SSC CGL – SSC CGL Test 34

Read the following passage carefully and answer the questions given below it.<br> First, there's a perception that outsourcing could adversely impact the quality of service. "We believe that directly controlling our stores is the only way to maintain quality. If we outsource, quality would suffer and that would have a negative rub­off on our business as a whole. You can do outsourcing only if you're willing to shut your eyes to many things," says the Managing Director of a company. Despite being the dominant partner in the relationship, the outsourcer doesn't always have all the advantages. For one, very few entrepreneurs are willing to take on a new outsource, unless it comes with a guarantee of a certain level of sales. The trade refers to it as the minimum guarantee clause, which means that if an outsourcee is unable to reach an anticipated sales level, he will be compensated for the balance amount. This invariably acts as an incentive for outsourcees to be lax in developing the business. Yet, given that there are too many outsourcers chasing too few potential outsourcees, the minimum guarantee clauses often become a crucial deciding factor in choosing an outsource. Of course, there are ways of working around this.<br> The Rs 14­crore­chain of personal grooming and fitness clinics tried the outsourcing route two years ago by handing over management of the outlet to its outsourcee. That agreement did not work. "Ours is a very critical service. Our business is about people's health and well­being. If the standards are not kept up, one mistake will wipe out so many years of goodwill. And since we saw maintaining the right service levels was a problem, we decided to opt out of outsourcing," says a managing director. To make things simpler, it set up joint ventures with interested parties and kept 65% of the stake and, therefore, management control in its hands. Its future plans of opening specialised fitness centre chains and good health eateries are also based on the current 65 : 35 model. Players with a large existing outsourced network have an incumbency problem: upgrading the quality of the outlets in line with changing customer needs. The logic may seem reasonable, but convincing an outsourcee to invest more in upgradation is seldom easy.<br> Bentex wants to move beyond the retail ambience it is offering to its customers. "We have grown to a fair level with our outsourcees but times have changed. We need to move on," says executive director. Won't it unsettle the 430­odd Bentex outsourcees ? "We are only setting up 25 of these shops to show our outsourcees it can work. The rest we want to outsource," affirms marketing manager. But potential outsourcees will be up against a hurdle: the stores will be allowed to stock only branded Bentex products, from earrings to bangles. This may put off consumers who seek variety. Currently, Bentex allows its outsourcees to outsource 35% of the products in the outlet. "There may be a certain sense of independence that an outsourcee gets by choosing some stock but we think it is a habit. Once he realises the convenience of sourcing from just one place, he will upgrade. But Bentex realises the psychological impact of starting its own retail stores."

Which of the following is a disadvantage of outsourcing?

Read the following passage carefully and answer the questions given below it.<br> First, there's a perception that outsourcing could adversely impact the quality of service. "We believe that directly controlling our stores is the only way to maintain quality. If we outsource, quality would suffer and that would have a negative rub­off on our business as a whole. You can do outsourcing only if you're willing to shut your eyes to many things," says the Managing Director of a company. Despite being the dominant partner in the relationship, the outsourcer doesn't always have all the advantages. For one, very few entrepreneurs are willing to take on a new outsource, unless it comes with a guarantee of a certain level of sales. The trade refers to it as the minimum guarantee clause, which means that if an outsourcee is unable to reach an anticipated sales level, he will be compensated for the balance amount. This invariably acts as an incentive for outsourcees to be lax in developing the business. Yet, given that there are too many outsourcers chasing too few potential outsourcees, the minimum guarantee clauses often become a crucial deciding factor in choosing an outsource. Of course, there are ways of working around this.<br> The Rs 14­crore­chain of personal grooming and fitness clinics tried the outsourcing route two years ago by handing over management of the outlet to its outsourcee. That agreement did not work. "Ours is a very critical service. Our business is about people's health and well­being. If the standards are not kept up, one mistake will wipe out so many years of goodwill. And since we saw maintaining the right service levels was a problem, we decided to opt out of outsourcing," says a managing director. To make things simpler, it set up joint ventures with interested parties and kept 65% of the stake and, therefore, management control in its hands. Its future plans of opening specialised fitness centre chains and good health eateries are also based on the current 65 : 35 model. Players with a large existing outsourced network have an incumbency problem: upgrading the quality of the outlets in line with changing customer needs. The logic may seem reasonable, but convincing an outsourcee to invest more in upgradation is seldom easy.<br> Bentex wants to move beyond the retail ambience it is offering to its customers. "We have grown to a fair level with our outsourcees but times have changed. We need to move on," says executive director. Won't it unsettle the 430­odd Bentex outsourcees ? "We are only setting up 25 of these shops to show our outsourcees it can work. The rest we want to outsource," affirms marketing manager. But potential outsourcees will be up against a hurdle: the stores will be allowed to stock only branded Bentex products, from earrings to bangles. This may put off consumers who seek variety. Currently, Bentex allows its outsourcees to outsource 35% of the products in the outlet. "There may be a certain sense of independence that an outsourcee gets by choosing some stock but we think it is a habit. Once he realises the convenience of sourcing from just one place, he will upgrade. But Bentex realises the psychological impact of starting its own retail stores."

What compensation does the outsource expect?

Read the following passage carefully and answer the questions given below it.<br> First, there's a perception that outsourcing could adversely impact the quality of service. "We believe that directly controlling our stores is the only way to maintain quality. If we outsource, quality would suffer and that would have a negative rub­off on our business as a whole. You can do outsourcing only if you're willing to shut your eyes to many things," says the Managing Director of a company. Despite being the dominant partner in the relationship, the outsourcer doesn't always have all the advantages. For one, very few entrepreneurs are willing to take on a new outsource, unless it comes with a guarantee of a certain level of sales. The trade refers to it as the minimum guarantee clause, which means that if an outsourcee is unable to reach an anticipated sales level, he will be compensated for the balance amount. This invariably acts as an incentive for outsourcees to be lax in developing the business. Yet, given that there are too many outsourcers chasing too few potential outsourcees, the minimum guarantee clauses often become a crucial deciding factor in choosing an outsource. Of course, there are ways of working around this.<br> The Rs 14­crore­chain of personal grooming and fitness clinics tried the outsourcing route two years ago by handing over management of the outlet to its outsourcee. That agreement did not work. "Ours is a very critical service. Our business is about people's health and well­being. If the standards are not kept up, one mistake will wipe out so many years of goodwill. And since we saw maintaining the right service levels was a problem, we decided to opt out of outsourcing," says a managing director. To make things simpler, it set up joint ventures with interested parties and kept 65% of the stake and, therefore, management control in its hands. Its future plans of opening specialised fitness centre chains and good health eateries are also based on the current 65 : 35 model. Players with a large existing outsourced network have an incumbency problem: upgrading the quality of the outlets in line with changing customer needs. The logic may seem reasonable, but convincing an outsourcee to invest more in upgradation is seldom easy.<br> Bentex wants to move beyond the retail ambience it is offering to its customers. "We have grown to a fair level with our outsourcees but times have changed. We need to move on," says executive director. Won't it unsettle the 430­odd Bentex outsourcees ? "We are only setting up 25 of these shops to show our outsourcees it can work. The rest we want to outsource," affirms marketing manager. But potential outsourcees will be up against a hurdle: the stores will be allowed to stock only branded Bentex products, from earrings to bangles. This may put off consumers who seek variety. Currently, Bentex allows its outsourcees to outsource 35% of the products in the outlet. "There may be a certain sense of independence that an outsourcee gets by choosing some stock but we think it is a habit. Once he realises the convenience of sourcing from just one place, he will upgrade. But Bentex realises the psychological impact of starting its own retail stores."

Outsourcing works best if