Search:

Outsourcing of the Aramark Corporation (Track This Article)

Many organizations choose to outsource because they face a lack of available, skilled personnel or resources, timing and response issues, or financial concerns; they want or need to stay abreast of new technology; they want to counter the threat of obsolescence; or because they need to focus on their core processes (Engle, 2002; Bierce & Kenerson, n. d.). Outsourcing can help alleviate these problems and concerns because it can provide a strengthened focus on core processes, little or no capital investments, improved service to customers, cost reduction, and the controlled supply of many functions (i.e., information systems, accounting, distribution, customer services, etc.) (Johri & Cooper, 1998; Bierce & Kenerson, n. d.; Chipman, 1993).
Additionally, outsourcing can free an organization to direct scarce capital where they hold the competitive advantage (Chipman, 1993), and to obtain predictable outcomes at lower cost than if they had done it themselves (Engle, 2002). Finally, outsourcing can mean a higher return on employed assets (skills upgrade, retention and access), a lower risk of obsolescence, less impact from market forces, and improved technology and responsiveness to change (Engle, 2002; Bierce & Kenerson, n. d.).

An “Outsourcing Giant” (Moon, 2003), who took advantage of these benefits, is the Aramark Corporation. Aramark is a “$6 billion contract management company with more than 150,000 employees worldwide that provides support and services to hundreds of companies in fields ranging from food to uniforms to child care” (Vogl, 1997). Early on, the privately held organization had good cash flows and reasonable profits for several years, but eventually projections began to flatten out. Aramark also had a very hierarchical culture that was transaction based and where profitability was a driving force (Hayes, 2004).

In 1992, Al Vicere began working with Aramark as a consultant and change agent to give them some ideas on spurring growth through leadership development. This collaboration resulted in Aramark’s Executive Leadership Institute (ELI), which, through its design process, led Aramark to develop a broader perspective of their business. They not only began to develop a social network and to have much more hands-on interaction across the businesses, but they also looked for ways to branch out through extension opportunities and new markets) (Hayes, 2004).

Aramark sees each of their partnerships as a “system-delivery vehicle,” and controls and programs them by separating each one into individual pieces, monitoring their outcomes as they go through each system. One of Aramark’s goals is to obtain an unlimited partnership with each of their customers, and they are very close to becoming a virtual organization (Vogl, 1997). In 2001, Aramark launched was some consider the most successful IPO of that year, doubled employment, and tripled revenues. In 2004, the Fortune 500 survey ranked it number one in its industry and Fortune named them as one of “America’s Most Admired Companies” (Hayes, 2004).

Article Castle - Articles Resources: http://www.articlecastle.com

Robert Smith was born in New York in 1956. He has spent more than 12 years working as a professor at New York University. He is always fond of helping students with academic writing. Now he spends most of his time with his family and shares his experience in writing an about me essay and where to get english essays.

Please Rate this Article

Not yet Rated