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  • Essay / Explaining 'Make or Buy' as a Business Strategy

    All businesses have a set of strategies to follow when it comes to how they produce their products and services, and in this changing economy fast, the link between product and service has become increasingly important. However, in order to produce the products and services that a company must offer to its customers, it must first examine its production process. Manufacturing the products in-house or outsourcing their production to other companies, with the aim of being more profitable and more efficient in the provision of their products and services has become an issue on the agenda of all managers wishing grow their business globally. The decision to produce their products and services in-house or outsource them would be taken primarily on the basis of cost-benefit. situations in which the company finds itself, while taking into account factors such as speed and cost of delivery, weighing the benefits of outsourcing and the quality of the final products that must be launched in their target market. There are several advantages if companies were to choose the "do" strategy for outsourcing. One of the most obvious is the total control over the cost and quality of products and services that the company has when it vertically integrates its production chain. This would prove effective in ensuring value and quality of products and services to their customers. This form of vertical integration in the “brand” strategy is clearly visible in the case where Toyota Motor Corporation integrates its production line with the help of the acquisition of its raw materials and distribution channels. Using the “do” strategy would also mean that all information relating to the production of the product would be handled internally with direct responsibility and control over the security and confidentiality of the information. This would allow companies to maintain their competitive advantage, as information leaks can prove fatal for companies that are unable to react to competitors duplicating their technology and then improving it to their advantage. Although in-house production brings many prudent advantages, there are also disadvantages to this decision. For example, the employment and retention of a specialized workforce can sometimes be unjustifiable from an economic point of view and have negative effects on the profitability of the company. Therefore, when deciding to embark on a highly specialized project, companies must decide the cost of in-house production versus outsourcing to other companies that already have the infrastructure and manpower. work needed to manage the new project..