What other factors other than costs should pagoda consider

Assignment Help Operation Management
Reference no: EM13998283

Case Study - Pagoda.com

Introduction

Pagoda.com is an Internet service provider (ISP) that caters to individual consumers and small businesses who require a high level of service and are willing to pay a premium for it. Specifically, Pagoda.com offers state-of-the-art email applications and Web-building software, as well as plenty of storage space and fast access via its high-speed servers. The marketing vice president, Jerry Hunter, puts it this way: "There are a lot of companies out there promising the cheapest Internet access. But what do you get for your money? Slow- or no-access, a mailbox full of spam, and an endless stream of system crashes. And I won't even mention the lack of support if you have a technical question! For a few dollars more a month, we give our customers the environment they need to be productive-without having to think about whether or not they can retrieve their email, or whether their Web site has crashed. It's no surprise, then, that we have the highest customer satisfaction and retention rates in the industry."

The Online Help Desk

One of Pagoda's services is its online help desk. The online help desk works as follows: Customers who are experiencing technical problems, or who simply have questions about their account, enter a one-on-one chat room, where they can interact directly with an expert. Problems are usually resolved within 10 minutes, and customers have listed it as one of the top three reasons they stick with Pagoda.com. Presently, Pagoda has enough capacity to handle up to 900,000 requests per year, although management doesn't expect the number of requests to change much from the current level of 800,000 per year.

A firm located in New Delhi, India, has approached Pagoda about outsourcing the online help desk. The offer is attractive. The New Delhi firm's own personnel would handle the help desk function. These personnel all speak English fluently and have college degrees or appropriate technical backgrounds. And because they are located in India, labor costs would be a fraction of what they are in the United States. The savings would be passed on, in part, to Pagoda.

And since the help desk chat room exists on the Internet, Pagoda's customers should be unaware of the switch.
Pagoda management has put together the following figures, outlining the yearly costs associated with the current system and the Indian proposal:

Current Online Help Desk

PERSONNEL COSTS:

40 full-time-equivalent (FTE) technical experts @ $40,000 per year (salary and benefits); 3 supervisors @ $70,000 each per year (salary and benefits) EQUIPMENT COSTS:

4 servers @ $2,000 per year

20 PCs @ $1,000 per year
VARIABLE COSTS: $1.50 per request (office supplies, fax paper, etc.)

New Delhi Proposal

FIXED COST: $1,500,000 per contract year (to cover administrative and IT costs)
CHARGE: $0.50 per request

Questions-

1. Calculate the total cost of outsourcing the online help desk versus staying with the current solution. Which option is cheaper?

2. What other factors, other than costs, should Pagoda consider? How would you weigh these factors? Given the above, how might you use a weighted-point evaluation system should Pagoda consider? How would you weigh these factors? Given the above, how might you use a weighted-point evaluation system to evaluate the two options?

3. A statement of work typically specifies performance measurements that the buying firm can use to determine whether the service provider is meeting the terms of the contract. What performance measurements would you recommend be put in place? What should happen if the service provider fails to meet these requirements?

Reference no: EM13998283

Find out what is troublesome and frustrating

A manager is intrigued why some people seem to derive joy from work and get energized by it, while others find it troublesome and frustrating.

Communications function that is more effective during crisis

What are the benefits of creating a comprehensive crisis response plan before a crisis happens? Please research and share at least 1 example of an organization that created an

Root cause behind reduced number of on-time deliveries

It appears that the warehouse is routinely past inventory capacity, and product age and overall cycle time are increasing. Your vehicle fleet is just past its prime; however,

Prepare a scope statement for a coffee shop

Prepare a scope statement for a coffee shop. Remember to be tangible, measurable, and specific. The components: Project Objective, Deliverables, Milestones, Technical Requir

Determine implied utilization of the frozen drink maker

After an all-night study session the day before their last final exam, four first-year MBA students decide to stop for some much-needed coffee at the campus Starbucks.

Significant amount of inventory

Share a photo of a business that would have a significant amount of inventory. Briefly describe whether you expect the business uses a periodic or perpetual inventory system,

They rely on similar types of human capital

Industries may be related in all of the following ways except: 1.they rely on similar types of human capital 2. they share customers with similar needs 3. they vary in terms o

Emergency department requiring treatment

Describe a hospital's duty to a person who comes to the emergency department requiring treatment. Does it matter whether or not the person is indigent? What effect have Good S

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd