   
|
|
|
|
Vertical Integration
|
In strategic management and microeconomics, vertical integration is the consolidation of upstream (suppliers) and/or downstream (customers) components of the value chain into a common ownership structure. Costs, market differentiation, and other business issues are impacted by the extent of vertical integration. For instance, vertical integration is a solution to what economists call the hold-up problem, a situation in which it would be efficient for two firms to cooperate, but the firms do not because of differences in bargaining power. Major players in the oil industry have extensive vertical integration. Oil giants including BP and Shell conduct exploration and crude recovery, transport and refining, and retail distribution and sale of fuel. Vertical integration focused on expanding downstream activity is called forward integration. Vertical integration focused on expanding upstream activity is called backward integration. Vertical integration should be distinguished from horizontal integration.
Rate this vertical integration definition...
|
|
Where is the market headed? The answer may surprise you. Find out
right now with the exclusive & Barron's recommended charts of Chart of the Day.
|
Popular Terms: EBITDA, liquidity ratio, 401a, deferred tax, command economy, 144a, per diem, margin rate, deferred revenue, required rate of return, cancelled check, open position, stock split, ex-dividend, implied volatility, in escrow, irrevocable trust, limit order, quality assurance, risk management, 1035 exchange, Key Rate Duration, class C shares, current ratio, Zero Cost Collar, 1031 exchange, wholly-owned subsidiary, VIX, reverse mortgage, retained earnings, phantom income, option premium, minority interest, labor relations, ex-dividend date, covered put, real GDP, LIBOR, inflation, dividends payable, diluted share, debt service coverage, balance sheet, APR, equities, average price per share, FICO score, FTSE, stock market close
|
|
|
|
