When company must make build or buy decision

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When a company must make a build or buy decision, several factors should be considered. Obviously, price is one of the driving factors. Teams making these decisions should use net present value to compare costs associated with building or buying (Berk, 2010). However, cost should not be the only factor considered. Risks must be evaluated as well. There will be risks with either building or buying. For example, will you have the manpower to manufacture something in house? Likewise, if you outsource, you can run the risk of supply chain issues which could set your schedule behind and increase your costs. Also, when the product or service is needed would be something to consider. Building might not be feasible if there is a tight deadline. Buying would be best in this situation since the product or service is "off the shelf", however, the cost might be higher.

Reference no: EM133863272

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