Outsourcing: Management and Practice Within the Automotive Industry

Abstract

With the continuing increase of competitive pressures in the automobile industry, the acceleration of cost and price pressures and the omnipresent need for improvement of engineering productivity managers have to constantly ensure the company’s survival in the market. This perspective emphasises the need for managers to consider outsourcing in order to sustain a company’s competitive advantage. The use of external assembly service providers in the automotive industry is widespread and is embraced in the build to order concept. Outsourcing capacity brings with it the risk of outsourcing competency. Managers in the customer-conscious automotive market have to thoroughly understand the concept and the associated risks in order to benefit from the outsourcing practice. Therefore, this chapter critically evaluates the benefits and risks associated with outsourcing core and supporting activities in the automotive industry. Moreover, the study draws on different theoretical positions delivering a rigorous description and comparison of the theoretical outsourcing standpoints. The research study is underpinned by empirical evidence from the automotive industry and concludes with a set of managerial implications to facilitate well-grounded outsourcing decisions within the automotive industry.

Keywords: outsourcing, automotive, risks

JEL Classification: A1