Procurement and Contracting Process Assessment of Procurement Case Study

Excerpt from Case Study :

Procurement and Contracting Process

Assessment of procurement contracting process

Travel Magazine is a newly established new magazine, specializes in printing out the news, articles, reports, guides, special offers and many more. Established on the first quarter of 2009, the company targets its marketing campaign towards the middle-income population to achieve market advantages. Over the past six months, the founding partners have spent great deal of time developing the Business Plan and Marketing Plan, setting up a corporation, and conducting research on the operating requirements of the magazine. Despite the efforts of the partners to enhance the company growth, the company has been affected by the recession because all the investing partners have not been able to contribute the additional capital and this has threatened company growth. Since all the partners have decided not to bring in other partners at this point, they both agree to scale back the company expenses and outsource some of the business processes to restructure the cost requirements. To continue the business operations, Travel Magazine will need to outsource minimum of five business processes and will need to be in operation within nine months to hold this venture successfully.

This paper formulates research objective to enhance greater understanding on the procedures Travel Magazine will implement the outsourcing process.


To reveal the entire outsourcing/contracting process of Travel Magazine

B: Business Process to run a Magazine Business

In a magazine business, there is business processes required to run the business successfully. Travel Magazine key business processes are accounting, photography, editorial, publishing, distribution, layout, printing, advertising, editing, and articles.

Accounting is one of the core competences in a magazine business. The accounting unit provides the overall costs that the company incurs to run business in a fiscal year. The accounting unit also calculates all the revenues that the businesses have accumulated within a year. By preparing the company balance sheet, the management is able to understand whether the company is making profits or loss. The accounting unit also has the capacity to advice the company the method to cut costs in order to boost the revenues.

Photography unit is an important business process in a magazine business. This unit provides the overall photographs that will be displayed in the magazine to attract the readers. Articles are a part of the business process. The articles may be stories, news contents or may contain subjects ranging from business to politics.

Editing unit is to edit the contents of the articles before they are published. The editors proofread the articles to reduce the grammatical errors. Editor edits the captions, photos, and ads placement to enhance marketability of the magazine.

Layout unit is to ensure that all text, articles, and photos are arranged to attract the attention of the readers. Publishing is one of the important business processes of the magazine business. The publishing deals with printing of the whole magazine. The publishing produces the magazine for the public.

Advertising is a part of the magazine business tasked to enhance the publicity of the magazine. The advertising unit could use internet, television, magazines, newspapers and radio to publicize the magazine.

The next stage is to distribute magazine to the public. Company uses distribution business process to implement this task. A distribution unit ensures that all magazines reach the target markets at a stipulated time

In a magazine business, editorial is written by a senior editorial staff revealing his opinion piece. Editorial is often published on a special page which features the letter from the member of the public.

Despite that Travel Magazine employs all these business functions for the business operations, the compare is still incurring high costs in its business process. Thus, the partners have decided to outsource some of the business processes to restructure the costs requirements.

Analysis of the Business Process to Outsource

To lower costs, Travel Magazine has decided to outsource some of its business processes. However, the company needs to identify and analyze some of the business processes to outsource. Careful analysis is very important to identify the business processes to outsource and stay in-house.

Business Process to Outsource

There are businesses areas that Travel Magazine needs to outsource to cut costs. Some of these areas are articles, editing photograph, advertising, and distribution. The business process to remain in-house is accounting, printing, publishing, editorial, and layout. The company should leave these business processes in-house because they are the core competence of the magazine business. Typically, Travel Magazine has already developed more skills in their core competence, and the company is able to deliver quality jobs on these functions than to outsource them. Moreover, the company could lower the costs by leaving these functions in-house. In addition, the core competence of the Travel Magazine is too confidential to be outsourced. Keeping this function in-house will enhance the company integrity.

The paper discusses the business process to be outsourced one by one.

Articles and Editing

Among the business processes the Travel Magazine needs to outsource are articles and editing. In the contemporary business environment, many organizations have started to take the advantages of outsourcing to lower costs, and restructuring the cost requirements using the Business Process Outsourcing (BPO).( Khalfan, 2003).

Business Process Outsourcing is a subset of outsourcing where business organizations contract some of their business functions and responsibilities to a third service provider. (Tas & Sunder 2004). Outsourcing is becoming more attractive because the competitions among the BPO vendors make the outsourcing to be more cost effective. With rapid development of Information Technology (IT), it is possible for organizations to outsource some of their businesses to the third parties at any part of the world. With IT advantages, a company could establish outsourcing contract with a third party at any part of the world, and the results are delivered electronically from the vendors from any part of the world. (Jacks, Palvia. Schilhavy. et al. 2011). In the United States, up to 90% of the companies adopt outsourcing as part of their business strategies, and many of them establish outsourcing contracts with vendors in India. (Corbett, 2004). Typically, some service providers specialize on one or more aspects of the business functions and are able to deliver these business functions at reduced costs.

Some of the aspects of the business processes of the Travel Magazine that could be outsourced at reduced costs are articles and editing. Many of the service providers specialize in articles and editing. Typically, many service providers are able to deliver high quality articles and editing tailored to the needs of Travel Magazine at reduced costs.


Photography is another area of the business functions of Travel Magazine that needs to be outsourced to lower costs. Apart from hiring a service provider to deliver high quality photograph tailored to the company needs, Travel Magazine could also seek for the service of the freelance photographers to assist the company in delivering high quality photograph. Outsourcing this function to a service provider or freelance photographers will assist the company to lower costs because a service provider or freelance photographer will only charge the company per order.

Advertising and Distribution

Advertising and distribution could be used to achieve strategic market advantages, and effective advertising is very critical for an organization to enhance publicity. In addition, distribution is very critical for the success of Travel Magazine. The company needs to deliver its magazine at the target markets efficiently and at reduce costs to continue enjoying patronage of its customers. Despite the benefits of advertising and distribution to the company strategic advantages, the core functions of Travel Magazine are not advertising and distribution. There are array of vendors that specialize in advertising and distribution of the company products and services and deliver the results at lower costs. Travel Magazine could seek for the services of one of the service providers for the advertising and distribution functions.

To assist the Travel Magazine to make effective decision in outsourcing some of its business functions, the paper provides advantages and disadvantages of outsourcing of some of the business processes of Travel Magazine in Table 1.

Table 1: Pros and Cons to Outsourcing Process.

Business PROCESS



Business Process #1 Advertising

Focusing on the core activities thereby develop employee on the in-house functions.

Time saving


Help the company to lower the cost and save money

Reduce overhead costs

Efficient operational control

Staffing flexibility

Continuity and risk management

Develop internal staff



Capital conservation

Confidential risks

Lost of control in advertising function

In ability to develop employees for advertising function

Business Process #2 Article

Ability to provide quality articles that will attract customers

Cost saving because the company only hire when they need resources

Provide fresh outside perspective on the articles requested

Inability to develop skilled employee for this function

Inability to maintain the company quality control. Quality control system of Travel Magazine may be different from the quality that outsourcing company may offer.

Business Process #3 Photograph

Ability to have access to the high quality photograph

Cost saving


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