of assigning their employees in developing new products can motivate them and challenge them to exercise their skills and talents. Threats Threats in losing loyal and skilled employees due to this sudden change is possible Improper handling of the new change could create a negative impact on the company If already made housings and fittings are not properly checked and monitored, might give the company a negative feedback from its customers Alternative Courses of Actions 1. Push through with the outsourcing and reassign their employees to the other departments or divisions in order not to lose their loyalty to the company › PROS: The Company would be able to retain their loyal employees without losing the quality of their product. They would also save enough money for future plans › CONS: There would be conflict with the employees when it comes to job specialization and division of labor 2.
Do not push through with the outsourcing and focus in making the company improve their current product and maintain their image in relying to home grown talents › PROS: They would retain the trust and loyalty of their employees and retain total quality management control of their own housings and fittings › CONS: they will not pose any threat to the market and they will not improve their competitiveness in order to gain more customers and be more attractive to the market. 3. Push through with the outsourcing and assign their employees still in their specialization which is production, by using the saved money in developing a new line of agricultural and mining pumps › PROS: The company can keep the loyalty and skills of the employees, avoid any intercompany conflict, gain more customers, become more attractive to the market, introduce a new product line, save more money, ensure the quality of the pump housings, and be more competitive to the market.
CONS: mishandling may lead to negative impact in the company Presentation of Alternative Course of Action Alternative 3 is the chosen alternative course action since it has more Pros than Cons and could arise with more benefits than Risks. › Proper segregation of duties and Management assignment for monitoring the outsourced goods and further background check on ATF › Assignment of personnel in charge of the monetary reserves to be incurred as the result of outsourcing, it should ne notified that there saved money shall be use for the mining and agricultural pumps development › Assign a new department for the production of the new product line › Encourage Production employees to maximize their skills and talents in developing the mining and agricultural pumps › Provide customers and synthesize and advertising campaign of the new product line to be released Conclusion Outsourcing has it’s pros and cons but it is a fact that it can help save time and cost without risking the quality of the product since it has been deemed proven from a reliable source that the technology used to manufacture the ATF housings are cutting edge equipments that are capable of producing such.
In terms of the talents, skills and loyalty of the employees, outsourcing the pump housing will help them to focus more on future projects and use their skills in developing products that would make the company even more competitive in their field of specialization, and be more attractive to clients who are in need of their new product line. Hence, outsourcing the pump housings is deemed to have more benefits than risks. Recommendation MPC should push through with the outsourcing to save enough money and time in order to focus on their new product line, which is the production of agricultural and mining pumps, that will help the industry to be more flexible in the needs of the market, instead of consuming a lot of efforts in producing products which could be outsourced with the same, or even better quality that what they can produce Not only will it provide an attractive consumer market, but it will also help the employees to expand their knowledge and practice their expertise, skills and talents in creating a product line without losing their loyalty and image of good internal company relationship.