Difference between revisions of "Vertical Integration"
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A term used in microeconomics and management to describe the process whereby a company expands its business into areas that are at different points on the same production path. In a vertically integrated company, each member of the supply chain is engaged in a different part of the production process (e.g. manufacturing, transporting, marketing, and retailing). The products and services come under a common ownership. For instance, a solar company producing photovoltaic products may also manufacture cells, wafers, and modules to create these products. There are two forms of vertical integration: backward and forward. Vertical [[integration]] has a number of advantages. In addition to reducing costs and improving efficiency, it also helps to reduce turnaround time and increase financial growth. | A term used in microeconomics and management to describe the process whereby a company expands its business into areas that are at different points on the same production path. In a vertically integrated company, each member of the supply chain is engaged in a different part of the production process (e.g. manufacturing, transporting, marketing, and retailing). The products and services come under a common ownership. For instance, a solar company producing photovoltaic products may also manufacture cells, wafers, and modules to create these products. There are two forms of vertical integration: backward and forward. Vertical [[integration]] has a number of advantages. In addition to reducing costs and improving efficiency, it also helps to reduce turnaround time and increase financial growth. | ||
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| + | == External links and references == | ||
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| + | * [http://www.economist.com/node/13396061 Vertical Integration, by The Economist] | ||
| + | * [http://www.nationalchickencouncil.org/industry-issues/vertical-integration/ Vertical Integration, by National Chicken Council] | ||
| + | * [http://www.supplymanagement.com/news/2013/virtual-vertical-integration-is-the-future-of-supply-chain Virtual vertical integration is the future of supply chain] | ||
| + | * [http://www.oxfordenergy.org/wpcms/wp-content/uploads/2010/11/WPM21-TheEffectsofVerticalIntegrationonOilCompanyPerformance-FBarreraRey-1995.pdf The effects of vertical integration on oil company performance, by Fernando Barrera Rey, Oxford Institute for Energy Studies] | ||
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[[Category:The Cultural Diplomacy Dictionary]] | [[Category:The Cultural Diplomacy Dictionary]] | ||
Latest revision as of 10:14, 8 April 2014
A term used in microeconomics and management to describe the process whereby a company expands its business into areas that are at different points on the same production path. In a vertically integrated company, each member of the supply chain is engaged in a different part of the production process (e.g. manufacturing, transporting, marketing, and retailing). The products and services come under a common ownership. For instance, a solar company producing photovoltaic products may also manufacture cells, wafers, and modules to create these products. There are two forms of vertical integration: backward and forward. Vertical integration has a number of advantages. In addition to reducing costs and improving efficiency, it also helps to reduce turnaround time and increase financial growth.
