The boundaries of which activities are to be performed within the company and which are to be outsourced from markets are demarcated as vertical boundaries of the company (Besanko et al 2009) . Therefore, it is possible for the company to source the components it needs from competitors. However, the company must resolve the make-or-buy decision by comparing the benefits and costs of doing the business itself versus purchasing from a competing company (Besanko et al 2009). This essay will first discuss the advantages and disadvantages of outsourcing from competitors. Two solutions will then be applied depending on the risks of outsourcing. Finally. He will draw a conclusion. Main body The benefits of outsourcing: The first thing to consider is efficiency, so that companies focus on what they do best and leave others to the markets. There are some specific reasons to support companies that buy from competitors. First, some companies are likely to exploit economies of scale and learning more easily. The definition of economic of scale is that of the reduction in average cost resulting from an increase in production in the long run (Anderton 2008). As known from the diagram: the most efficient production occurs when the quantity is greater than A*. However, some firms simply produce A', which is lower than A*, at cost C', while some competing firms are able to produce A'', which is higher than A*, at cost C*. Because this competing company may be able to aggregate the demands of a large number of customers and cause a production surplus (Besanko et al 2009). Furthermore, they can achieve learning economies by leveraging their experience in producing for many customers over a long period of time. As a result, the cost of purchasing from some competing companies is lower than an IT company's in-h...... middle of paper ...... sourcing strategies shown in the diagram below, it simply outsources the commodity with low business value and operational performance. As a result, it avoids disclosing core technology and other proprietary information to its competitor (Earl 1996). In conclusion, advantages such as lower costs and disadvantages such as leakage of private information, probable cooperation and high transaction costs both coexist in outsourcing from a competing company. However, “make” and “buy” are two extremes along a continuum of vertical integration possibilities (Besanko et al 2009). The degree of integration of a business varies across industries, businesses within an industry, and transactions within a business. More importantly, it depends on the companies themselves combining in-house manufacturing and outsourcing from competitors to achieve maximum business benefit..