If Ford produces 1 million cars per year, it needs 4 million tires - should it buy them or make them in house?
- Buy them.
- Firestone and other tire manufacturers probably produce many more than 4 million tires per year, so they benefit from lower costs from economies of scale (and probably learning curves) - these costs savings can be passed on to auto makers.
In house tire manufacturing by Ford would probably also incur additional costs, such as monitoring slack efforts, health insurance for additional workers, etc.
IF the benefits of buying from the market are greater than the costs, buy from the market.