For companies operating in the global market space, certain special decisions (make or buy, also known as outsourcing, special order, or equipment purchasing decisions) can have both quantitative and qualitative considerations, which may or may not outweigh a favorable calculated outcome. Vetting each qualitative and quantitative matter takes time and resources, but it is necessary to make sure the company makes sound business decisions from both perspectives.

-What are some of those considerations on how the qualitative considerations should be weighed in a company’s decision-making?

Consider the below scenario and please explain:

The pharmaceutical industry faced a challenging situation in September 2017 with the significant weather disruption incurred by their manufacturing plants when the island of Puerto Rico was hit by damaging Hurricane Maria. Let’s consider how big of a deal it was for the industry.

For many years, favorable tax laws made it cost beneficial for pharmaceutical companies to locate manufacturing plants in Puerto Rico. In fact, almost 75% of Puerto Rico’s exports in 2016 were pharmaceutical products according to the Bureau of Labor Statistics. Shortly after Maria hit, the U.S. Food & Drug Administration identified a list of more than 40 high-priority pharmaceutical drugs where short-term distribution disruption could be an issue. That’s a huge hit to the industry which it likely had not planned for and would have to incur significant additional costs to remedy. As a result, that could eliminate many of those cost savings.

Required If the CEO of a newer pharmaceutical company was in the process of looking to outsource the manufacturing of a medication currently produced at a plant in the U.S. to Puerto Rico when Maria hit, should they immediately stop their consideration of the plans because of the hurricane even if it was financially favorable to outsource there?