Case Study III-2 Make-or-Buy Decision at Baxter Manufacturing Company
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Teaching Note on Case Study III-2
Make-or-Buy Decision at Baxter Manufacturing
Company
Objectives
The objective of this case is to explore the considerations involved in a real-world software make-
or-buy decision. It also illustrates some of the problems that small to medium-sized
manufacturing companies have in managing IT.
Overview
Baxter Manufacturing Company (BMC) is a very successful specialized metal stamping shop that
produces deep-drawn parts for the automotive and appliance industries. BMC is family owned
and managed, and has around 400 employees.
Manufacturing Vice President Lucas Moore has proposed that BMC purchase a manufacturing
software package from Effective Management Systems (EMS). The new IS director has had
Questions for Discussion
1.
purchase the manufacturing software from EMS?
2. What are the arguments in favor of developing the needed systems internally?
that the EMS software is much more sophisticated and complicated than BMC needs. He
Case Study III-2 Make-or-Buy Decision at Baxter Manufacturing Company
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3. How should BMC obtain the needed manufacturing software?
4. What problems in managing IT does a small company like BMC have as compared to a
Fortune 500 company?
BMC has managed to build a small IS staff, but there is little opportunity for specialization as