Week 10_understanding food suppliers_vertical integration

Week 10_understanding food suppliers_vertical integration -...

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Unformatted text preview: LESE204 Department of Food and Resource Economics Understanding Food suppliers- Vertical Integration - LESE204 Department of Food and Resource Economics 1. Vertical Chain vertical chain- From the procurement of raw materials to the sale of finished goods/services. vertical integration Vertically integrated firms execute all the functions within the vertical chain Vertically disintegrated firms outsource many tasks within the vertical chain. LESE204 Department of Food and Resource Economics 1. Vertical Chain vertical chain (Example: Dodram cooperatives) Pig producers (cooperative members) Dodram Livestock processing center(LPC): Slaughter Dodram Food: Processing and selling Dodram Agency, Big mart, etc Feed company Pares biofeed Integrated firm LESE204 Department of Food and Resource Economics 2. Upstream and Downstream Early stages in the vertical chain are upstream Later stages are downstream : Support services are provided all along the chain (examples)- Accounting- Finance- Marketing- Planning- Human Resource Management LESE204 Department of Food and Resource Economics 3. Defining the vertical boundaries Example: furniture company Transportation and Warehousing Intermediate Good processors Transportation and Warehousing Furniture manufacturers Raw materials Transportation and Warehousing Retailers: furniture stores Firms need to define their vertical boundaries. A B C Vertical boundaries: A? B?...
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Week 10_understanding food suppliers_vertical integration -...

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