Snazzy Jazzy Footwear’s Make-or-buy Decision
Calculations performed and shown by Bell show that internal manufacturing is a better alternative for Snazzy Jazzy Footwear. In part B of the task, the company would still save $40 if it decided to produce laces using its facilities and resources (Bell, 2013). While the supplier’s offer looks good and outsourcing opens up a lucrative new opportunity for Snazzy Jazzy Footwear, these are still insufficient to overcome the benefits of internal production.
A counterargument to Bell’s Decision
As noted above, the organization would only lose $40 if it decided to outsource the lace production. One can safely say that it would be a good exchange for a long-term partnership with an outsourcing supplier and steady, active development. If Snazzy Jazzy Footwear focuses on developing partnerships with external manufacturers, it will provide opportunities for new projects and enterprises, which will make the company an even stronger market player. It seems that Snazzy Jazzy Footwear is a small entity, and outsourcing provides the needed manufacturing capacity for the growth of small-scale businesses (Oskow, 2019). Moreover, building a relationship with a supplier would bring Snazzy Jazzy Footwear into their network, where the company could later find new and more suitable ones.
Outsourcing and Employees Trust
Despite the prospects that the outsourcing approach offers, I would prefer to produce laces using the company’s facilities. Not for financial reasons, but because outsourcing undermines employee trust in management. According to Hayes (2021), “if a worker knows that their job may be outsourced … they may lose confidence in their employer and become discouraged” (para. 2). Its consequences are a decline in production and employees leaving, which is very damaging for small businesses.
Bell, T. (2013). Part 4 – relevant costs for decision making – make or buy [Video]. YouTube. Web.
Hayes, A. (2021). The unintended consequences of outsourcing. Investopedia. Web.
Oskow, K. (2019). Is outsourcing a long term business solution? Uplers. Web.