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Keeping work in-house or contracting it out?

Von: Justin Credible (matt.finish@btopenworld.com) [Profil]
Datum: 11.05.2010 19:22
Message-ID: <vngGn.77141$rc7.4977@newsfe19.ams2>
Newsgroup: uk.finance
Just musing over a present real-life scenario and would appreciate any
thoughts.

Assume a company distributes a product across a given region.  It currently
uses an external third party to carry out this task at a cost of, say, £10m
per year.

The company already has a transport arm but bringing the distribution
in-house would cost, say, £15m (the third party can undercut the in-house
operation by virtue of the fact that they already distribute a competitor's
products across the region, i.e they're basically piggy-backing us onto the
back of them).

As it stands, the £10m cost is paid to a third-party and is gone.  Whereas,
if the operation was brought in-house, even though the cost is higher, it
stays within the parent company.

What am I missing?


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