A debt contract promises a creditor a fixed repayment not contingent on a debtor’s performance. At the same time, it provides the creditor with a right to foreclose on the debtor’s assets in default and to enforce liquidation. However, in practice, even when the debtor misses (i.e., defaults on) the promised repayment, the creditor does not always enforce liquidation. Instead of enforcing it, she occasionally permits the defaulting debtor to restructure the contract terms to obtain relief (forgiveness) from the liability. The agents continue to keep the contractual relationship beyond the default.
This paper focuses on how do firms make the outsourcing decisions and deeply research into the determinants for outsourcing decision. Meanwhile, this paper pays attention to the potential outsourcing market in China and treats the Chinese company differently from the previous views, considering them more as outsourcers than outsourcing suppliers.
Through the literature review, I will give a definition and classification to the term “outsourcing”; then analyze the factors that influence the outsourcing decisions from the transaction cost and companies’ core competence perspectives. A decision model will be introduced in my paper based on the previous literatures. A case study focuses on how companies solved outsourcing problem will be presented and analyzed according to my model.
The recent economic turmoil beginning in late 2007 has challenged businesses of all sizes. Firms have been faced with a great deal of uncertainty regarding sales and the economic outlook. At the same time, the recent downturn has dramatically impacted the availability and terms of credit. Over the 2007-2009 period, financial institutions have reported tightening their credit standards for approving loans (SLOOS).
