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Vertical Integration

Vertical Integration - Vertical Integration Developing the...

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1 Vertical Integration þ Developing the ability to produce goods or service previously purchased þ Integration may be forward, towards the customer, or backward, towards suppliers þ Can improve cost, quality, and inventory but requires capital, managerial skills, and demand þ Risky in industries with rapid technological change
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2 Keiretsu Networks þ A middle ground between few suppliers and vertical integration þ Supplier becomes part of the company coalition þ Often provide financial support for suppliers through ownership or loans þ Members expect long-term relationships and provide technical expertise and stable deliveries þ May extend through several levels of the supply chain
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3 Virtual Companies þ Rely on a variety of supplier relationships to provide services on demand þ Fluid organizational boundaries that allow the creation of unique enterprises to meet changing market demands þ Exceptionally lean performance, low capital investment, flexibility, and speed
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4 Managing the
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