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Non-financial factor for make-or-buy decision in SME

Pakir Mohamed, Mohamed Ismail and Kamarudin, Ahmad Rifa’I (2013) Non-financial factor for make-or-buy decision in SME. In: Proceedings the 2nd International Conference on Global Optimization and Its Applications 2013 (ICoGOIA2013) , 28-29 August 2013, Melaka, Malaysia.


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Make-or-Buy decision is a choice between making or manufacturing in-house or outsourcing activities or product to ensure a smooth operation of any factory or company. There are several factors involved in making such decision. The factors are financial and non-financial factors. Most companies use financial factor as their main reason to decide whether to make-or buy. However non-financial factors also sometimes are used in making make-or buy decision. Therefore the objective of this research is to determine the most significant non-financial factor influencing make-or-buy decision in Malaysian SME. In order to achieve the objective, a quantitative approach using survey method is employed to determine which non-financial factors play the dominant role in making a decision to make-or-buy in manufacturing operations. The finding shows that capacity factor is the major non-financial factor for SME to decide whether to make-or buy. It is also discovered that process control is the most significant factor if the manufacturers decided to manufacture or making in-house while capacity is the most significant factor if the manufacturer decided to buy or outsource. This research provides an understanding of SME make-or-buy decision concept where it can be concluded that manufacturing capacity play a major role for SME in deciding whether to manufacturer in house or to buy or outsource externally.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: non-financial factor; make-or-buy; SME
Subjects: H Social Sciences > HF Commerce
Divisions: Faculty of Technology Management and Business > Department of Production and Operation Management
Depositing User: Normajihan Abd. Rahman
Date Deposited: 24 Oct 2013 07:45
Last Modified: 21 Jan 2015 08:15
URI: http://eprints.uthm.edu.my/id/eprint/4431
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