To vertically integrate or outsource is a critical strategic decision that can play a big role in a company’s success or failure. On the one hand, we have seen some companies gaining great control and power through vertical integration, from Andrew Carnegie’s integration of upstream and downstream activities in steelmaking in the Gilded Age to Apple’s integration of hardware and software in the current time; on the other hand we see companies gaining advantage through outsourcing, such as Dell’s outsourcing of computer manufacturing. We have also witnessed IBM’s critical mistake in outsourcing the key components (the CPU and operating system) in the PC, which eventually cost it leadership in that market. Can you imagine Coca Cola outsourcing the production of Coke’s concentration and revealing the secret formula?!
Which model is better, vertical integration or outsourcing, ultimately depends on each situation, which includes industry dynamics, company goal, company resources, and nature and role of the activities in question. Think of a “make or buy” decision through YOUR OWN experience. Describe how that decision was made and the rationale. Apply the make versus buy strategy tool at the end of the chapter to evaluate that decision, the factors affecting that decision, and whether you think that was a good decision and why.
Note: I just moved to Texas being a military family, and I use to work as a Preschool Teacher. I have shifted my career path into working for Prudential as a Claims Examiner. I decided to pursue my masters degree to be able to provide a better future for my family. I want to be able to grow within a company, and I know that working at prudential I am able to do so.
For how the decision was made after I complete my bachelors degree I saw that teaching wasn’t the future i wanted to continue pursuing. I decided to pursue my masters degree for a better job opportunity. As my husband is military I knew that him being away all the time dealing with a 2 year and pursuing a masters degree was going to be a challenge but I was determined to better my future.