Title: The effect of 'make' or 'buy' on the timing of capacity investment by manufacturers in new markets
Authors: Zhaoqiong Qin
Addresses: North Carolina Agricultural and Technical State University, Greensboro, NC 27411, USA
Abstract: We analyse the manufacturer's decision in the timing of capacity investment when there are two retailers in the new market: an incumbent retailer who either makes the product in house or buys the product from the manufacturer and an entrant retailer who must purchase the product from the manufacturer. We find that the unit production costs of the manufacturer and the incumbent retailer, the demand uncertainty and the incumbent retailer's decision of 'make-in-house' and 'buy' are the main factors to affect the timing of capacity investment.
Keywords: capacity investment; timing; game theory; strategic outsourcing; manufacturing investment; new markets; make-or-buy; unit production costs; demand uncertainty.
International Journal of Applied Management Science, 2013 Vol.5 No.4, pp.377 - 396
Received: 08 May 2021
Accepted: 12 May 2021
Published online: 11 Oct 2013 *