Meditations and Learnings

Meditations and Learnings

The Benefits of Specialisation

A company in the United States benefits from focusing on that which they do best. The economy in the Soviet Union forced companies to own more of the process because they could not rely on others. The inability to outsource could require an automobile manufacturer to make its bricks.
In a free market, those who can most efficiently handle a hood at a given stage will tend to own it at that stage. Profit incentives mean that wherever a component can be made the cheapest at the desired quality, that will be the preferred source. The efficiency is reliant on established knowledge and expertise and is the result of specialisation.