Discuss the Build-Borrow-Buy Framework. How can a company make its strategy?

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Discuss the Build-Borrow-Buy Framework. How can a company make its strategy?
Build-Borrow-or-Buy Framewk•
Provides a conceptual model that aids firms in deciding
whether to pursue internal development (build), enter
a contractual arrangement or strategic alliance
(borrow), or acquire new resources, capabilities, and
competencies (buy). Firms that are able to learn how to
select the right pathways to obtain new resources are
more likely to gain and sustain a competitive
advantage.
Build-Borrow-or-Buy Framework
EXHIBIT 9.1 / Guiding Corporate Strategy: The Build-Borrow-or-Buy Framework
Strategic
Resource
Gap
Low
Low
High
Low
Revisit
How relevant
are internal
resources?
How tradable
are the targeted
resources?
How close
How well can
Key
Question
to your resource
partner?
you integrate the
target firm?
options or
reformulate strategy
build-borrow-buy
High
High
Low
High
Strategic Alliance
Internal
Development
Action
Acquisition
• Contract
• Licensing
· Equity Alliance
• Joint Venture
Buy-Borrow-
or-Build?
Build
Borrow
Buy
Contractual
Alliance
Alliance with
Equity
SOURCE: Adapted from L Capron and w. Mitchell (2012). Build. Borrow, or Buy Solving the Growth Dilemma (Boston, MA: Harvard Business Review Press)
Transcribed Image Text:Build-Borrow-or-Buy Framewk• Provides a conceptual model that aids firms in deciding whether to pursue internal development (build), enter a contractual arrangement or strategic alliance (borrow), or acquire new resources, capabilities, and competencies (buy). Firms that are able to learn how to select the right pathways to obtain new resources are more likely to gain and sustain a competitive advantage. Build-Borrow-or-Buy Framework EXHIBIT 9.1 / Guiding Corporate Strategy: The Build-Borrow-or-Buy Framework Strategic Resource Gap Low Low High Low Revisit How relevant are internal resources? How tradable are the targeted resources? How close How well can Key Question to your resource partner? you integrate the target firm? options or reformulate strategy build-borrow-buy High High Low High Strategic Alliance Internal Development Action Acquisition • Contract • Licensing · Equity Alliance • Joint Venture Buy-Borrow- or-Build? Build Borrow Buy Contractual Alliance Alliance with Equity SOURCE: Adapted from L Capron and w. Mitchell (2012). Build. Borrow, or Buy Solving the Growth Dilemma (Boston, MA: Harvard Business Review Press)
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