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Is there a strategic advantage for a shoemaker to make their own hammer?
by mcqueenjordan 8y ago
Is there a strategic advantage for a shoemaker to make their own hammer?
- petronio 8y agoThere's a couple. Some samples: * If the hammer manufacturer decides not to sell you any, you'll still have hammers. * If the hammer manufacturer gains enough power to fix prices, you won't be paying them exorbitant prices. * If the hammer manufacturer or their country gets embargoed and you're unable to legally purchase their hammers, you'll still have hammers. All the above grant you a strategic advantage since you'll still have the necessary tools to continue your business while your competitors won't (or will have to pay much higher prices for their supply of hammers).
- rdtsc 8y ago> Is there a strategic advantage for a shoemaker to make their own hammer? Sure. If they are paying $100M/y on hammers, it's at least worth running the numbers and investigate alternatives.
- mcqueenjordan 8y agoBut that's ignoring the opportunity cost. Strategically, you probably want to focus on what your core competencies are, even if you could in theory do something for cheaper. It's easy to ignore the foregone best alternative of iterating on your own product instead.