edf40wrjww2CF_PaperMaster:Desc
Survival and Growth of the Firm
The trend towards globalization has greatly increased the need for
strong interorganizational relationships to ensure a firm's growth and
survival. As globalization has placed firms under ever greater
competitive stresses, companies are forced to become as efficient as
possible in all aspects of their business. One concept that has
gained popularity is that of core competency: those things that a firm
does especially well and that give it competitive advantage. When
firms stray from their core competencies, problems often result.
To allow companies to focus on their core competencies, outsourcing
has gained in popularity. First, outsourcing reduces the need for a
company to focus on an area that is not as critical to its success as
other areas are. Second, the firm may not be able to perform a
noncore function as effectively or as cheaply as a firm specializing
in that area. Third, the ability to identify which function should be
outsourced and to work with other companies to manage those functions
may in itself be a core competency or a source of competitive
advantage.
ADP is an example of one company that has flourished by building
strong interorganizational relationships with its customers. ADP
handles payroll processing for a large number of companies.
Historically, most companies handled payroll administration
themselves. A grocery retailer I worked for went as far as even
printing its own payroll checks. However, as the amount of regulation
associated with payroll admin ...