Asked by Anita Gallegos on May 08, 2024
Verified
Can an organization's plans for vertical integration be supported by the tools of make-or-buy analysis? Explain; provide an example.
Vertical Integration
A strategy where a company expands its business operations into different steps on the same production path, such as a manufacturer owning its supplier and/or distributor.
Make-Or-Buy Analysis
An evaluation process used in business to determine whether products, parts, or components should be produced in-house or purchased from an external supplier.
- Recognize the relevance of make-or-buy determinations and the justifications for them.
Verified Answer
YZ
Yumeng ZhangMay 09, 2024
Final Answer :
Yes; the decision to acquire the provider of an upstream operation is the same as choosing to make whatever has been provided. Not to acquire is the equivalent of "buy." The analysis also holds for downstream operations: the acquisition of a delivery fleet is equivalent to "make" in the downstream operation of distribution.
Learning Objectives
- Recognize the relevance of make-or-buy determinations and the justifications for them.
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