Reasons for Procuring to be More Expensive by 2% for BBC Technology Compared to Other Companies
The reasons for procurement to be more expensive for the BBC Company than for the rest of the organizations can be explained by its size. With a range of affiliates all over the world, the organization required a large sum of money to carry out the procurement.
Reasons for Outsourcing to the Third Party Being Cheaper than to the BBC Technology
While collaborating with the BBC Technology in order to enhance the quality of the services provided by the organization seemed an obvious solution to the company’s concerns, the decision to be made was fraught with a range of serious financial consequences. By selling BBC Technology, the organization could save the money required for outsourcing from the third party and at the same time increase its revenues, which would have been impossible with BBC Technology around.
Reasons for Choosing Privatisations
The reasons for the company to resort to privatizations are, in fact, quite basic – by carrying out the specified actions, the company invested into the staff, who would have faced the threat of losing their jobs otherwise. While considered unreasonable at first due to major losses taken in the process, the given step helped BBC gain the credibility and reputation that it had been striving to attain.
In addition to the above-mentioned advantage, the approach designed by the organization helped BBC improve the quality of its services.
Finally, the process of knowledge sharing, which the outsourcing approach launched in the BBC Company, can be viewed as a major breakthrough. This addition to the information management strategy, which the organization used to follow previously, will clearly help coordinate the work of the staff in a more adequate manner. As a result, the company’s performance and overall competitiveness have been increased.
BBC and Porter’s Competitive Forces Model
From the perspective of Porter’s Five Forces Model, the choice made by BBC in terms of using outsourcing as the basis for its procurement strategy and the further expansion into the global market can be considered rather reasonable. Seeing that the threat of new entrants is rather high in the specified industry, the necessity for the company to increase its performance by acquiring new experience and increasing its staff’s competence is rather obvious. The threat of substitutes, however, can be deemed as average, seeing that there are very few alternatives to news media in the realm of the 21st century.
The bargaining power of buyers, in its turn, is rather high, as the latter is capable of identifying the quality of the news by comparing the information provided by the BBC Company to the actual facts. With the help of modern media, the data concerning inaccuracies or false evidence will be transferred from one potential customer to another, thus, launching the chain reaction of the company’s demise. The bargaining power of suppliers, in its turn, can be considered average.
Risks and Advantages of Outsourcing before the Deal
For the BBC Company, outsourcing presupposed benefiting financially in an otherwise unfavorable scenario. In addition, the company upgraded the skills of its staff and the quality of its services. However, BBC risked failing to meet the demands of the target audience by betting on the wrong company for outsourcing; in the worst-case scenario, the organization would have lost a large number of its viewers.