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ACCA Strategic Professional · Strategic Business Leader · Enabling success: organising

Marlow Pharma is deciding which activities to outsource. Its research on new compounds gives it a unique, hard-to-imitate advantage. Its facilities cleaning, payroll and IT helpdesk are standard activities with many capable suppliers. Applying a core competence view, which approach is most consistent?

Marlow should retain research in-house and consider outsourcing or sharing the non-core support activities. Research is a unique, hard-to-imitate competence that underpins advantage, while cleaning, payroll and helpdesk are commodity activities with many suppliers and can be handled more cheaply externally.

  1. AOutsource research and retain cleaning, payroll and the helpdesk to protect jobs
  2. BOutsource all four activities to focus on managing contracts
  3. CRetain research in-house and consider outsourcing or sharing the non-core support activitiesCorrect
  4. DRetain all four activities because outsourcing always destroys value

Explanation

A core competence approach says to keep activities that provide sustainable competitive advantage and to outsource non-core, commodity activities where a competitive market exists. Outsourcing research would give away the source of advantage. Retaining everything or outsourcing everything ignores the distinction.

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