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When and When Not to Vertically Integrate
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By John Stuckey and David White
Spring 1993
Reprint 3435
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Volume 34, Number 3, pages 71-83, 13 pages
Primary Topic: Operations
SummaryVertical integration is a risky strategy -- complex, expensive, and hard to reverse. Yet some companies jump into it without an adequate analysis of the risks. The authors have developed a framework to help managers decide when it's useful to vertically integrate and when it's not. They examine four common reasons to integrate and warn managers against a number of other, spurious reasons. Their primary advice: don't vertically integrate unless it is absolutely necessary to create or protect value. |
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