He was assigned to serve in South Korea and became a fluent speaker of Korean. Upon graduating, he received a Rhodes Scholarship and spent two years studying applied econometrics at Oxford Universityreceiving an M. Christensen served as its president and CEO through the late s, then decided to leave the company and become a university professor. He returned to Harvard for doctoral study in business, receiving a Doctor of Business Administration degree in
Ben Chams The make-or-buy decision is the act of making a strategic choice between producing an item internally in-house or buying it externally from an outside supplier.
The buy side of the decision also is referred to as outsourcing. Make-or-buy decisions usually arise when a firm that has developed a product or part—or significantly modified a product or part—is having trouble with current suppliers, or has diminishing capacity or changing demand.
Make-or-buy analysis is conducted at the strategic and operational level. Obviously, the strategic level is the more long-range of the two. Variables considered at the strategic level include analysis of the future, as well as the current environment.
Issues like government regulation, competing firms, and market trends all have a strategic impact on the make-or-buy decision. Of course, firms should make items that reinforce or are in-line with their core competencies.
These are areas in which the firm is strongest and which give the firm a competitive advantage. The increased existence of firms that utilize the concept of lean manufacturing has prompted an increase in outsourcing.
Manufacturers are tending to purchase subassemblies rather than piece parts, and are outsourcing activities ranging from logistics to administrative services.
It prescribes that a firm outsource all items that do not fit one of the following three categories: Items that fit under one of these three categories are considered strategic in nature and should be produced internally if at all possible. Make-or-buy decisions also occur at the operational level.
Keong Leong, and Keah-Choon Tan, suggest these considerations that favor making a part in-house: Lack of expertise Suppliers' research and specialized know-how exceeds that of the buyer cost considerations less expensive to buy the item Small-volume requirements Limited production facilities or insufficient capacity Desire to maintain a multiple-source policy Indirect managerial control considerations Brand preference Item not essential to the firm's strategy The two most important factors to consider in a make-or-buy decision are cost and the availability of production capacity.
Burt, Dobler, and Starling warn that "no other factor is subject to more varied interpretation and to greater misunderstanding" Cost considerations should include all relevant costs and be long-term in nature.
Obviously, the buying firm will compare production and purchase costs. Burt, Dobler, and Starling provide the major elements included in this comparison. Elements of the "make" analysis include:About the Author. Cam Merritt is a writer and editor specializing in business, personal finance and home design.
He has contributed to USA Today, The Des Moines Register and Better Homes and. The first dilemma: Innovate or Conserve We all discuss about the importance of innovation, that you should focus on new applications, new markets, etc.
The Innovator’s Dilemma is an interesting work written by Clayton M. Christensen in The book seeks to explain why certain businesses are successful in their ventures and why other firms fail in response to new technologies.
Chapter 4: The Business Research Process: An Overview The research process begins when a management dilemma triggers the need for a decision. The origin, selection, statement, exploration, and refinement of the management question is the most critical.
Definition of dilemma: Forced choice between two (or more) courses of action which are equally disfavored or favored.
For example, a choice between debt (which has to be paid back with interest and on schedule, but which. CCA is America's leader in partnership corrections.
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