Make or buy in a mature industry? models of client - supplier relationships under TCT and RBV perspectives

Abstract

In this paper, we use the transaction cost theory [TCT] and the resource-based view [RBV] to discuss three propositions on the models of client-supplier relationships in mature industries. The two theories seem to advance different organizational forms of the client-supplier relationships, and in some instances are contradictory. How should firms organize to prosper and grow, namely in the international markets? Through the case study of three Portuguese packaging firms, with primary (interviews) and secondary data, we discuss how the three firms deploy three distinct strategic organization models in a mature industry. One firm utilizes marketbased governance mechanisms, and concentrates its production in a few selected locations. Another firm vertically integrates almost the entire value chain of the product to provide full service to its clients. The third firm operates in a model of integrated outsourcing, with the installation wall to wall with its clients. The clientsupplier models adopted by these firms are based on efficient, stable, and trustworthy relationships that permit them to focus on their core competences and reduce transaction costs. The superior performance of firms requires a proper alignment of hierarchical and relational governance, taking the dimensions of their transactions into consideration.

Framework built on resource based view for outsourcing strategy on hiring logistics service provider

“…Another model was presented by Al-Kaabi et al, (2007) with the objective of obtaining greater profitability in the operation through collaboration on specialized activities. Holcomb & Hitt (2007) and Ferreira & Serra (2010) have developed a framework for transaction cost reduction, resource identification, capability complementarity, and strategic similarity, while McIvor (2010) and Souza et al (2011) have developed a way to analyze capabilities and resources to promote better performance.…”

“…Assessing risks to the organization due to possible failures of the outsourcing process (Tsai et al, 2008;Govindan et al, 2013), and resilience for the contracting company in coping with possible periods of turbulence and vulnerability (Glas et al, 2013); iv. Achieving the objective of selecting an appropriate LSP by means of hierarchical processes (Chiang & Tzeng, 2009;Chen et al, 2011;Anderson et al, 2011), resources (Chen et al, 2010;Perunovic et al, 2012), and the lowest possible transaction cost (Ferreira & Serra, 2010;Vasiliauskiene et al, 2011;Lee et al, 2012); and v. Building a partnership (Hofer et al, 2009;Lai et al, 2013).…”

Integração Vertical em Montadoras Automotivas

“…Na segunda metade do mesmo século, conforme Lung e Volpato (2002), a organização da produção automotiva foi caracterizada pela integração vertical, por meio da internalização da produção da matéria-prima necessária às suas atividades. Um novo momento, iniciado nos anos 1960, e ainda presente, é marcado pelo retorno à produção desverticalizada, com novos delineamentos na relação montadora-fornecedor (Costa & Henkin, 2016;Ferreira & Serra, 2010;Lung & Volpato, 2002;Torres & Cario, 2012;Vanalle & Salles, 2011).…”

Make or Buy Analysis Model Based on Tolerance Design to Minimize Manufacturing Cost and Quality Loss

“…Outsourcing causes the company to rely on suppliers to compete with its competitors [1]. In outsourcing, 87 components are bought from suppliers, and then the component prices influence the final price of the product [2,3].…”

“…Therefore, a manufacturing company must be very careful in determining whether the component is made in-house (make), purchased from suppliers (buy), or a combination of both. The right decisions and policies will determine the success of the business [1], which is why the make or buy analysis becomes an important aspect in a manufacturing company.…”