LEGO Group: An Outsourcing Journey - Essay Example

Task: An Outsourcing Journey major issues and challenges LOGO group, a conglomerate was constantly undergoing transition. The transitions aimed at realigning the organization’s operations, management and strategic objectives. The transition brought changes rapidly on the three levels of the entity. The transition resulted in increased efficiency in the organization. However, the entity could not fully capitalize on the changes since the management had not fully comprehended the diverse perspective of the changes instituted and the benefits arising thereof.

This is a common occurrence in the managerial process. At the initial stage of transition, the management cannot foresee the real impacts of the changes. It is not until the changes are fully effected that the management encounter the real impacts of the transition. Due to this, such an entity may fail to capitalize on the benefits of transition on all the three level of an organization (Larsen, Pedersen and Slepniov 9). Owing to rising cost in certain nations, LOGO group opted to shift its operations to other countries.

LOGO group based its operation in low cost nations. This was a strategic measure, which sought to reduce the overall cost in the entity. The entity also sought to outsource key components of its products. Outsourcing is a concept that has enabled entities eliminates their operational inefficiencies. Outsourcing such vital elements of its products is bound to raise supply fears. The company may fear that the supplier may sabotage the entity’s operations intentionally. Additionally, inefficiencies of the supplier may affect the operations of this entity.

Therefore, the entity should build a relation in which such factors are factored (Larsen, Pedersen and Slepniov 12).Changes in the external and /or internal environmentLOGO group has encountered countless changes. The changes have been both internal and external. On the internal environment, the entity operations have increased by numerous folds. The increase in operations possesses numerous challenges to the management. The management has to coordinate many activities such as supply, manufacturing and distribution.

Poor management of any of the activities would result in increased efficiencies in the organization. Increased efficiencies would result in reduced profitability. With the emergence of outsourcing as a factor that contributes significantly to the fortunes of an entity, the managerial environment has changed. As such, management requires an individual who could capitalise on outsourcing to ensure efficiency and increased profitability in an organization. Current managers have to undertake activities that aim at boosting the entity’s brand.

Corporate social responsibility has become an imperative aspect of management in contrast to the past where entities only sought to increase their profitability (Larsen, Pedersen and Slepniov 7).On the external environment, many changes have occurred. The entity faces countless competitors. The competitors could easily take over the market if this entity lags behind in providing the clients with value through its products. Competition has necessitated the entity to undertake far-reaching marketing that will ensure the entity still maintains and increase its market segment.

The external environment also entails factors such economic patterns and government regulations. When the economy is performing dismally, consumption declines therefore; companies ought to strategize for such situations. The decline in consumption results in reduced sales. The measures to address this hitch would entail closure of most inefficient plants. Additionally, the entity may reduce its prices to boost it sales. The entity may also seek to boost its profitability via cost cutting (Larsen, Pedersen and Slepniov 6).

Work citedLarsen, Marcus, Pedersen, Torben and Slepniov, Dmitrij. LOGO group: An Outsourcing Journey. 2010. Web. 2012.