Overview of the Build Borrow Buy Framework
The build borrow buy framework in strategy is a tool designed to help in making decisions about how to build up new resources and capabilities. The framework considers three alternative means of developing new resources:
- Building the resources internally when the resources are close enough to existing capabilities that the firm is able to easily develop them.
- Borrowing the resources from others, such as through a partnership or alliance with another firm. This may be a good approach when it is not feasible to build the resources internally (e.g., so far away from the firm’s existing core competencies), but the resources can be acquired in agreements with others.
- Buying the resources by acquiring another firm, such as a merger or acquisition. This can make sense when the resource can’t easily be internally developed nor acquired in a partnership with another firm.
Situations when the Build Borrow Buy Framework is useful
The Build Borrow Buy framework is useful in situations where the firm is determining how to expand into a new area. This could be an adaptation to existing products, potentially requiring new internal capabilities to offer, or it could be diversification.
The build borrow buy framework is a high-level approach to illustrate the different possibilities to achieve such expansion. When firms know they want or need to expand into a new area, but are unsure of how to do so, the build borrow buy framework is useful to refer to.