The term manufacturer is not a definitive description and is often loosely applied. It can include companies that produce products starting from basic raw materials, to finished products. Any company engaged in business or manufacturing a new product must first consider which parts are to be made in their own plant and which parts will be purchased. Of course, it can not be a general rule.
More assembly parts that a company buys requires less space, equipment and workforce; therefore, the initial capital requirement and the initial risk are significantly reduced. However, when purchasing products already manufactured by other people, the company pays its costs and earnings indirectly. Also, if it is more efficient than other manufacturers, you may be able to produce products at a lower price than your competitors.
Many large companies think it is much cheaper to switch production to a place than to make the product itself. This savings can be achieved because they use other facilities, do not hire workers, and do not care about the entire production process. So, large companies know how to manufacture a product to achieve higher profits in the end.
Furthermore, large manufacturers of products or parts for many companies are able to invest in new equipment and study new methods to a much larger extent than a company focusing on many other areas of their company’s development, such as market research, product development and searching for places to product placement.