Should we outsource it, or should we mess it up ourselves? : Factors affecting the make-or-buy decision in the sports retail industry: The case of Adidas Sailing

Abstract:

Combining concepts regarding the make-or-buy decision, such as Williamson’s (1981) ideas on transaction costs in conjunction with theories of supply chain management, the thesis outlines what factors should be of importance to firms when deciding to make or buy certain processes within the supply chain. Using Porter’s (1985) division of the supply chain into 5 sections we analyze the make-or-buy decisions of Catamaran Sports/Adidas sailing, finding that while many decisions taken match the theory-based predictions, a lot of processes are handled the way they are because of external constraints faced by the firm. In the case of Adidas their main reason for taking certain strategic decisions are to maintain their competitive advantage in the market, which they build on a benefit leadership strategy. This has resulted in them often choosing a production method that has a relatively high accounting cost, compared to what could have been achieved, in order to maintain flexibility, reduce lead times and provide a higher level of service.