Question

How can “make-or-buy” concepts be applied to decisions at a service organization? What types of “make-or-buy” decisions might a service organization face?

Answer 1

A make or buy decision is an act of choosing between manufacturing a product in - house or purchasing it from an external supplier.

This can be applied to not only manufacturing sector but also to service sector. This can be done by employing the workers self or by outsourcing it to an external service provider. The main objective of the business is that to reduce the cost and increase the profits. In case of taking a decision about make or buy cost plays a main role. The cost of self manufacturing must be compared with the cost of outsourcing.

This decision can be faced at a situation to decide wheather to recruit an employee to a specific job or outsource it to a service provider.