Make-or-buy Decision at Baxter Manufacturing Company Harvard Case Solution & Analysis

Option Presented in the Case

The first option presented in the case includes Baxter manufacturing company in purchasing the Effective Management System or the second option enables the company to develop its own software. The third option of the company remains that it should not make any changes while sticking with the same Lotus spreadsheet method.

Criteria for Making Change in the Information System

Criteria 1

Identifying the need of the company and then identify and evaluate the need of a particular software and make comparisons on which software closely satisfies the need of the company (p447).

Criteria 2

The second criteria include modifying the existing system of the company which will allow receiving and sending of data through the package bought by the company. However, if the existing system does not integrate well with the package bought then the additional system will be in place to translate from one package system to another (p448).

Criteria 3

Studying the manufacturing area of the company for what it is doing now, and what it shall do in the future. This step would take about 6 months of time. After that, exploring many system packages the better package would be selected and further scrutiny would be provided to select the best package after comparison. The comparison procedure would require evaluation of time and money that shall be spent for each package (p449).

Additional Criteria

Another criterion that could be adopted is the financial projections for each option which is utilized by the company. If positive financial analysis results in the option of adopting the development of its own system package for the long run of 5 years, then the particular option must be adopted. The other criteria shall also include the particular system which has the best data security system for which the data is kept secured.

Reviewing Criteria List

The strategic business goal is to provide customers with the highest quality of products and services. Therefore, the best suitable criterion that ascertains the strategic business goal of the company is criteria 1 and the criteria for financial projections. As the company focuses on identifying the need of its customers, the company would identify its need and then it would identify the need for its software in order to better serve its customers. This criterion would save the future cost of the company by experimenting on different software. The company would know what to acquire and from which software. The second criteria depend upon identifying the financial projections for each software, while the best software with respect to the financial position would earn the contract. This particular criterion would earn the company more than 20% of growth as this strategy is particularly aimed at evaluating those criteria that have high growth.

Relating Option with Criteria

The first option goes well with all the three criteria because in all criteria it requires a thorough analysis of the system package and as well as the company’s need and financial analysis. The second option only goes well with the first option because it provides an opportunity to the company to come up with its own system. However, the second and third criterion does not provide the company with an option to introduce its own system package as it depends upon purchasing the package. The third option does not support any of the criterions.

The Best Option

The best option that can be selected is that the company shall develop its own software because then it would be developed according to the necessity of the industry and would also be easier for employees to learn more about the software. The company would be able to change accordingly to their needs and future demands. However, even though it requires $420,000 to build an entire system, but it would save the future cost of the company as the investment cost will earn the company huge profits as it would focus on facilitating company’s needs.

Additional Changes in the Best Option

The change that may require in the best option available includes the training of the staff members from the top companies that provides services for installing software. The option shall also include the feasibility of the software that shall be devised by the company. This would also enable to maximize their shareholders’ wealth because identifying them the best option, would fulfill their needs...........................

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