is linked into the global supply chain for a global firm to supply specific
country or regional markets around the globe. set up to overcome intangible and tangible
barriers (tariffs, taxes...).
is similar to server factory, but has responsibilities for product and
process engineering and development. Can try new suppliers, etc. and actually compete
with the global firm’s home factories for testing new ideas and products. Thus, not as big
a part of the global supply chain.
is an intelligence-gathering unit
set up near competitors/demanding
customers/key suppliers. (often operates as a server and/or offshore factory as well)
is intended to create new processes, products, and technologies that can be
used throughout the global firm in all parts of the world. Important!
Hidden costs of foreign locations
Significant issues in some outsourcing locations:
high employee turnover
poor product quality
17.4 - Make-or-Buy Decisions
Produce an item in-house (“make”) or purchase it from an outside supplier (“buy”).
Strategic decisions that are pro “make”:
Issues of product success
If it’s specialized knowledge
Strategic fit (e.g. with other production OR if it’s a core competency)
In reality, the make-or-buy decision is often based largely on two critical factors:
Cost issues related to raw materials or parts needed to “make”
Production capacity. Two things:
Is there capacity to produce the product at a cost that is at least no higher
than the cost of buying it from an external supplier.
Does it take the capacity of something else, we want to “make”?
To facilitate the make-or-buy decision, we have captured the dynamics of this choice in two
figures that center on either operationally favoring a make decision or operationally favoring a