Vertical Integration

  • W. Stewart Howe
Chapter

Abstract

Vertical integration as a business strategy involves a firm in undertaking two or more successive stages in the process of converting raw materials into finished goods in the hands of the ultimate consumer. By this means two or more successive technologically distinct production or distribution processes are carried out by a single enterprise. We noted in Chapter 4 (see Table 4.1, p. 55) and in Chapter 7 that vertical integration constituted a significant potential growth path for the firm. In addition to the prospect of growth that vertical integration offers, there is a range of further advantages that may be gained from the adoption of this strategy. In this chapter we shall analyse the nature of these possible advantages, consider the potential strategic drawbacks of such a policy, and examine how management can arrive at an optimal strategy in this area.

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References

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© W. Stewart Howe 1986

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  • W. Stewart Howe

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