Alworth Institute Evaluating Outsourcing Issuess

Evaluating ‘outsourcing issues’

Party decision: You are a student and you decide to pay $10 to go to a student event. You get to the event and find it be very dull and disappointing. Do you leave or do you decide to stay in an effort to ‘get your money’s worth’?

What factors do you need to take into account as you review the need for a decision?

A	Consider that you paid good money and as a result you are committed to the event whatever happens.	Option ‘A’ assumes that resources are inflexible. You may wish to ask ‘what are the relevant resources’? Your money has already gone. The key resource is your time. The money is no longer available for re-allocation but your time is.
B	Ignore the money expenditure and review what you could now be doing other than being at the event.	Option ‘B’ assumes that your time is available for reallocation. You are starting to wonder what other activity that you could pursue would give you greater satisfaction that the one in which you are currently engaged.
C	Just assume that the event will get better and stay.	Option ‘C’ is passive and ignores the fact that an event is composed of yourself and other people Others will be facing a similar decision and if they decide to leave then the event will never get better.
D	Forgetting what you paid to get in, weigh up the pros and cons of staying against the pros and cons of what else you could be doing with your time.	Option ‘D’ builds upon option ‘B’ Option ‘D’ builds upon option ‘B’ and recognizes, as does option ‘B’, that there are what economists call ‘opportunity costs’ (the cost of the next best alternative) involved in making choices about spending time. What you are giving up by staying on is a missed opportunity and represents the economists’ notion of ‘opportunity cost’.

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Evaluating ‘outsourcing issues’