Outsourcing – New threat

Executive Summary

The growth and expansion of outsourcing in recent years is manifestation of a general shift in business philosophy. Despite this growth, a number of firms still grapple with successful outsourcing. This is because successful outsourcing demands strong background knowledge of competencies of an organization and future direction. The reasons for outsourcing are varied and depend on the type of services sought from another party. Principal merits of outsourcing include cost savings, flexibility, knowledge, accountability and focus.

The case study material “Strategic Outsourcing at Bharti Airtel Limited” by Martinez-Jerez and Narayanan offers an insightful analysis of the underlying reasons why companies outsource critical services (2007). The case of Bharti Airtel is a typical example of the importance of outsourcing, the challenges, major concerns and an analysis of how these concerns can be addressed. In addition, the case offers an insightful analysis on the management of IT expenditures and the need to transfer risks to vendors. The management must seek to adopt a lean and predictable model if they are to effectively manage their capital expenditures.

An analysis of the case study reveals that it presents underlying issues that firms involved in the procurement and management of capital assets have to grapple with to ensure lean and cost-effective systems. Key issues raised in the case material include the complexity of tendering process for network expansions. In an industry where capital equipment must be replaced continuously, the challenge rests on the huge amounts of investments sunk in the purchase of capital expenditures. The importance of strategic outsourcing and key issues of concern are highlighted.

If you were Bharti, what major concerns would you have about entering an outsourcing agreement with IBM? With Ericsson, Nokia, or Siemens?

Outsourcing is an important, but a complex decision to make. This is because it supports an organization in transferring risks to another, but there are a number of factors to consider before in making successful transition from an organization to a vendor. In the case study material, Bharti has a number of issues to consider before entering an outsourcing agreement with the four vendors.

The first and the most important factor Bharti has to consider is the ability of the four vendors to live up to the companies’ expectations.  This is because the capacity of Bharti to remain competitive and deliver services to its clients are anchored on the capacity of the selected vendors to provide Bharti with network capacity complete and comprehensive end-to-end management service for supplying, installing, and managing all of its hardware and software requirement in accordance with its projected growth. This does not only encompass the capacity to deliver the services, but also the ability to meet quality controls specified in the service. These include assessment of network quality such as number of completed and dropped calls.

The second concern is the ability of the vendors to change and meet the demands Bharti needs in the ever-changing and volatile industry. This is related to the capacity of the vendor to manage all software and hardware requirements as concerns basic IT and all relevant applications required to run the IT architecture. The major problem that led to need to outsource vendor services was the management of firms IT Capital Expenditures. This is because intensive capital equipments that were purchased within a couple of years were no longer able to cope up with the changes and the demands of the consumers. This implied the company invested in unpredictable expenditure, which eventually turned into waste after a couple of years. The vendor therefore, must have the capacity to offer a lean and predictable cost model. This is a viable way through which Bharti could become the lowest-cost producer of minutes.

The third concern Bharti would have about entering an outsourcing agreement with the vendors is the ability of the vendors to ensure non-disruption of services offered by Bharti through maintenance of all hardware and software. The telecommunications industry is a volatile sector that requires effective security and fraud management, business intelligence and human resource management. This implies that the vendor must undertake to ensure that all internal customer service and all negotiations with external software and hardware suppliers are captured and effectively addressed.

The fourth concern Bharti had to have about entering an outsourcing agreement with IBM is the readiness and support of executives, managers within the company ranks and employees. This is because one of the main concerns expressed by all the board members was the risk of excessive reliance upon the vendors. The underlying reason was that the executives were not ready for change. Bharti had to assess the management of change through an analysis of change drivers in an organization.

To avoid internal conflict, it was necessary to ensure that key drivers of change such as industry evolution, business cycles, competitive structures, market needs, technological changes, and rules and procedures were captured. Evolution normally comes up with new way of doing things as seen in the current case. It was the responsibility of Bharti to ensure that executive and managers understand that companies in a given industry must adopt changes which industry evolution has brought about. In this case, industry evolution is the force, which necessitates an organization to adopt change. This is because the capacity to enlist the support of all stakeholders is a critical success factor in change management.

What do you see as advantages and disadvantages of outsourcing agreement outlined by Gupta? How would you structure the agreement to address your concerns and capture any advantages you have identified?

Outsourcing agreement outlined by Gupta presents a number of advantages as well as disadvantages for the firm. The first advantage is that the vendors have access to the best technology in the world. They would deliver the technology that would address the shortcomings experienced by the firm in the past. Second, Bharti would transfer the risk to a party that has the capacity to manage the risk better. Third, the outsourcing agreement would foster greater and better working relationships between Bharti and the vendors. In addition, it would help Bharti mange the high cost of procuring and maintaining capital assets.

On the other hand, the agreement presents a number of disadvantages for the firm. First, one of the core competencies of Bharti is the operational experience. In outsourcing these services, they would lose the competency. Second, hardware and software applications not supported by IBM may not be available. Third, the company faces a serious human resource problem, especially by transferring frontline personnel in capital asset management.

The agreement would be drafted in a manner that takes cognizance of the concerns of all stakeholders. In addition, the agreement must capture the important aspects of business strategy.  This implies that agreement must be aligned to the overall strategy of the organization and ensure that it makes financial sense to the company and the shareholders.


Martinez-Jerez, F.A. and Narayanan, V.G. (2007). Strategic Outsourcing at Bharti Airtel Limited. Harvard Business School. 9-107-003


Probability Solutions


  1. A person may be able to snap his/her fingers. Likewise, a person may be able to whistle.  Let S be the event that a person can snap his/her fingers. Let W be the event that a person can whistle.  We have

P(S) = 0.68  and  P(W) = 0.79

  1. What is the probability of the largest possible intersection of S and W?


Since P(S) < P(W), then the largest possible intersection is


0.68 [Answer]



  1. What is the probability of the smallest possible intersection of S and W?





The probability  is between 0 and 1 (inclusive)

Multiply by -1

Add 1.47 to both sides

The probability cannot exceed 1.


Hence, the probability of the smallest possible intersection of S and W is 0.47.

Answer: 0.47





  1. It is known that P(SCWC) = 0.12. What does SCWC represent?  (Write this out in words).  What is P(SW) using P(SCWC) = 0.12?



SCWC represents all elements in the Universal set that are not in the union of S and W.



= 1 – 0.12

= 0.88 [Answer]


  1. Using the information in part c), determine P(SW).






  1. Draw a Venn diagram using the information in parts c) and d).


  1. Using the information in part c), determine P(SC | W).




= 0.25316 [Answer]




  1. At the dog park on a Sunday afternoon, 35% of the dogs are purebred and the rest are mixed breeds (i.e. “mutts”). 40% of the dogs are aggressive.  At the same time we know that 75% of the purebred dogs are aggressive in their encounters with any other dog.
    1. What is the probability that a dog is aggressive and purebred?

Let A = event that a dog is purebred

B = event that a dog is aggressive






0.2625 [Answer]


  1. What is the probability that a mixed breed dog is not aggressive?





Side Work:





= or 0.788462 [Answer]



  1. We will roll 2 fair dice and are interested in the following events:

Event J: both dice show the same number

Event K: the sum of the dice is 6

Event L: the second die is a 4

  1. Write out all the elements in each event J, K and L and find P(J), P(K), P(L).


J = {(1,1), (2,2),(3,3),(4,4),(5,5),(6,6)}

K = {(1,5), (2,4), (3,3), (4,2), (5,1)}

L = {(1, 4), (2,4), (3,4), (4,4), (5,4), (6,4)}


n(J) = 6

n(K) = 5

n(L) = 6


There are 36 possible outcomes when two fair dice are rolled. There are 6 outcomes for the first roll and 6 outcomes for the second roll. Multiplying, there are 6 × 6 =36 outcomes in all.



P(J) = 6/36 or 1/6

P(K) = 5/36

P(L) = 6/36 or 1/6



  1. b) Find P(J ∩ L)










  1. Find P(K ∪ L)



K = {(1,5), (2,4), (3,3), (4,2), (5,1)}

L = {(1, 4), (2,4), (3,4), (4,4), (5,4), (6,4)}





Hence,  or [Answer]


  1. Is Event J independent from event K? Explain and show your work.



If , then events J and K are independent, otherwise not independent.

J = {(1,1), (2,2),(3,3),(4,4),(5,5),(6,6)}

K = {(1,5), (2,4), (3,3), (4,2), (5,1)}


This shows that

Therefore, Event J is NOT independent from event K .


  1. Is Event J independent from event L? Explain and show your work.




J = {(1,1), (2,2),(3,3),(4,4),(5,5),(6,6)}

L = {(1, 4), (2,4), (3,4), (4,4), (5,4), (6,4)}



and  from part “a”.

This shows that

Therefore, Event J is independent from event L .


  1. Is Event K independent from event L? Explain and show your work.



K = {(1,5), (2,4), (3,3), (4,2), (5,1)}

L = {(1, 4), (2,4), (3,4), (4,4), (5,4), (6,4)}



and  from part “a”.

This shows that

Therefore, Event K is NOT independent from event L .



  1. Is event L mutually exclusive from event K? Why or why not?


which is not an empty set.

Therefore, event L is NOT mutually exclusive from event K.


  1. What is the probability that the sum of the dice is at least 10?



Let T = the sum of the dice is at least 10

There are 6 elements in T.

Hence, or [Answer]


  1. Given that Event J has occurred, what is the probability that the sum is less than 6?



Let A = event that sum is less than 6


A =

J = {(1,1), (2,2),(3,3),(4,4),(5,5),(6,6)}


n(A) = 10

P(A) = 10/36 = 5/18







=  [Answer]










  1. Three components are connected to form a system as shown in the diagram below. In order for the whole system to function, component 1 must function and at least one of other components must function.  Assume that each component functions or not independently of the others. The experiment consists of determining the condition of each component.  Let S (success) denote a functioning component and F (failure) denote a nonfunctioning component.  For example, SSF, is the outcome that component 1 functioned, component 2 functioned and component 3 failed.


  1. What outcomes are contained in event G that exactly two of the three components are functioning?


Answer: G = {FSS, SFS, SSF}


  1. What outcomes are contained in the event H that at least two of the components are functioning?


Answer: H = {FSS, SFS, SSF, SSS}


  1. Assume that each outcome in the experiment is equally likely. What is the probability that the whole system is functioning?


Let W = event that the whole system is functioning.


There are 8 possible outcomes in the sample space.


Hence P(W) =

or 0.375 [Answer]



  1. Given that the system did not function, what is the probability that component 1 was functioning?

Let W = event that the whole system is functioning.




Let A = component 1 was functioning













  1. Suppose that with further investigation, it is known that component 1 fails 20% of the time, and components 2 fails 10% of the time and component 3 fails 5% of the time. Using this information, what is the probability that the whole system functions?


Let W = event that the whole system is functioning.



P(W) = (1-0.2)((1-0.1)(0.05) + (1-0.2)(0.1)(1-0.05) + (1-0.2)(1-.1)(1-0.05) = 0.796 [Answer]








  1. At a buffet dinner for 105 people, there were 3 choices for vegetables—artichokes, broccoli and cauliflower. Diners may have more than one type of vegetable or none at all.  Mary Meediun recorded the vegetable choices of the diners that evening.
    • 15 took cauliflower and broccoli
    • 75 took broccoli or cauliflower
    • 28 took artichokes
    • 12 took cauliflower and artichokes
    • 8 took all three
    • 17 did not take any vegetables
    • 33 took broccoli only
    • 22 took two or more vegetables


  1. Draw a Venn diagram for this information—label with number of diners in each section of the Venn diagram.



  1. How many diners took only cauliflower?

20 diners took only cauliflower






  1. What is the probability that someone took only cauliflower?



Let A = event that a diner took artichokes

B = event that a diner took broccoli

C = event that a diner took cauliflower

There are 105 diners in all.

Therefore, or [Answer]



  1. What is the probability that someone took broccoli?


or [Answer]

  1. What is the probability that someone did not take cauliflower?

or  [Answer]


  1. What is the probability that someone took broccoli and artichokes?



  1. What is the probability that someone took cauliflower or artichokes?

or [Answer]



  1. What is the probability that someone took artichokes or took no vegetables?


Let D = event that someone took artichokes or took no vegetables

or [Answer]







  1. Of those taking broccoli, what is the probability that they also took cauliflower?









  1. At the Anytown International Airport, there is a coffee kiosk, which sells regular and decaffeinated (i.e. decaf) coffee in sizes small, medium and large. The small size coffee is purchased 30% of the time, medium size coffee 37% of the time and large size coffee the rest of the time.  62% of the small coffees, 84% of the medium coffees, and 75% of the large coffees sold are regular.
    1. Draw a tree diagram to illustrate the above information.


[The tree diagram is on the next page]

  1. If a customer is randomly chosen, what is the probability that he/she purchases a large coffee?

From the Tree Diagram, the probability is equal to 0.33.

[Subtract the sum (0.3 + 0.37) from 1]

Answer: 0.33


  1. What is the probability that a customer purchases a coffee that is medium and regular?


From Tree Diagram,

Probability = (0.37)(0.84) = 0.3108 [Answer]


  1. What is the probability that a customer purchases decaf coffee?


From Tree Diagram,

Probability = (0.3)(0.38) + (0.37)(0.16) + (0.33)(0.25) = 0.2557 [Answer]





  1. Given that a customer purchased decaf coffee, what is the probability that it was a small size?


Let D = event that a customer purchased decaf coffee

S= event that a customer purchased a small size coffee.



= 0.445835 [Answer]



  1. Is the size of the coffee purchased independent from the type (regular or decaf)? Explain your answer mathematically.


Let D = event that a customer purchased decaf coffee

S= event that a customer purchased a small size coffee.


P(S) = 0.3 and P(S|D) = 0.445835


This shows that the size of the coffee purchased is NOT independent from the type (regular or decaf).


  1. Suppose that one die is rolled and you observe the number of dots facing up. The sample space for this experiment is Ω = {1, 2, 3, 4, 5, 6}.  The following table provides 5 different potential probability assignments to the possible outcomes.
Outcome #1 #2 #3 #4 #5
1 1/6 0.1 0.2 1/2 1/16
2 1/6 0.15 0.15 1/4 1/8
3 1/6 0.4 0.2 -1/4 1/4
4 1/6 0.05 0.2 1/2 0
5 1/6 0.1 0.1 -1/8 7/16
6 1/6 0.2 0.2 1/8 1/8


  1. Which of the assignments #1-#5 are legitimate probability assignments? Explain your answers.


# 4 is NOT a legitimate probability assignment because some of the probabilities are negative (-1/4 and -1/8).

A valid probability value is between 0 and 1 (inclusive).


#3 is also NOT a legitimate probability assignment because the total probability exceeds 1 which is not valid (total =0.2+0.15+0.2+0.2+0.1+0.2 =1.05 > 1). The total probabilities of all outcomes in the sample space should be equal to 1.


#1, #2, and #5 are legitimate probability assignments. All probability assignments are between 0 and 1 (inclusive) and total probabilities of all outcomes in each assignment (#1, #2, and #5) is one.



  1. Let A = die comes up odd; B = die comes up at least 2; C = die comes up at most 4; D = die comes up 5. Determine the probability of each of these four events using each of the legitimate probability assignments (i.e. only use the assignments you said were legitimate in part a).


A = {1,3,5}

B = {2,3,4,5,6}

C = {1,2,3,4}

D = {5}


Assignment #1

P(A) = (1/6) + (1/6) + (1/6) = ½

P(B) = (1/6) + (1/6) + (1/6) + (1/6) + (1/6) = 5/6

P(C) = (1/6) + (1/6) + (1/6) + (1/6)  = 4/6 or 2/3

P(D) = 1/6



Assignment #2

P(A) = 0.1 + 0.4 + 0.1 = 0.6

P(B) = 0.15 + 0.4 + 0.05 + 0.1 + 0.2 = 0.9

P(C) = 0.1 + 0.15 + 0.4 + 0.05 = 0.7

P(D) = 0.1



Assignment #5

P(A) = (1/16) + (1/4) + (7/16) = 12/16 or 3/4

P(B) = (1/8) + (1/4) + 0 + (7/16) + (1/8) = 15/16

P(C) = (1/16) + (1/8) + (1/4) + 0 = 7/16

P(D) = 7/16




  1. Determine the probability that the die comes up even using each of the legitimate probability assignments in the table.


Let E = die comes up even

E = {2, 4, 6}


Assignment #1

P(E) = (1/6) + (1/6) + (1/6) = 1/2



Assignment #2

P(E) = 0.15 + 0.05 + 0.2 = 0.4



Assignment #5

P(E) = (1/8) + 0 + (1/8) = 1/4


  1. If the die is balanced, which probability assignment would be appropriate? Why?


If the die is balanced, then each outcome has an equal chance of occurring.

Therefore, probability assignment #1 would be appropriate.


  1. Using probability assignment #2 and the events defined in part b) above, find P(AB), P(BC),        P(BC), P(AcD), P(AC)c, P(D|B), and P(A ∪ (BC)).


A = {1,3,5}

B = {2,3,4,5,6}

C = {1,2,3,4}

D = {5}

Outcome #2
1 0.1
2 0.15
3 0.4
4 0.05
5 0.1
6 0.2






[ from part ‘b’ P(B) = 0.9]

= [Answer]






  1. JJ’s Video Game store sells used games. For Pokémon fans, the store has used copies of Pokémon Pearl, Diamond and Ruby for sale.  22% of the Pokémon games sold are Pearl, 36% are Diamond and the rest are Ruby.  Annie knows that counterfeit (i.e. fake) games are commonly sold in stores used.  She has done some research on this and has found that a used Diamond game will be fake with a probability of 0.18, a used Pearl game will be fake with a probability of 0.1 and a used Ruby game will be fake with a probability of 0.26.    Find the probability that a customer buying a used Pokémon game at this store will purchase a counterfeit Pokémon game.



Let A = event that a customer purchased used Pokémon Pearl game.

B = event that a customer purchased used Pokémon Diamond game.

C = event that a customer purchased used Pokémon Ruby game.

D = event that a customer purchased counterfeit Pokémon game.


Given: P(A) = 0.22

P(B) = 0.36

P(C) = 0.42

P(D|B) = 0.18

P(D|A) = 0.1

P(D|C) = 0.26


Find: P(D)


Tree Diagram:

From above tree diagram, we have

P(D) = (0.22)(0.1) + (0.36)(0.18) + (0.42)(0.26) = 0.196 [Answer]






Introduction to Information Systems









Executive summary

Ford is facing a dilemma on how to adopt emerging internet technologies and ideas of high-tech industries.  These are in relation to their interaction with suppliers. Proponents of embracing the new emerging technological trends in business were of the view that the company already lags behind when it comes to adopting technology, and the need to respond rapidly is apparent. There was another group that was rather cautious in their approach. They articulated on the need of considering the difference between the auto business and Dell-a different form of business emerging in a different industry- prior to incorporating any form of technology into their business framework. Shareholder value and customer responsiveness is a characteristic in Dell worth acknowledging. Ford has experienced growth in revenues, employees and operations since its inception. Effects of globalization are apparent in the auto business. Ford has embarked on a restructuring plan called Ford 2000 which calls for a reduction in costs that is to be achieved through reengineering and globalization of corporate organizations and processes. Great emphasis is placed on proper understanding of; Ford’s existing supply chain, customer responsiveness initiatives, their existing supply base, production system and retail network. The Dell integrated supply chain system is well analyzed, and its significance to the supply chain strategies of Ford determined.





The existing supply chain is the key historical legacy that has affected the ability of Ford to move to a BTO model. The supply base in place is as a result of history. In the early 1990s, Ford focused on decreasing the number of suppliers dealing with the company directly. Their interest shifted towards building long term relationships with a given number of suppliers who would manage relationships with a large number of suppliers. In return, these suppliers would give Ford yearly price reduction.

Another key factor hindering the shift is the organizational structure of Ford. Purchasing is independent of organizations, a powerful tool that ford has capitalized on.


Virtual integration is the application of internet technology in an organization in place of physical components. Technology has facilitated coordination across boundaries for dell. This has resulted to appropriate returns for their investors. The supply chain is well coordinated. It has greatly benefited from specialization. Dell can tailor their products to the needs of their customers. What is more, their marketing strategy is market driven. Their inventories are low with rapid turnover and have a short order to delivery time.


The practical challenges that Ford should address revolve around the organizational structure of Ford and changes in its supply network. Ford should increase competition among its suppliers instead of maintaining close relationships with a limited number of suppliers. This will make the market competitive for them hence a reduction in the cost of their operations. They should also focus on directly dealing with their customers. Changing the historical organization structure of Ford is another challenge because it has greatly capitalized on it since time immemorial.


Ford should capitalize on the benefits accruing from adopting internet technology in their business structure. Their design strategy will strictly be based on the needs predetermined by their mainstream customers. Their pricing strategy will be market driven in place of the existing strategy that is driven by the budget of the program in normal circumstances. Irrespective of the fact that there will be no maximization on production, there will be a schedule of production in place that would greatly reduce the working cycle of Ford. What is more, orders will be placed based on the demands of their customers unlike the prevailing scenario whereby orders are placed based on capacity constraints and allocation. Additionally, their inventories will have a high turnover.


Source: AceMyHW.com review

Business Study



Business Study

The article is quite justified as it approaches to the problem of increasing oil prices through the eyes of the bigwigs of the industry. These people have showed their concern towards the future of the petroleum industry as theprices are constantly increasing and the man-power is decreasing. Tis in turn is resulting in shorter supply. The article also supplies statistical information about the industry hence it succesfully explores the risks and benefits of the petroleum price increase. The rticle signs off with the note of future hopes of the people who are involved in the industry and relates this o America’s growth and success.

Oil industry is such a field that has no end. Oil supply is constantly increasing with the increase in vehicles and industries all over the world. If we see critically, oil is the blood of the world economy. So this industry has no saturation and no stability. The oil prices increase constantly which keeps the oil possessing countries sit on gold mines. But the demand is more and the supply is less in this industry as there are not sufficient number of people who are contributing to the labour. People involved are not getting paid properly and there is a lot of corruption involved in the field. The prices are constantly increasing but the wages are not. This makes people less inclined to work in this field. Other than that if we see from a business point of view, the capital is also very much important for the growth of the industry. The capital that the companies invest in the oil industry also need to get proper benefits and returns of their money. They invest to make money so that they can make the most of it. The increased need of petroleum and related products has given rise to the need of better technology and machinery to be incorporated in the oil corporations. It also needs to employ more people to meet with the needs of labor. The companies pay for these facilities through the capital that the investors provide to them. This enables them to take risks and innovate more to deliver better quality and quantity of products. The capital that the companies invest also serves in the marketing and transportation of the goods which results in better turn-overs and increased economic support to the industry. Hence the importance of man-power and capital is evident.

But there are points to be concerned about. The industry experts are very much concerned about the continuous price rise of the products. According to Mabro, Robert, (2006), the continuous rise in the petroleum price indicates that there is some corruption going on in the industry as the products are not being supplied to the required places. Even if it supplied, the prices are higher than the regular routine. This is making people innovate new techniques to replace petroleum products with cheaper and better products. This in turn is causing huge damage to the industry. People are losing jobs as companies are cutting costs. This is leading to people’s repulsion from the field of petroleum. The labor shortage is another nail in the coffin as it is making the production insufficient and the supply is scarce because of this. The products are existing but they are not being supplied to the right places. The scarcity is leading to disastrous effects for other industries and overall economy. The increased petroleum prices lead to increase in every single thing available in the market and it affects the general people’s lives as well. The inflation increases and makes it difficult for the regular people to survive.

However, government should take proper measures to stop the prices from rising. The most important step to be taken is stopping the black-marketing of petroleum and related products. Proper investigation should be done to determine the causes of price rise and rectify them. The government should review and rework on the policies of the oil industry policies. There should be strict restrictions on the illegal supplies of the products. This can only happen when people are made aware of the pros and cons. When normal people of the society will know the reasons and benefits of the matter, they will be more particular about the issue and this will help in curbing the malpractices a lot. The joint effort will then result in a melt down in the prices and lesser rate of inflation.



Mabro, Robert, (2006), Oil in the 21st century: issues, challenges and                                  opportunities. Oxford Press. p. 351.