Why buy:
  • Lack of expertise

  • Suppliers' research and specialized know-how exceeds that of the buyer

  • cost considerations (less expensive to buy the item)

  • Limited or insufficient capacity

  • Desire to maintain a multiple-source policy

  • Indirect managerial control considerations

  • Procurement and inventory considerations

  • Brand preference

  • Greater assurance of continual supply


Make-or-buy analysis is conducted at the strategic and operational level. Obviously, the strategic level is the more long-range of the two. Variables considered at the strategic level include analysis of the future, as well as the current environment. Issues like government regulation, competing firms, and market trends all have a strategic impact on the make-or-buy decision. Of course, firms should make items that reinforce or are in-line with their core competencies. These are areas in which the firm is strongest and which give the firm a competitive advantage.