Make-or-Buy Analysis

Correct Answer: The IT department's preference for in-house developed systems

In a make-or-buy analysis, the decision to either develop a product in-house or purchase it externally should mainly depend on cost-effectiveness, risk analysis and compatibility with the existing system. The IT department's preferences for in-house developed systems should not significantly impact this business decision because: 1) The cost of developing the reservation system in-house compared to purchasing a solution: This is a prime consideration, as cost-effectiveness is one of the main determining factors in a make-or-buy analysis. 2) The compatibility of the purchased system with the airline's existing infrastructure: This is also a key factor to consider, as the value of the purchased system would be negated if it can't integrate with the existing infrastructure. 3) The risk of exposure to cyberattacks for both in-house and purchased solutions: The decision should take into account the potential security risk associated with both the approaches. Overlooking this could lead to significant financial loss and damage to the company's reputation. So, all these factors are of high importance in a make-or-buy analysis, whereas the IT department's preferences are less so.

Correct Answer: The quality of customer service provided by the external provider compared to in-house staff

In a make-or-buy analysis for a customer service function, the quality of customer service provided by the external provider compared to in-house staff is the most critical factor. This is because customer satisfaction heavily relies on the quality of customer service. If the external provider cannot maintain or exceed the current level of service, customer satisfaction will likely decrease. The number of customer service representatives employed by the external provider doesn't necessarily determine the quality of service. The location of the provider's customer service center could affect the service level due to time zone or cultural differences, but not as directly as the service quality itself. The internal staff training cost compared to the cost of outsourcing could affect the business owner's decision, but it is not directly tied to customer satisfaction. Therefore, the quality of customer service provided by the external provider compared to in-house staff should be the priority.

Correct Answer: The cost of renting formwork exceeds the cost of owning the modular system over a certain number of projects

The project manager's decision would be correct in the scenario where the cost of renting formwork exceeds the cost of owning the modular system over a certain number of projects. This answer is the best because it addresses the financial considerations, which are often the most critical factor in investment decisions. The other answers, while relevant considerations, do not directly impact the cost and return of investment calculation that would validate the project manager's recommendation. Having a sufficient storage facility, project manager's experience, or a successful partnership with the manufacturer may all be beneficial, but they don't make the decision to invest in a modular formwork system financially advantageous per se, hence, they can't be the best answer.