What is the difference between to make and to buy?
A make-or-buy decision is an act of choosing between manufacturing a product in-house or purchasing it from an external supplier. Make-or-buy decisions, like outsourcing decisions, speak to a comparison of the costs and advantages of producing in-house versus buying it elsewhere.
Why is make-or-buy decision important?
Companies use the total transaction costs accrued in developing products to reach a make-or-buy decision. Make-or-buy decisions reward firms with a competitive advantage and reduce the cost of production and capital investment.
What factors must a firm consider while addressing the make-or-buy decision?
The two most important factors to consider in a make-or-buy decision are cost and the availability of production capacity.
What is make-or-buy decision in corporate tax planning?
This applies to industries where assembly of products takes place to make a finished product. Like a manufacturing of car, where thousands of different parts or components are assembled to make a car.
Which cost is taken into consideration for make-or-buy decision?
Make or buy decision is the production decision made by the company i.e whether to buy the product or to manufacture the product. The cost of buying and manufacturing are both taking into consideration while making the decision. Hence, the cost of production is considered for ‘make or buy’ decision.
What are the advantages of decision making?
Advantages and Disadvantages of Decision Making
- Gives more information.
- Increase people’s participation.
- Provide more alternatives.
- Improves the degree of acceptance and commitment.
- Improves the quality of decisions.
- Helps in strengthening the organisation.
What are the factors affecting make or buy decision?
Factors Influencing Make or Buy Decision:
- Volume of Production:
- Cost Analysis:
- Utilization of Production Capacity:
- Integration of Production System:
- Availability of Manpower:
- Secrecy or Protection of Patent Right:
- Fixed Cost:
- Availability of competent suppliers or vendors.
What is pros and cons in decision making?
A pros and cons list is a quick and easy decision-making tool. Pros are arguments FOR taking a particular path. Cons are arguments AGAINST. Once you develop a list detailing both sides of the argument you can make more sensible, informed decisions.
What are advantages and disadvantages of decision making?
Advantages and Disadvantages of Decision Making
- Meaning of Decision Making.
- Advantages of Decision Making. Gives more information. Increase people’s participation. Provide more alternatives. Improves the degree of acceptance and commitment.
- Disadvantages of Decision Making. Costly. Time-consuming. Individual Domination.
What are the factors affecting plant location?
1. Selection of Region:
- Availability of Raw Materials:
- Proximity to Markets:
- Transport Facilities:
- Availability of Power, Fuel or Gas:
- Water Supply:
- Disposal Facility for Waste Products:
- Climatic and Atmospheric Conditions:
- Availability of Labour:
What are the strengths of decision making?
Strength: Uniformity and Fairness One of the decision making strengths of making decisions from policy is uniformity in procedure and results. If you follow policy each time you make a decision in a situation, you are more likely to show fairness, consistency and ethics.
What is the importance of plant location?
Plant location is important because of the following: (i) Location influences plant layout facilities needed. (ii) Location influences capital investment and operating costs. Location decisions are strategic, long-term and non-repetitive in nature.