3. Competition

As a business, most every organization has intense competition. When speaking about a corporation in a competitive free market, this is obvious. But the same is true of support functions within corporations.

One form of competition is outsourcing.

If customers are dissatisfied with an internal service provider -- either unhappy with the quality or value of its products and services, or displeased with the way the organization treats them -- they may choose to buy from vendors and contractors rather than through internal staff.

Another form of competition is decentralization.

If customers don't want to do business with the corporation's central provider, they may choose to make its products and services themselves. They may simply do the work as part of their jobs, or they may go so far as to hire staff or contractors and start their own competing groups.

Of course, there are cases where clients will simply do without, missing potentially lucrative opportunities rather than do business with an organization they have difficulty working with.

In any case, the internal service provider loses market share.

Even if the organization is granted a monopoly, that is, the rest of the company must work through the organization, the surest way to lose a monopoly is to behave as a monopolist.

In fact, a monopoly does not guarantee that the organization will remain in business. It only makes its market share either 100 percent or zero.

Without a monopoly, as internal customers become disgruntled, market share begins to dwindle. This is important news; it gives the organization an early-warning signal that it must change.

With a monopoly, however, pressure builds until dissatisfaction is so great that the entire organization is either outsourced or broken up and decentralized.

The bottom line is, every organization must earn the right to do business with its customers, be they external or internal, even if corporate policies dictate that clients must work through them.