East or West, Home is Best? A case study regarding backsourcing at Volvo Car Corporation

Abstract

Background and Problem: For the last couple of decades, global competition have increased tremendously, forcing companies to find new ways to stay competitive. One way of doing this is to outsource functions to external suppliers. However, many outsourcing decisions have been ill-founded, sometimes leading to severe implications. As a consequence of this, the phenomenon backsourcing has emerged, i.e. bringing an outsourced function back in-house. Purpose: To examine how financial- and non-financial aspects are taken into consideration when Volvo Car Corporation (VCC) considers backsourcing. What importance is put on financial aspects in comparison to non-financial aspects? Method: The authors have taken an explorative research approach, where a qualitative case study has been performed. Six semi-structured in-depth interviews have been conducted at VCC, in order to gather the empirics. This method corresponds well to the purpose of this thesis, i.e. a purpose that tries to examine how and why certain aspects are considered. Result and Conclusions: The conclusions that can be drawn based on this thesis are that backsourcing decisions are complex. Multiple aspects are considered in a cross-functional consensus context, where costs savings hold a superior position. What aspects that are contemplated in backsourcing decisions, depend on the nature of the industry and the complexity of the organization´s products. All backsourcing decisions should be based on the company´s long-term strategy. Future Research: The authors have identified a number of areas where they find it interesting to conduct future research. For instance, the authors would find it interesting to perform a similar study on other production companies with a complex product. To examine whether the same aspects are taken into consideration, and if cost savings holds the same superior position?