report libre

Topics: Outsourcing, Request for proposal, Customer Pages: 16 (4108 words) Published: February 7, 2015
COMP-1601

Outsourcing & IT Management

Precision Electronics
Case Study

Prepared By:
Saad Yehia El Ashmawi

Submitted On:
10 May 2013

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Table of Contents
Key Issues ................................................................................................................................................... 16 What to Outsource ........................................................................................................................................ 8 How to Outsource ....................................................................................................................................... 10 Conclusion .................................................................................................................................................. 15 References ................................................................................................................................................... 16

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Key Issues
Family Business
Precision Electronics is a family business where the four directors who run the company are from the same family. There are many disadvantages of running a family business that could cause a lot of financial damage to it.

Family business usually filled with mixed interests; there is a risk that the family member’s interests would be mixed with the corporate interest. Any misunderstanding or issues between the family members could also be brought back to the office. It’s a possibility that the family personal expenses could be deducted from the business as well, which will cause an extra burden on the business and unclear financial status.

Another fact about running a family business that sometime family members might become too comfortable to do their jobs efficiently, from the perspective that they work with other family member close to them. Of course this would result to poor performance, lack of any formal planning and will definitely affect the company budget/revenues.

As Precision Electronics is managed by four directors from the same family; this gives us a tendency of appointing family member only even if they lack training and experience. Its’ known in family business that the chairman or in our case the company directors would favor to hire their sons in critical position without any regards to their experience or their ability to develop the company.

A huge disadvantage of family business is the lack of openness; there is always a temptation to keep the business to the family members. Almost 80% of any family businesses are tightly run by the family and few other outsider employees, and in our case the Precision Electronics is managed by the four directors only without taking into consideration the senior management team advice or counseling. Employee from outside the family may work in the company but they will never be in top management position or have decision making control. Even though non family member employees might have more ideas and skills that can be useful to the business but their ideas won’t be incorporated because they are outsiders. If Precision Electronics want to improve their governance procedures, they need to start by sitting down and working out a five-year plan. This might lead Precision Electronics to appoint a board of advisers, rather than a formal board of directors. This board might include the four directors which are family Page | 3

members and senior management, the company’s accountant and lawyer and some outside experts in particular areas the company struggles with.

No Job Description
Not having a formal job description for each employee is a huge issue that might cost the business a lot. Usually small/medium family business owners don’t think it’s important to have written job description for their employees. Yet all employees regardless of how basic or complex their responsibilities need direction and a reference point.

Employees will be sticking to...

References: Craig E. Aronoff, John L. Ward, Preparing your family business for strategic change
Melody J. Hsiao, The impact of buyer-supplier relationship and purchasing process on the supply chain
performance: a conceptual framework, University of Sydney
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