Question

A country hospital is debating the possibility of running its own food service. The foodservice will serve multiple groups including patients, employees, the executive (physicians) dining room, the visitor and volunteer cafeteria and the cafe/ coffee shop. Your options include expanding, as the central commissary to the country school district and other area hospitals which are smaller in size. The alternative would be going to a contract food service provider.

You are to weigh the (3) positives and (3)negatives of each option.

Which option you would prefer to operate as a manager and why?

Answer 1

Expanding the Operations

Giving Contract to the Food service provider

Positive Side: Here, Expansion drive will include people from their organization and Organizational people could have greater awareness about the vision of such Initiatives, Expansion services need not require to search any third party, and organization will create their team to handle the project and operations, sometimes searching for third party could be much grueling and issues may come with service level, hence, doing expansion of their business and keeping their own people will be much reliable in that context, With Expansion strategy, organization can achieve economies of scale, as Organization will not add extra party to manage their food operations, hence, with limited and their own stakeholders, employees, they can achieve Economies of scale, Negative side: Expanding their operations will bring huge risk towards the organization, as It is not going to involve any specialized third party, those have market expertise in it, Another Negative side, here, we require more investment or Initial set up cost that to be paid by the original company; no third party will share investment. Expanding their business operations by their own team requires people and resources to support their venture, however, such initiative becomes tougher as even, and parent organization could have limited capability.

Positive side: With this strategy, organization can transfer significant amount of risks and specialized third party can be involved, hence, they can make their business up just in days, Parent organization need not to investment much, instead, they will give licensing to third party who will work on the business, here, Third party will do investment for resources, Every parent organization have some limited capability, here, such organization still can run their business by giving contract to the food service provider. Negative Side: With giving contract to the Food service provider, cost of operations will increase, organization may not achieve economies of scale, With giving contract to food service provider, here, mostly skills and expertise are with food service provider, organization will face difficulty to evaluate performance of people with third parties, Organization people could lose their own control, as they have given Contract to the Food service provider,

It could be best choice giving contract to the Food service provider, as every task needs high level of skills and expertise, keeping and controlling such skills and expertise could go challenging, here, Third party can manage such things much efficiently, further, Organization will not require to invest much, instead, they can transfer their risks to the third party,