QUIZ ANSWERS

Quiz answers:

1. What are the major drivers of the outsourcing at Kone?

· Kone is a multinational company which the size of the company is a bit large. The company embarked on a globalization strategy several year ago and soon discovered that the internal IT process were insufficient to support the expansion.

· The company try to reduce the costs of global sales was minimal

2. Why did Kone elect to work with several vendors?

Kone elect to work with several vendors such as HP because to manage the hardware on which SAP is run.

3. What are some of the risk of this outsourcing?

The risks or the outsourcing are:

· Shirking occurs when a vendor deliberately underperforms while claiming full payment. For example: billing for more hours than were worked, providing excellent staff at first and later replacing them with less qualified ones).

· Poaching occurs when a vendor develops strategic application for client and then uss it for other clients. For example: Vendor redevelops similar system for others clients business, competing against it.

· Opportunistic repricing (“holup”) occurs when a clients enter into a long term contract with a vendor and the vendor changes financial terms at same point or overcharges for anticipated enhancement and contract extensions.

4. How can Kone control its vendors?

Kone control its vendors by maintains some IT competencies to allow it to control its vendors.

Prepared by:

SUHANA BT ABD AZIZ

3SCS