Make or buy decision essay

Make or buy decision essay

MAKE OR BUY Management decision should be based on careful consideration of all the factors, including implication as regard to tax liability. Keeping view various tax implications that are relevant while taking some specific management decision under different provision of Income tax Act have dealt with: Make or Buy: One of the vital investment subject to the influence of tax factor is “Make or buy decision” Dec 10,  · Definition of 'Make-Or-Buy Decision'. The act of choosing between manufacturing a product in-house or purchasing it from an external supplier. In a make-or-buy decision, the two most important factors to consider are cost and availability of production capacity. An enterprise may decide to purchase the product rather than producing it, if is cheaper to buy than make or if it does not have sufficient production capacity to produce Make-Or-Buy Decision Essay. The term make-or-buy decision represents the decision of firms to organize their goods and services internally or externally. This decision is so central to the functioning of businesses that it has attracted scholars from multiple disciplines such as supply chains, vertical integration, technology, flexibility, allocation of resources, large versus small organization, and core Estimated Reading Time: 5 mins

Make-Or-Buy Decision Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The term make-or-buy decision represents the decision of firms to organize their goods and services internally or externally.

This decision is so central to the functioning of businesses that it has attracted scholars from multiple disciplines such as supply chains, vertical integration, technology, flexibility, allocation of resources, large versus small organization, and core competencies, among others. Further, factors that have been documented as being central to the make-or-buy decision include total acquisition cost, make or buy decision essay, complexity of the product, technological factors, costs, make or buy decision essay, and skills.

Others have discussed factors that include environment characteristics, make or buy decision essay, lifetime costs, make or buy decision essay opportunity costs. Although these factors are important, what is missing is the role of market orientation and production costs in the make-or-buy decision-making process.

Given that market orientation leads to superior performance, and that production costs make or buy decision essay on the costs of transportation, which in turn depend on the cost of fuel, it is imperative that managers understand the circumstances under which a making or buying decision is most desirable.

Clearly, the fundamental benefit of being market oriented is the creation of superior customer value and continuous superior performance for the business. Empirical research supports this assertion. However, market orientation is the function of costs; e.

Further, the significant increase in the geographical scale of production and distribution has necessitated that firms compare production costs. For the purpose of this study, production costs is defined as the total costs incurred by a firm through the purchase of input goods, its transportation to a plant, and its production. Prior research addresses the elements of time in transportation, such as order time, timing, punctuality, make or buy decision essay, and frequency, and evaluates the differences between adjacent trading partners, nearby trading partners, and distant trading partners.

However, there is little reference to the heart of the transportation costs, such as the cost of fuel. Clearly, an alternative to geographical proximity is that suppliers that are located far from plants should coordinate their transportation systems, leading to considerable reduction in transportation time and costs.

Or, firms should make the product in-house, leading to savings in transportation time and costs. This makes the argument for the need for inclusion of market orientation and costs in the make-or-buy decision-making model in order to create superior value for customers and superior performance for businesses. While one scenario may make or buy decision essay that the production cost exceeds the benefit being market orientation, another scenario suggests that the benefit of market orientation outweighs the cost of production, make or buy decision essay.

A third scenario indicates that buying is more desirable than making because buying is always cheaper than making. Clearly, the first scenario is desirable for managers engaged in service industries, whereas the second scenario is applicable to manufacturing.

The third scenario is advisable for managers who need to maintain a stable market orientation and thus keep production cost low; however, firms that are equipped to handle only stable markets will not be effective because real markets are often complex and unpredictable.

Although the model depicts how costs can be minimized, sometimes volatile changes in the price of fuel should be factored into the production costs. Indeed, rising fuel costs have been identified as an emergency that affects all supply managers. In sum, the implication for managers is that they should recognize the need for preserving market orientation by keeping costs low through the make-or-buy decision.

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Make or Buy Decision

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make or buy decision Essay

Mar 12,  · The buy or make decision is centered on issues that may be situational or strategic. Issues that influence this decision are competitive advantage, flexibility in the face of technological changes, and potential coordination inefficiencies MAKE OR BUY Management decision should be based on careful consideration of all the factors, including implication as regard to tax liability. Keeping view various tax implications that are relevant while taking some specific management decision under different provision of Income tax Act have dealt with: Make or Buy: One of the vital investment subject to the influence of tax factor is “Make or buy decision” Make-Or-Buy Decision Essay. The term make-or-buy decision represents the decision of firms to organize their goods and services internally or externally. This decision is so central to the functioning of businesses that it has attracted scholars from multiple disciplines such as supply chains, vertical integration, technology, flexibility, allocation of resources, large versus small organization, and core Estimated Reading Time: 5 mins