Title: Towards the strategic outsourcing of core competencies in the automotive industry: threat or opportunity?

Authors: Glenn Parry, Jens K. Roehrich

Addresses: School of Management, University of Bath, Bath BA2 7AY, UK. ' School of Management, University of Bath, Bath BA2 7AY, UK

Abstract: Faced with shorter product life cycles and increased cost of capital, companies can no longer afford the capital outlay for new facilities, which may become underutilised as processes improve over the first few years of operation. Outsourcing the production capacity can remove this uncertainty. However, fast-moving automotive environment companies, faced with increasingly demanding customers, have to deploy the resources and expertise of the best-in-class provider. To achieve this, they have further reduced their functions to a handful of core activities. Outsourcing core activities can bring about benefits under certain circumstances, but also possesses the risk that companies may become |hollow|, and lack a core deliverable. Within the next couple of years, companies in the automotive sector will further outsource activities in order to free up investment capital. The trends and areas of outsourcing have been explored and a guiding framework has been developed for practitioners.

Keywords: strategic outsourcing; core competencies; resource-based view; RBV; transaction cost economics; TCE; automobile industry; automotive outsourcing.

DOI: 10.1504/IJATM.2009.023585

International Journal of Automotive Technology and Management, 2009 Vol.9 No.1, pp.40 - 53

Published online: 02 Mar 2009 *

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