Question

The starting point of the build-borrow-or-buy framework is management's Multiple Choice 1. evaluation of the firm's existing internal resources to check if they are relevant. 2. comparison of the internal transaction costs against the external transaction costs. 3. identification of a strategic resource gap that will impede future growth. 4. evaluation of the alliance partners' compatibility and commitment.

Answer 1

Answer:

The correct answer is 3. identification of a strategic resource gap that will impede future growth.

Explanation:

The build-borrow-or-buy framework is adopted to develop the most appropriate strategy towards an organization's growth. It provides three alternatives to the management: build the asset itself, borrow it from an external organization, or simply buy it.

Sometimes, any one of these three options is applicable to an organization, but typically, a combination of these may be preferred by the management, thus adopting a multi-faceted approach.

The first step in the build-borrow-or-buy framework is to identify strategic resource gaps that could impede future growth using the organization's strategic planning process. This is because it is necessary to identify right at the beginning what resources the organization needs going into the future. If this gap is wrongly assessed, the organization, may under-estimate or over-estimate its existing resources, thus ending up with the wrong growth strategy.

Answer 2

Answer:

The answer is option 3) identification of a strategic resource gap that will impede future growth is starting point of the build-borrow-or-buy framework is management's

Explanation:

Most companies are very good at identifying the resources they need to grow. However, organisations get into trouble because they pay much less attention to the right way to obtain resources than to the task of identifying them.

Most companies are very good at identifying what those new resources are, and nearly all of them take that challenge seriously. Pursuing a new opportunity indeed requires one or more types of resources firms don’t yet possess. These might consist of some combination of assets, skills, know-how, technologies, methods, and broad competencies.

1. Build on your existing internal resources;

2. Borrow from others via contracts or alliance agreements; or

3. Buy other companies.