ACCT 001A Lecture Notes - Lecture 20: Outsourcing, Moe Williams, Vertical Integration
7 Jan 2021
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Document Summary
Mark-or-buy decisions short-term decisions to outsource labour or to purchase components used in manufacturing from another company rather than to provide services or produce components internally. Requires in-depth analysis of relevant quantitative and qualitative factors and consideration of costs and benefits of outsourcing and vertical integration. Vertical integration accomplished when a company is involved in multiple steps of value chain. All elements of value chain form initial research and development through design, manufacture, marketing distribution and customer service must be considered. Advantage of making components internally since they are not dependent on suppliers for timely delivery. Disadvantages could be suppliers provide high-quality part for a less cost. Thus, computer manufacturers do not produce own computer chips. Birdie maker golf company produces custom sets of golf clubs and are sold per set with 1000 sold per year. Birdie currently makes all golf clubs but is considering acquiring putter from ace putter, inc. Ace putters is offering per putter.
