An auto manufacturer is designing a new line of sports utility vehicles for which the manufacturer will need a new line of engines with high horsepower and high torque. The new line of engines is going to be of central importance in providing competitiveness for the new range of vehicles in the marketplace. However, the auto manufacturer does not have these engines in its current range. Furthermore, the auto manufacturer does not possess the required in-house capabilities to design the new engines, and it will take a significant amount of time and investment to develop the capability to design and make the required engines with reasonable performance and quality. Which of the following is going to be the most preferred mode of access to these high horsepower and high torque engines?

Make a spot purchase of engines from competitors as and when required based on market demand.

 

Use a smaller range of engines from its current engines, even though the new vehicles will be much less competitive in the marketplace.

 

Establish a joint venture with an engine manufacturer to supply the required engines.

 

Enter into a short-term contract with an engine manufacturer who has the required engines.

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