In a strategy course I had taken last year I came across a very useful tool to make a make-or-buy (or outsourcing) decision. In order to determine which products or services might qualify for the “make” or “buy” components of this multi-dimensional problem, the tool employs “suppliers” as the first dimension and “technology” as the second dimension. The terms to describe the alternative or extremes in the supplier dimension are “few” and “multiple”. “Few Suppliers” refers to unique technologies, for which there are limited supply of vendors. The opposite alternative, “multiple suppliers”, represents broad technology activities for which there are many vendors. “Critical” and “non-critical” are the terms selected for alternatives within the technology dimension. This dimension reflects the degree to which the operations constitute the core-competency of a company.
Tags: make or buy, strategy
