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Often, however, feasibility studies can be read and perceived too optimistically and based on wishful thinking. The urge to outsource can be strong and linked to manager prestige, so that danger bells are overheard. In the KMC case the prices that farmers charged for tapioca roots were much higher than reported in the feasibility study. This was, of course, a blow to KMC Vietnam as tapioca roots are the main raw material in producing starch. RECOMMENDATIONS FOR LOCAL STAKEHOLDERS Local stakeholders should be committed and sincere in their approach to business. It seems that the Vietnamese mindset is rather opportunistic with focus on short term advantages. This should be turned into a more relationship-focused mindset, where the outsourcing and host companies communicate fully with employers in both organizations. It should be emphasized that cooperation and assertiveness are essential for long term win-win outcomes. WHAT HOST GOVERNMENTS SHOULD DO? Porter and Rivkin (2012) have given some policy recommendations to enhance the competitiveness of the United States. These would be obvious to recommend for other governments as well. One of these recommendations is to address the country’s business environment weaknesses. In KMC’s case concerning Vietnam it seems like the communist party has a good grasp on the economy. Even under Doi Moi, which means change and newness, which was implemented from 1986 and was a departure from the very Stalinist governance from 1975, there is still much government influence on business life (Dali, 2012). The government did not keep their promise of land and raw material supply for KMC. The second recommendation is to protect core country strength. In Vietnam these could be a hard working population and a good climate for agricultural production. The government should enhance work ethics, upgrade farming methods, and invest in infrastructure to get farming produce into a more advanced supply chain. In the KMC case, it was told that Vietnamese farmers’ productivity was about half that of their Thai colleagues despite similar natural production conditions. It was mainly a question of the Vietnamese using too little fertilizer. The third Porter and Rivkin (2012) recommendation is to eliminate trade and investment distortions that unfairly disadvantage a country. Governments should work actively within international organizations - not least the WTO framework - to secure orderly trade. It is seen lately that free trade agreements (FTAs) proliferate, and in the absence of a successful WTO, these FTAs should have government attention. Governments are always vulnerable to subsidy wishes from local farmers and industries, but Porter and Rivkin (2012) suggest avoiding the subsidy trap, and instead “offering a compelling value proposition, such as access to talent, technological knowledge, supporting institutions, or a local market that fits the firm’s strategy and cannot be matched elsewhere” (p. 90). In Vietnam’s case it is obvious that most businesses need “compelling value propositions.” Linked to the former policy advice is the advice to “Work collaboratively to enhance local competitiveness” (Porter and Rivkin, 2012). This has much to do with cluster thinking, where industries collaborate and support each other, along with active government support to promising industries. In the KMC case the government could have been more dedicated, consistent, and long term in their attitude to KMC. Tenth Annual International Daejeon, South Korea P a g e | 84 Smart Sourcing Conference June 28-29, 2012
CONCLUSION The KMC case study embodies some of the recommendations in literature, for example the outsourcing checklist (Michelman, 2005). There are also good illustrations in the KMC case of the policy recommendations of Porter and Rivkin (2012). In their words, “Location-decision processes are so complex and dynamic that they are often made on the basis of simple rules of thumb, rough estimates, or history” (p. 85). This seems to be the case for KMC too. FURTHER RESEARCH This research project has been based on one case only. It is obvious that more case studies would uncover more problems in offshoring and outsourcing. The case is based on offshoring/outsourcing of agricultural production, narrowing the scope of problems to this form of collaboration. Probably, many of the problems described in this case are generic, but some can be industry specific. REFERENCES 1. Burns, A.C. & Bush, R.F. (2008) Basic marketing research. Using Microsoft Excel data analysis. Upper Saddle River: Pearson International Edition, 2nd Edition. 2. Børsen (2012) Leading Danish business newspaper, article database, www.boersen.dk, accessed different dates in 2012. 3. Dali, S. (2012) Retrieved from http://www.pptpalooza.net/PPTs/OtherTeachers/SDalyPPTs/VietnamUnderDoiMoi-SDaly.ppt, accessed 28 May 2012. 4. Jacobs, F.R., Chase, R.B, Lummus. R.R. (2011) Operations and supply chain management, thirteen edition, McGraw-Hill Irwin. 5. KMC (2001) Feasibility study for sourcing tapioca roots in Vietnam. Brande: Company internal material. 6. KMC (2012) Company homepage www.kmc.dk, accessed different dates in 2012. 7. Michelman, P. (2005) An outsourcing checklist. Harvard Business School Publishing Corporation. 8. Newman, W.L. (2000) Social Research Methods: Quantitative and Qualitative Approaches (4th ed.), Boston, MA: Allyn & Bacon. 9. Nygren and Blom (2001) Analysis of short reflective narratives: A method for the study of knowledge in social workers’ actions. Qualitative Research, 1(3), 369-384. 10. Porter, M.E. and Rivkin, J.W. (2012) Choosing the United States. In contests to attract high-value business activities, the U.S. is losing out more than it should, Harvard Business Review, March. 11. Porter, M.E. and Rivkin, J.W. (2012a) The looming challenge to U.S. competitiveness, Harvard Business Review, March. 12. Quinlan, C. (2011) Business Research Methods, South-Western, Cengage Learning EMEA. 13. Russell, R.S and Taylor III, B.W. (2011) Operations Management, 7th Edition, John Wiley & Sons, Inc. 14. Verma, R. and Boyer, K.K. (2010) Operations & Supply Chain Management: World Class Theory and Practice, first edition, South-Western, Cengage Learning. 15. Yin, R.K. (1997) Case study research: Design and methods. Thousand Oaks: Sage. Tenth Annual International Daejeon, South Korea P a g e | 85 Smart Sourcing Conference June 28-29, 2012
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2012 Global Sourcing of Services: B
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Center for Global Outsourcing Tenth
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Dear Conference Participants: I wou
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Center for Global Outsourcing 26 Be
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2012 June 28 8:00AM-5:30 PM Registr
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Contemporary Issues and Challenges
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Introduction Outsourcing is contrac
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In this way Big Business is on the
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Introduction and Literature Review
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DESIGNING AND IMPLEMENTING A FRAMEW
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giving weight to the sub criteria,
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Abstract Secrets of Competitiveness
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outsourcing some or major function
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prescription to grow not only organ
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ENTREPRENEURSHIP IN TIME OF CRISIS:
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