MGT488 Suzlon Edge Case Response

MGT488 Suzlon Edge Case Response - Christopher 1 Taylor...

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Christopher 1 Taylor Christopher Professor Watkins SP14 MGT488 SEC2 March 25, 2014 The Suzlon Edge Case Study Response Researchers have identified numerous reasons for firms’ vertical integration strategies. All the motives can be categorized as either strategic considerations, which focuses primarily with power and positioning, or efficiency considerations, which emphasizes governance and transaction cost arguments. Vertical integration is prompted by considerations such as foreclos- ing of input and output markets to competitors, cross-subsidization of one stage of the value chain by another in order to “squeeze out” more focused competitors, increasing barriers to entry by upping the ante and reducing the threat of potential entrants, and retaining control over propri- etary knowledge so as to prevent suppliers/customers from becoming competitors. Firms imple- mented vertical integration in the 19th century to achieve economies of scale, which somewhat
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