Operation Management Assignment : Make or Buy Decision
Executive Summary
This paper explores one of the fundamental processes in most businesses, the make-or-buy decision. This research scrutinizes the theory related to the make-or-by decision, its importance in businesses strategy, criterions to be considered in the process as well as its advantages and disadvantages. Further investigation conducted revealed the reality of make-or-buy decision and it was found that decision makers rarely apply strategic decision making rules based on sound reasons resulting in unpremeditated and irrational conclusions.
An international clothing retail business, ZARA, is chosen to demonstrate the application of such decision process in its production. The business outline is briefly described and the make-or-buy decision model practiced in the company is further investigated.
By and large, this paper focuses on the central knowledge related to the make-or-buy decision. It is imperative for the decision makers to understand the process prior to their involvement in the operation managements. Awareness of such knowledge is paramount to the businesses, in order to achieve a competitive and efficient business strategy.
1.0 Introduction
In our contemporary society backed by commercialization and the drive of profit-driven markets there’s an emphasis for business to strategically formulate their make-or-buy procurement decision. It is crucial for them to decide whether to produce their product, process, or service internally or externally (Ahlstrom & Moses, 2009). This decision often is considered to require cross-functional knowledge, of which models and guidelines are normally developed to understand the entire structure and outcome of the make and buy procurement decision (Lonsdale, 2009). Numerous models have been developed to date, specifying which criteria to take into consideration in the make-or-buy decision process. However, the scopes of cross-functional make-or-buy decision process, and the steps taken to reach a decision,
This paper explores one of the fundamental processes in most businesses, the make-or-buy decision. This research scrutinizes the theory related to the make-or-by decision, its importance in businesses strategy, criterions to be considered in the process as well as its advantages and disadvantages. Further investigation conducted revealed the reality of make-or-buy decision and it was found that decision makers rarely apply strategic decision making rules based on sound reasons resulting in unpremeditated and irrational conclusions.
An international clothing retail business, ZARA, is chosen to demonstrate the application of such decision process in its production. The business outline is briefly described and the make-or-buy decision model practiced in the company is further investigated.
By and large, this paper focuses on the central knowledge related to the make-or-buy decision. It is imperative for the decision makers to understand the process prior to their involvement in the operation managements. Awareness of such knowledge is paramount to the businesses, in order to achieve a competitive and efficient business strategy.
1.0 Introduction
In our contemporary society backed by commercialization and the drive of profit-driven markets there’s an emphasis for business to strategically formulate their make-or-buy procurement decision. It is crucial for them to decide whether to produce their product, process, or service internally or externally (Ahlstrom & Moses, 2009). This decision often is considered to require cross-functional knowledge, of which models and guidelines are normally developed to understand the entire structure and outcome of the make and buy procurement decision (Lonsdale, 2009). Numerous models have been developed to date, specifying which criteria to take into consideration in the make-or-buy decision process. However, the scopes of cross-functional make-or-buy decision process, and the steps taken to reach a decision,