Final answer:
The decision involved in selecting between producing components in-house or acquiring them from suppliers is called the make-or-buy decision, a critical strategic choice for businesses like car manufacturers that impacts production efficiency and market competitiveness.
Step-by-step explanation:
The decision-making process that involves determining which components and raw materials should be produced in-house or procured from suppliers is known as the make-or-buy decision. This strategic choice allows businesses to weigh the benefits and costs of creating a product internally against those of buying it from an external supplier. The decision typically involves considering factors such as cost, quality, technology, capacity, and the strategic importance of the item in question. In the context of car manufacturing, for example, a company may decide to make certain critical parts in-house to maintain control over quality and intellectual property, whereas less critical parts might be outsourced to achieve cost savings or because the suppliers have specialized expertise.
Companies must also consider risks such as potential supply chain disruptions, the reliability and performance of suppliers, and environmental and political implications. This is increasingly important in an era where consumers and governments are concerned about environmental standards and national security related to reliance on imported goods, as in the case of oil. International trade policies can also affect these decisions, as they influence the costs and feasibility of sourcing materials from abroad. Overall, the make-or-buy decision is crucial for optimizing production efficiency, cost management, and competitive positioning in the market.