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Factors that may influence a firm's decision to buy goods rather than produce goods internally include a lack of in-house expertise, small volume requirements, a desire for multiple sourcing, and the fact that the item may not be critical to the firm's strategy. Additional consideration may be given if the firm has the opportunity to work with a company that has provided outsourced services successfully in the past and can sustain a long-term relationship (Kenton, 2019).
Additionally, most businesses make decisions not only about how many workers to employ at any given point in time (e.g., the amount of labor) but also about the scale of an operation (e.g., size of factory, office) to put together and which production processes to use. Therefore, the long run is defined as the time horizon necessary to not only change the number of workers but also to scale the size of the factory up or down and alter production processes as desired.
If you were a manager at Ford, what information would you need to make decisions about the production of a vehicle like the Ford Fusion? In your answer, please include information about number of employees, factory size, office space, production processes, and scale of operation.
Reference:
Kenton, W. (2019, May 10). Understanding Make-or-Buy Decisions. Retrieved from https://www.investopedia.com/terms/m/make-or-buy-decision.asp
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