'Buy' refers to a companies decision to manufacture or develop (parts of) a product externally. Reasons favoring 'Buy' decisions are:
* ''High economies of scale''
** If an external party can produce the asset for multiple consumers in higher volumes than the firm itself, that party is in a much better position to profit from economies of scale
* ''High capital requirements''
** If the production of a certain good requires a high upfront investment, such as a specific production plant. It may be helpful to find an external partner who already made that investment.
* ''Specialized know-how''
** Due to [[Learning effects]] a company with specialized know how will be able to produce a certain good or service cheaper at higher quality.
* ''Higher efficiency of the open market''
** External parties are forced to be more efficient as they are continuously under competitive pressure.
bag
businessmodelling_public
created
Sun, 19 Sep 2010 09:38:03 GMT
creator
dirkjan
modified
Sun, 19 Sep 2010 09:38:03 GMT
modifier
dirkjan
tags
Business
M8
Modeling
Term
creator
dirkjan